By: Wayne Robins

Lee Enterprises, CityXpress Work Together Towards Profitability

Newspapers can’t make money from advertising on the Internet?
Don’t tell that to Lee Enterprises Inc. and CityXpress. Lee, a
media company with newspapers in nearly two dozen small and
midsize markets in the Midwest and West, claims surprisingly
stout revenue from ad sales in its online special sections, using
platforms and even content from e-commerce specialists

Lee sells six annual special sections to advertisers in local
markets: Home & Garden; Health & Wellness; Sports & Fitness;
Dining & Entertainment; Travel & Leisure; and Professional
Services. Though each newspaper also runs print versions of these
special sections, the advantage of the online sections is that
they don’t get tossed out or recycled. They stay online for an
entire year, with content constantly added and updated to
maintain relevance.

“It’s not just ‘Build it, and they will come,”’ says Gregory P.
Schermer, vice president of interactive media for Lee,
headquartered in Davenport, Iowa. “It’s ‘Build it, and, by the
way, we’ll improve our revenue picture and online profit picture
by this focus.'”

To maximize efficiency, Lee uses the same display advertising
salespeople for both print and online. “Having display reps sell
online was a difficult strategy to implement, but worth the
trouble,” said Greg Swanson, director of interactive media sales
for Lee. And they don’t rely on banner ads, but instead offer a
full array of services, including online coupons, directories to
click-and-buy, and product and services links. Banners, too.

“It’s a more sophisticated online product, and a better marketing
and business model for us. … There are better marketing
opportunities for advertisers,” says Swanson, “and better
integration and utility for online users.”

In Lee markets such as Bismarck, N.D., or Missoula, Mont., sales
reps have developed relationships with clients that run much
deeper than is usually possible in larger communities. “If you’re
in a town like Bismarck, ad sales is a service job, you know your
clients and most of their children,” Swanson says. “Your sales
calls might be like, ‘George, you should run a bigger ad this
week.'” The question is: how do you get “George,” who might have
a family-run hardware store or nursery, to buy into the Internet
– instead of, say, local radio?

First, Lee claims that the newspaper Web sites in most of its
locations rule their roosts. “Our newspaper sites are far and
away the biggest Web sites in town,” Swanson says, “unlike, say,
Boston or New York, where they’re fighting tooth and nail for
market share. ” Swanson says Missoulian.com gets about 3
million page views per month, which is not bad for a town of
about 55,000 people and a newspaper, the Missoulian, whose daily
circulation is 30,364.

Swat’s up

One reason for the success of the online ad sales is the
preparation that Lee and CityXpress bring to each of their
markets. Swanson and Lee advertising executive David Popke have
put together what he calls a “SWAT team” of sales managers who’ll
descend on Helena, or Butte, wherever a special section is about
to launch. On Monday morning, there’s half a day of classroom
training, and then a team trainer will spend the rest of the week
going out on calls with the local sales reps. So even though
these are small markets, when Lee went into Missoula to pitch ads
for the first online special section, it sold $70,900 worth of
annual contracts. If it can match or come close to that figure
with five other special sections, that’s annual gross income
ranging from $300,000 to $400,000.

That’s real money in Missoula. Or Corvallis, Ore., where $60,000
of advertising was sold for an electronic special section on the
Gazette-Times’ site (http://www.gtconnect.com).
Or Racine, Wis., where $53,000 in ads were sold for one of The
Journal Times’ sites (http://www.racinecounty.com).
Or Winona, Minn., and LaCrosse, Wis., where $78,000 in ads
were sold for the home-and-garden section for the Winona Daily
News and LaCrosse Tribune (http://www.lacrossetribune.com).

What makes these sections sell? “The integration of editorial
content and the promotional opportunities they’re offering their
customers,” says Phil DuBois, CEO and co-founder of CityXpress,
which is based in Vancouver, British Columbia. “The advertiser
can quickly see the value in the proposition.” CityXpress
customizes its platforms to blend with the look and feel of the
local newspaper Web portal.

The value that Lee offers is partly based on a variety of
advertising models, rather than a single one. “Coupons work
really well for some people, but for some they don’t work,”
Swanson says. “Some use online directories, others don’t. We sell
more than one business model to each advertiser. Rather than say
to the advertiser, ‘This is it!,’ we know that all these business
models are emerging, and we’re agnostic as to which ones will
work. Instead of saying, one of these business models is the
ultimate, we’ll offer them all: Coupons, banner ads, directory
listings, and catalog. We don’t oversell or overpromise any one,
but we do offer a wide array of ways to reach the customer.”

Shell game

One thing that escaped Lee early on was the appetite for content
these special sections would develop. “It started with us
providing the [platform] shell, and Lee providing the content
themselves,” says DuBois of CityXpress. “We all learned that’s a
significant challenge for the smaller newspaper enterprises,
being able to provide sufficient content to be refreshed on a
daily basis. The Internet is so demanding that if you see the
same story, you’re not going to go back to that site –
you’ve lost a viewer.”

Content is now being muscled up on both ends of the partnership
between Lee and CityXpress. (Last November, Lee invested $1.5
million in CityXpress.) CityXpress hired a content manager, Duart
Snow, a former editor of Pacific Yachting magazine, to
build a database of available material from content aggregators,
with the possibility of adding free-lance writers with expertise
in various special-section topics. “Coming out of the chute, we
want a few months’ content to draw on when we launch a special
section,” DuBois said.

Lee, for its part, has the modestly sized staffs of its own
papers to create content, but the individual papers lack the
resources to turn out the amount of specialized copy necessary to
deliver the daily updates, as well as the weekly and monthly
features that have been promised to advertisers.

“When we wanted to do a Home & Garden section in our Mason City,
Iowa, newspaper,” explains Swanson, “all we had was two stories
from Tribune Media Services before getting to the home
classified.” The solution was right in front of Lee’s executives:
begin aggregating content from all of their newspapers under
special-section topics, so that the Home & Garden special section
in Butte could draw relevant stories from Davenport, Iowa,
Decatur, Ill., or Lincoln, Neb.

CityXpress, of course, would like to sell its technology and
content to other, larger media groups. And Lee says it would
welcome the addition. “We want them to sign up other newspaper
companies, because if we can get others to join our editorial
content within our niche sections, it’ll make a richer online
experience for everybody,” Swanson says. And more newspapers may
find that their marriages to the Internet is for richer rather
than for poorer.

Wayne Robins (wrobins@editorandpublisher.com) is an associate editor covering new media for E&P.

Copyright 2001, Editor & Publisher.

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