How the Web Is Changing the Personal Ads Business

By: Steve Outing

Personal ads will never be the same, thanks to the Internet. This is good news to consumers, but for publishers used to relationship ads being a cash cow for their publications, trends being shaped by the Internet require some adjustment to the business model.

Let's face it, printed relationship-wanted ads are pretty uncompelling. While they have great entertainment value for browsing, actually using a print personal ads section to find a potential match is trying. This is an application that cries out for database matching to bring together like-minded potential mates. How much simpler to find the right person by having an online agent look for potential matches or a search engine seeking out matches than to spend time reading column after column of ads in agate type.

Typical of newspaper personals sections today is the 900-number model, where people place ads in the print section (sometimes for free, sometimes for a fee), and respondents to the ads contact the person who placed the ad via a 900-number service. A respondent might pay $2 a minute (a fairly typical charge in the U.S.) to listen to an advertiser talk about herself, then leave a message for the advertising party in her voicemail box. This surcharged back-and-forth communication, prior to either party feeling comfortable enough to offer the other their real phone number, earns money for the publisher.

But 900 numbers are a troublesome model. Many people perceive them as expensive (they are), and limit the number of ads they respond to out of fear of running up a large tab. Others just aren't comfortable using 900 numbers and prefer another way of responding to relationship ads. (The plus side of this technology is that it provides security and a screening mechanism against potential harassers.)

But the world is changing rapidly thanks to the Internet, and that's something that Andy Sutcliffe, president of Boston-based Tele-Publishing Inc. (TPI), recognizes. TPI is the world's largest purveyor of audiotex personal ads systems; it recently joined forces with Brite Voice Systems and now serves 600 publications worldwide. Its personals ad voice systems are in use by 600 publications worldwide. TPI is doing business with more of the top 100 U.S. dailies than any other company, and it is the leading vendor doing business with alternative newsweeklies, which in many local markets are the leading venue for relationship ads.

TPI also runs combined audiotex and online systems for about 50 publications, but its online model also utilizes pricey 900 numbers as the method for advertiser and respondent to get together.

Evolutionary step

What's next from TPI is an online personals system that allows both parties to communicate strictly online -- avoiding 900 numbers in favor of a "per transaction" online model where sending an email message to a personals advertiser costs 50 cents. Placing an ad online with a local publication (using TPI's system) is free, or it's included in the price (if there is any) of placing a print relationship ad. And browsing ads online, or searching for people with like interests, is also free. The point where charges ensue is when one person wants to contact another directly. (And if one person is online and the other party isn't, there's still the option of them connecting via the 900 number system, since audiotex and online components of the system are integrated.)

TPI's online personals system, which does not yet have a name, is currently under development. Recently, I saw a prototype of the system demonstrated. In the coming weeks it will be offered to publishers in a revenue-sharing arrangement. There will be no up-front charge for using the system, but revenues derived from online communication will be split between TPI and the publisher, Sutcliffe explains, with TPI keeping one-third.

Users will visit a publication's Web site and go to the personals area, where they'll see a locally branded personals section linked to the TPI system. They'll be able to operate without charge: browsing ads, running searches, going into "chat rooms" with other users, or going through an exercise called "The Path" (where selecting one of two choices from a sequence of photos leads down an electronic path where the result is a compilation of ads from people who chose the same "path," or an online chat area populated with similarly-minded path takers).

To communicate with someone who has placed an ad, the user will have to purchase books of "stamps" costing 50 cents each. It might cost one stamp to send an email to someone who placed an ad, perhaps two stamps to listen to a voice recording in RealAudio format of the advertising party talking about himself, Sutcliffe says.

Stamps can be purchased in three different ways: 1) Directly on the Web by filling out a form and entering a credit card number. 2) By calling a 900 number, which bills the user's telephone account directly. Or 3) by calling an 800 number and talking to a live operator who will take your credit card information.

Shift to the Web

Sutcliffe believes there is going to be a rapid movement by personals ad users -- who because they typically are young also are likely to be computer and Internet literate -- to the Web. This group of Web personals users will come partly from former 900-number users making the transition to new technology, and to a lesser degree brand new customers who don't use 900 numbers. Voice personals won't go away, he says, but the Web will become more and more important. "I think it's a mistake (for a publisher) to view the Web through the prism of the 900 number model (alone)," Sutcliffe says.

900-number response to personals puts up a barrier to a number of people because of their high cost. Many 900 users are highly selective about ads they respond to, not wanting to spend too much money. With a 50-cent per response model, Sutcliffe expects online users to respond to ads more freely than before. His advice to publishers is not to worry about the low price for responding to online personals because they'll make up the difference over $2-per-minute audiotex responses in volume.

