By: Carl Sullivan
Editor’s note: A condensed version of this story appears in the April 8 print edition of E&P.
A little over a year ago, the St. Petersburg (Fla.) Times‘ Web Publisher Ron Dupont laughed out loud when a vendor suggested the newspaper put its display ads online. He’s not laughing today.
“It’s instantly profitable,” a repentant Dupont said. “It’s part of our financial future.” So much so that display ads now represent a separate line item in his Web budget.
What once seemed, well, ludicrous (at least to the digerati), now is making a lot of sense and more than a few cents for print publishers, including Gannett Co. Inc., the Tribune Co., and Belo. And in a sure sign of print-to-Web ads’ viability, there’s a fierce battle among the vendors vying to own this space.
The genesis of the print-to-Web ad phenomenon started in the classified pages, where some advertisers run quarter-page or half-page ads that include all their listings — some finding that they could cut costs by buying a display ad instead of lots of individual liner ads. The problem for many newspaper Web sites was that these display ads usually weren’t searchable. They needed technology that would break out those display listings so that they’d be included in text searches. If they didn’t do this, Tommy Teenager’s search for a Honda Civic would only pull up the liner ads, but not the Civic listings in auto dealers’ display ads.
Now papers are moving beyond classifieds to all kinds of retail display ads, inserts, and special sections — giving all an extra life online. Many publishers are starting with classifieds and special sections such as their wedding and shopping supplements, said Al Corey, president and CEO of Print2Web LLC of St. Petersburg, Fla. “Once a newspaper finds little advertiser resistance with their special sections, then they’ll start converting all of their display ads,” he predicted.
Pushing the trend along is the ease of explaining print-to-Web ads, said Paul Wolfe, vice president, newspaper sales, at AdExpedia Inc. in Chico, Calif. “You don’t have to spend hours training your print sales reps to sell online advertising,” he said. “They’re still just selling the print ad with the bonus of getting that ad online.” AdExpedia Inc. just signed a plum contract with San Jose, Calif.-based Knight Ridder, which will roll out the service to its newspapers this year.
The large metros and big chains are leading the way, but smaller papers are getting in on the action too. On Jan. 1, The Sun Chronicle in Attleboro, Mass., put all of its display ads online using technology and hosting from TownNews.com of Moline, Ill. The 21,000-circ paper raised its rates 4%, with 1% credited to the online division. Production Supervisor/New Media Manager Michael Forgette expects to reap six figures in additional revenues from the project by year’s end.
And for not a lot of work either. In most cases, newspapers only have to send their display ads to a vendor who does all the work and, in most cases, hosts the service for them. Depending on the paper and vendor, the file transfer can be automatic; at some papers, the production department might have to resave the ads in a different format before shipping to the ad-conversion vendor. “We spend about an hour a day doing quality control, so the bulk of that revenue is pure profit,” said Lelani Bluner, director of multimedia product development for Irvine, Calif.-basedFreedom Communication Inc.’s Orange County division. Bluner’s group uses an internal system and two vendors: Harvest SwiftAds of Mason, Ohio, for ROP ads and Print2Web for special sections.
“It’s so easy to do,” confirmed Mike Coleman of The Arizona Republic‘s AZCentral.com, which is using yet another vendor, P2i of Bethlehem, Penn. The Republic is charging $100 per ad for the service.
Depending on the vendor, a number of sophisticated features can be offered to advertisers. San Francisco Chronicle Digital Media Vice President Bob Cauthorn refers to the process as “fluffing” the print ads.
You start with a basic image of the display ad from the print newspaper on your computer screen, but you tweak the ad to take advantage of the Web’s interactivity. You give readers the ability to enlarge pieces of the ad, including the undecipherable fine print that appears in ads such as those run by cell-phone companies and airlines. You may add automatic links to the advertiser’s Web page or quick links to directions to the store nearest you. You may offer an e-mail button allowing the consumer to instantly communicate with the advertiser directly. You might include a virtual shopping list that allows you to save items that you’re considering for later review.
Some services even let you sign up for e-mail alerts for future sales. Let’s say you’ve just moved into Marin County north of San Francisco and are in the market for a new couch. You pick up today’s San Francisco Chronicle, but don’t see any ads that fit the bill. You visit the paper’s Web site, SFGate.com and do a search under their “Personal Shopper,” but still come up empty-handed. SFGate addresses this problem by letting you sign up for e-mail that will alert you when Marin County furniture stores have sales in the future.
To be included in the Chronicle‘s online shopping application, print advertisers pay an additional $35 charge per ad, according to Cauthorn, who outsources the process to AdExpedia. But the paper plans to bundle the service into all print advertising sales as new rate cards are released this year — with a rate increase reflecting the added online service. “It’s been a challenge to get the [print] sales force to remember to do the upsell,” he said. “To get the critical mass of ads on our site, we’re going with the bundled buy.”
But raising rates isn’t something many newspapers feel comfortable with in this economy. “You can use the online feature as a rationale for a price increase, but some markets can’t sustain that when times are bad,” said Harvest SwiftAds President Chuck Albert. “The safer decision in a bad economy may be to put it out there in an upsell mode.” TownNews.com President Marc Wilson believes that the negative economic climate has prevented many papers from rolling out print-to-Web advertising products, but expects that to change when things tick up again.
At SFGate.com, Cauthorn isn’t making money yet, but he expects that to change quickly when the online option is bundled into the print buy. “There’s a clear margin on this,” he said. “It’s a straight per-ad cost.”
“We try to engineer pricing to produce at least a 30%-50% margin for the paper,” said Albert of Harvest SwiftAds. “In some cases, it’s much more than that.”
While the vendors don’t like to publicly discuss their prices, it can cost the newspaper anywhere from $1 to $20 per ad for this service, depending on what features are offered and the volume of business. Baseview Products Inc. of Ann Arbor, Mich., is charging $125 to $300 per month for an unlimited number of ads for its new service, launched just last week at the America East show, according to Jack Rosenzweig, senior product manager for Baseview Internet Technology Services. In most cases, there are no set-up fees involved.
Tony Wills, general manager of Newsday.com in Melville, N.Y., expects there to eventually be consolidation in the crowded fields of very competitive vendors. Tribune-owned Newsday is using two vendors, Print2Web and P2i, which purchased the early print-to-Web technology company Infosis Corp. about a year and a half ago.
The biggest benefit of all may not yet be obvious to newspapers or advertisers, SFGate’s Cauthorn said. “Over time, you generate data on what people are searching and shopping for,” he explained. “I know how many people are shopping for shoes in Concord, Calif. Without violating anybody’s privacy, we’ll have the ability to know what people want to buy and solicit new advertisers based on that data. That’s a paradigm shift.” So ironically, it may be print ads that finally help newspaper Web sites achieve the one-to-one marketing that dot-com visionaries have dreamed about.
“Internet purists resisted this for a long time because they felt Internet advertising should be ‘different,'” said Deb Dreyfuss-Tuchman, vice president for business development at P2i, which just started working for The Boston Globe last week. “Well these prints ads really are ‘different’ when we make all their individual components part of a searchable database.”
Major vendors in the print-to-Web ad space: