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true web smarts
Short on glam and hype, delivering on revenues
By Dave Morgan
Last week, Knight Ridder released news that would seem disheartening to the newspaper industry in general.
Total advertising revenue in May was down 0.4 percent, due to continued softness in help wanted classifieds (down 19.8 percent year-to-date) and a drop in retail ads, which offset gains in general and real estate advertising.
It might have been worse had not travel advertising rebounded in May, and there was continued strength in automotive and telecommunications spending.
Nevertheless the newspaper chain said its operating revenue was down 0.1 percent in the month, with subscription revenue falling 3.7 percent on daily and 0.2 percent on Sunday circulations.
You would have had to burrow all the way down to the last line of the release for the diamond in the rough: “Online advertising was a notable bright spot in the month, up 35.2 percent.”
This is consistent with the performance of most newspaper web sites, which are now running squarely in the black.
New York Times Digital reported its first-quarter revenue was up 21 percent. Washningtonpost.Newsweek Interactive climbed 27 percent. Likewise, Tribune Co. said revenues at its interactive division, which includes the web sites of the Los Angeles Times and Chicago Tribune, were up 14 percent over last year. The newspaper web sites owned by Cincinnati's E.W. Scripps Co. were profitable in 2002 and Lee Enterprises of Davenport, Iowa, has registered several years of profitability at its web sites.
Why are they seeing such strong growth and strong bottom lines now relative to other online media?
They never had a dot.com bubble. That is, they didn’t overbuild, over-promise or overspend in the Hyper-Inflated-IPO-of-the-Day era of the internet.
Managed by traditionally conservative (in many cases family) executives, newspapers recognized the potential of the internet and put up sites, but knew it would take a while before their traditional advertiser base -- local retailers, tire stores, flower shops -- would make that great leap into cyberspace.
News sites took a beating from critics who said they weren’t keeping up with all the newest advances in search, e-commerce, video, etc., but they stuck with what they had been doing for decades – providing critical community information to their local towns and regions. They built trust with consumers and with advertisers and now that most of the country is connected, that strategy is paying off.
Taking a conservative stance on web spending doesn’t mean newspapers have been asleep at the wheel. The NYT is often heralded as one of the web’s foremost innovators in advertising, developing new units and functionality to assure advertisers get the most out of their online spend.
Now, most of the top newspapers in the country are at the forefront of managing their audiences for higher profitability. They are way ahead of the rest of the online industry in understanding who is on their sites, what they are doing there, how valuable each visitor is to the site and segmenting their audiences for the most efficient and effective ad targeting.
They are selling ads based on a combination of demographic and behavioral data enabling them to deliver very precise audiences for advertisers.
In innovation and in revenue the turtle has clearly passed the hare.
June 20, 2003© 2003 Media Life
-Dave Morgan is the founder of Tacoda Systems, which provides software allowing web businesses to build profiles of their users.
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