Sutcliffe further believes that the per-transaction model is superior to the monthly all-you-can-eat subscription model, which is being used currently by TPI's chief online personals competitor, Match.com. That model will fail because Web users don't like paying subscription fees to multiple services, he suggests.

Clearly, the personal ads business is changing because of the World Wide Web. Newspapers that rely on a 900-number model only must soon introduce online personals (sans 900 numbers) as an alternative. This is partly because their consumers will demand it, and partly because national competitors like Match.com are entering their local markets with online personals, and this could begin to chip away at a newspaper's personals revenues -- precisely because of the perceived high price of 900 number personals.

TPI's new system is expected to go into beta testing in early July, with a formal launch predicted for September.

Contact: Andy Sutcliffe, asutcliffe@tpigroup.com

Comments on need for alliances

Several people had additional thoughts on my Wednesday column about newspapers' alliances with large companies entering the local content market:

>From Rodger Brown, online editor of Creative Loafing Network:
"I attended the convention in Salt Lake City, sat through all the Web publishing seminars, and am a little surprised to see that your presentation has been criticized so harshly. We are partnering with AOL to provide entertainment-related content for Atlanta's Digital City site, and consider it to be nothing but a benefit. We get a guaranteed revenue stream and the opportunity to *increase* our exposure online. We will be able to track usage of our content and position us to respond to changes in the online environment. It's kind of a no-brainer.

"What I do question is the lack of brand loyalty among online users. I don't think we can equate the fickle market for Web browsers and search engines to weekly newspapers going online. We all have fairly solid reputations in our markets, and as local users start opting for online vs. print, I expect they will continue to rely on the known commodity. Sure, there will be a different dynamic online, but I anticipate that some of the aura of the print product will carry over online as we deliver our readers to our various sites. We'll see."

Evan Rudowski, manager of business development for Excite Inc., wrote:
"One big threat to newspapers, which you did not touch upon in your recent column about the AAN flap, is that these well-funded big competitors can afford to snatch away the newspapers' talent and bring them on board at higher salaries. In the case of Microsoft, we have seen this happen several times with the hirings of Dan Fisher, formerly of the Los Angeles Times, Mike Gordon, formerly of Access Atlanta, and Cella Irvine, formerly of Hearst, to name a few of the more prominent defections.

"Newspapers run the risk of ending up as farm teams where talented staffers hone their expertise and then are cherry-picked by better-funded entities. And newspapers are nothing without the staffers who create the intellectual property the newspapers then resell to the public. Microsoft and other companies are raising the salary levels for talented journalists, product developers, business managers and others beyond what newspapers can or have been willing to pay. I know dozens of people -- as I am sure you do -- who either used to be or might have been valuable newspaper staffers, but who have now chosen instead to move on to higher-paying jobs at new media ventures.

"This brain drain may be one of the most serious challenges newspapers will face in the new media world -- unless this all goes bust and sends us all back to cover print beats for $18-36,000 per year. But I kind of doubt it."

Mark Potts, an electronic publishing consultant in Falls Church, Virginia, and a former Washington Post Digital Ink and @Home staffer, said:
"That was a fascinating, though perhaps predictable, reaction you got from the alternative publishers. But as Ann Landers would say, they'd better wake up and smell the coffee. In other words, I think you were entirely right, and in fact I'd argue that your advice goes for big-city dailies, as well. Alliances are where it's at, for a number of reasons, especially now that the playing field has been leveled and new competitors, big and small, are showing up on local customers' Web browsers. It's going to get real crowded out there. Wars of attrition ain't fun, and if you're going to get cannibalized, you might as well join in the feast.

"And here's another view: I think big dailies have a lot to fear from the alternative papers lining up with the Microsofts and AOLs of the world. The alternative weekly may not cover the city council as well as the big daily (and in a lot of cities, that's a matter of opinion), but it does at least as good a job covering and listing local entertainment and events and carrying personals, apartment-rental listings and a lot of other things that are of GREAT interest to the 18-35-year-old demographic that also happens to be the hot demo for the Web and online services (and that feels ill-served by daily newspapers). Put that together with the economic, technologic and promotional power of Microsoft and AOL and you've got a product that a lot of dailies will be hard-pressed to match -- and, I would argue, a competitor far more nimble than a big daily's online division. ...

"As you say in your piece, Netscape is a wonderful example of why alliances are important these days, and Boston.com is a landmark for media companies' willingness to share the glory a bit in return for much greater potential wealth. We newspaper people tend to be fiercely independent, and that just doesn't cut it anymore. Ally or die!"

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This column is written by Steve Outing and underwritten by Editor & Publisher magazine. Tips, letters and feedback can be sent to Steve at steve@planetarynews.com