By: Steve Outing
Is the Internet a zero-sum game for the newspaper industry? Will gains
from Internet-related ventures merely make up for inevitable losses on
the print side, as more readers migrate over time from print delivery to
digital delivery of the newspaper company’s news and advertising?
Or is there new money to be made? Can gains by a newspaper’s new-media
operations be what grows a company as print revenues flatten due to
increased digital distribution?
That’s a big issue for many publishers as they formulate strategy for
the next few years. Do they stick with a primarily defensive strategy,
where new-media operations are expected to be the part of the company
that grows in the decade ahead by in effect taking money away from the
print side? Or do they act aggressively to find untapped revenue on the
The only answer
The logical answer to these questions is to figure out how to find new
money, not just take money out of the right pocket and put it into the
left. If your newspaper’s Web site is primarily advertising supported,
the goal should be two-fold:
Find online advertisers who have not been customers of the
Devise new online services that will cause existing
advertisers to dig deeper into their pockets to spend more with your
company than they have in the past.
Let’s look at No. 1 first. The most significant opportunity will be in
attracting smaller local businesses – those that have not
previously advertised in the newspaper because of cost (or simply
because it didn’t meet their needs) – to advertise on the
newspaper’s Web site or other digital services. Just look to the yellow
pages print directory to see the likely candidates for lower-cost,
targeted online advertising. Many small service businesses can benefit
from online advertising – bringing in new dollars to a newspaper
Online news media consultant Peter Zollman, principal of Advanced
Interactive Media Group, says that smaller local companies have for some
time been priced out of advertising in many large- and even medium-sized
newspapers. Examples include independent dry cleaners, sandwich shops,
small specialty retailers found in shopping malls or strip malls,
independent sporting goods stores, etc. Because efficient print
targeting often isn’t possible, such enterprises may shy away from
buying print ads – not wanting to pay for distribution of their ad
to the north side of town if their store is in the south section, for
Many such small businesses spend their advertising budgets in suburban
or community newspapers, or “penny shopper” papers serving their
neighborhoods. Other businesses use local radio or even TV but don’t
find newspaper advertising useful. Newspaper Web site salespeople thus
should spend some of their time courting advertisers from other local
media that might be inclined to move some of their ad dollars to the
Internet. If your site has an online business directory or yellow pages
service, that’s an obvious place for such advertisers – but think
beyond that to targeted advertising and e-commerce opportunities on the
Such businesses don’t have to be small, Zollman points out. Some local
law firms spend profusely on TV ads (but not for print), so there is the
potential for significant ad revenues from such businesses. Be
aggressive; think about taking money away from other local media.
The key to attracting smaller businesses is offering something that’s
useful to them and reasonably priced. For example, a pizza shop may want
to spend its advertising dollars at certain times of the day. A news Web
site can add the shop’s banner ads during the hours of 3 p.m. to 7 p.m.
– when busy office workers are thinking about what to feed the kids
this evening, or just got home from work and must decide what to do for
dinner – or during the hours before pro football games. For the
cost-conscious pizzeria, this means that it’s not paying for ad
impressions during breakfast time. (The pizza place could get similar
time-targeting on TV, of course, but the costs would be much higher than
Another good market for “new” online advertising money: Businesses that
cater to out-of-town customers. Hotels and motels, for example, seldom
advertise in local newspapers, but they will advertise if a news Web
site is a destination site for out-of-towners looking for information in
preparation for a visit. Tourist attractions, rental car companies, and
discount-store shopping malls are examples of advertisers that will want
to reach an out-of-town audience.
Sometimes businesses that do well with online advertising are
unpredictable. At the St. Petersburg Times in Florida, Web
publishing General Manager Ronald Dupont Jr. says that one of the
most successful online advertisers was a company offering balloon
What they’re doing wrong
Dave Morgan, founder and chairman of Internet ad services company
Real Media, believes that running a newspaper Web site does not need to
be a zero-sum game – though many publishers behave as though it is.
Too many publishers are unwilling to devote the resources and take the
risks to find new revenue streams that will mean future growth for the
entire enterprise, he says. The result this risk aversion is that their
Web sites will do little more than pull in money from existing
advertisers that before would have gone to print.
The ideal way to pull in more new money from existing newspaper
advertisers is to offer them additional compelling services, Morgan
says. The ideal news site will not just carry banner ads for local auto
dealers, for example, but will actually sell cars online, as well as
related goods and services. The smart site will allow its users to shop
online for auto insurance, tires, mobile phones, extended warranty
services, baby seats, etc. – facilitating comparison shopping and
taking a cut of each transaction.
Such a strategy allows advertisers to spend more money on online
advertising and e-commerce programs because they sell more products and
services as a result of participation. In this way, a publisher can
squeeze more money out of an advertiser because the client is selling
more – adding to the bottom line of the newspaper company and not
taking away money from other departments.
Of course, such an approach can be scary to a traditional newspaper
company’s executives – for in the selling cars example it could be
perceived as marginalizing auto dealers, which have long supported the
Morgan points out that this evolution in local advertising is happening
whether local news publishers want it or not. The Internet is creating
better ways to target advertising to select groups and more efficiently
sell products and services. Local companies will migrate to these new
forms of advertising. Newspaper companies must take advantage of the new
opportunities presented by online advertising – and force
themselves not to fret over what it’s doing to the core print
To truly make a news organization focus on acquiring new revenues
instead of replacing old with new, publishers need to be thinking about
a wholesale revamping of their companies’ organizational structures.
Morgan is one industry observer who advocates a bold stroke: Take a news
company’s new-media division and put it on top of the entire enterprise.
That division becomes responsible for the brand and the content of the
company, and the print side of the company becomes a single appendage
responsible for but one mode of distribution of the core asset,
I think he’s right, for it will take the new-media side’s separation
from the print master – to set it free to “be all that it can be”
– for a newspaper company to be able to act assertively in going
after new revenues.
The Internet likely will be a zero-sum game for newspaper companies that
continue to approach new media with traditional thinking. Those that
keep Internet ad sales within the confines of a print advertising
department will succeed mostly in getting the same amount of money out
of existing advertisers, but spreading it among a wider variety of print
and online placements.
The better approach will be taken by those companies that free their
new-media departments to run wild – aggressively going after new
advertisers who’ve yet to do business with their newspapers, and
presenting existing advertisers with new services that will entice them
to spend more money with the newspaper.
Other recent columns
In case you missed recent Stop The Presses!, here are links to
the last few columns: Low-Cost Credit Card Content Sales, Wednesday, Sept. 13
What’s Wrong With Newspaper Discussion Boards, Wednesday, Sept.
6 The Interactive Newspaper Columnist, Wednesday, Aug. 30
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This column is written by Steve
Outing for Editor & Publisher Online. Tips, letters and feedback
can be sent to Steve at email@example.com
Copyright 2000, Editor & Publisher.