NAA MULTIMARKET AD SYSTEM TO BEGIN TESTS

By: Joe Nicholson One Competitor Doubts Net System Will Be Profitable



After months of delays and more than $5 million in expenses, the much-

touted NICC of the Newspaper Association of America (NAA) plans to
begin tests next month in preparation for a launch that could come as
soon as late summer.



NICC, a name with origins as an acronym for Newspaper Industry
Communications Center, is an Internet-based system for buying
multimarket newspaper advertising. NICC had been scheduled to begin
testing late last summer, and some NICC competitors continue to contend
it is a grand scheme that may never fly.



NICC, meanwhile, is taking some dramatic steps to seize as much market
share as possible. It is reducing its price from a flat rate of 1% per
insertion order to either 1% or $75, whichever is less, a change likely
to be popular with big newspapers, some of which have been slow to join
the group.



Another new development benefits rep firms and state press associations
'that have been confused as to how they would fit in,' said M. Blake
Barker, a new-media and telecommunications executive who was hired as
NICC'S president and general manager last fall. He explained NICC will
provide 'a private labeled entity populated with the newspapers they
represent free of charge.' A participating rep firm or state
association would have its own name on its home page, which also would
say 'powered by NICC.' The system will be free for third-party
processors. In a bid to generate interest among national advertisers,
the system also will be made available free to local retail
advertisers.



NICC was conceived as a project to help make the medium more attractive
to national advertisers.



NICC's 1998 business plan, obtained by E&P, showed newspapers'
share of ad revenue had dropped to 22%, with only 9% of those
expenditures coming through advertising agencies. In explaining why
agencies and advertisers have shunned the medium, the report cited 'the
difficulty associated with buying newspapers.'



Barker told E&P he halted testing last fall to eliminate a
potential 'bottleneck' by switching to a system that incorporates
electronic data interchange (EDI), a means of electronic communication
that has many forms. NICC's EDI feature will create an interchange
between advertisers, agencies, and newspapers; it also will allow
electronic payment. But EDI will not be available until some months
after the launch and will depend on participants' vendors setting up
interfaces. 'The first stage is an end-to-end process that will allow
an [insertion] order to go on the Net, select newspapers for a
newspaper campaign, and submit those ads,' said Barker. The system also
would handle tear sheets, provide invoice consolidation, bill
advertisers, and distribute the funds. More than 500 dailies have
signed on so far, Barker said.



NICC, a for-profit NAA subsidiary, has a $12-million line of bank
credit, which was designed to pay off NICC's initial $5-million
investment and provide for ongoing operations and development. Barker
disputed industry speculation that NICC debt has reached $10 million,
and that it had paid as much as $2 million to $3 million to buy the
assets of the Complete Newspaper Network (CNN), the 47-staffer ad
placement and processing arm of the California Newspaper Publishers
Association. Barker declined to provide financial details.



Skeptics remain among competitors and others in the industry. Some say
NICC will take years to phase in. Todd Melet, owner and president of
Chapel Hill, N.C.-based B-Linked.com, said his firm's AdTransit.com ad-

placement service has signed up 21 state press associations as well as
big papers such as The New York Times and the Los Angeles
Times. He said NICC will never provide most clients with a state
association's ability to help a national advertiser select local
papers.


Executives at mediapassage.com, a competitor that provides much of what
NICC proposes to offer, have met with NAA officials several times over
the last year to argue the industry is duplicating a service that
already exists and could be utilized. Carleton W. Bryant, a
mediapassage.com executive vice president, said, 'We don't believe, for
a large number of reasons, that [NICC] will ever make break-even.'