News Web Sites: A Future Waiting to Happen

By: Dave Morgan Guest Opinion

A recent informal Borrell Associates survey of 19 major U.S. newspaper Web sites found that most newspaper companies think of their online divisions as cost centers and are making little conscious effort to turn the online newsroom into a profit center. This should not be surprising to anyone that has spent much time around the industry over the last 10 years.

A number of newspapers even run their print products in harvest mode -- taking cash out with little regard for the future readership or advertising base, both of which are increasingly online.

The good news for newspaper Web businesses is that by and large they did not drink the Internet Kool-Aid in the '90s and experiment with all sorts of costly applications and offerings that on the surface looked promising but disappeared over time. The bad news is that just as Internet-based businesses were beginning to take off, the economy tanked and the return on investment for newspaper Web sites was flung far out into the unforeseeable future.

As the poor economy ate away at offline display and classified ads, newspapers circled their traditional business wagons and lost what incentive they had to force the kind of business discipline on their online units that is essential for profitability and future growth.

One aspect of that discipline is to stop pigeonholing readers as either offline subscribers, newsstand buyers or online traffic, but to regard them all as the enterprise's total marketable audience. Newspapers have a well-established ability to sell their subscribers, but need to learn how to incorporate their online readers into their total audience. The Wall Street Journal did that just that recently.

The Journal found, as many newspapers have, that while there is considerable overlap between their off- and online audiences, their Web sites are attracting people from all over the country who are not (nor probably ever will be) print subscribers. The challenge is to monetize these visitors with whom you are unlikely to ever have a broader relationship (although some sites are doing an aggressive and effective job of selling home delivery to at least some of these visitors).

Some newspapers have used a combination of online registration and behavioral (or navigation) data to understand the differences between their subscribers who are online and their site visitors who are not newspaper subscribers. This allows them to target separate content and ad messages to each group; for example prompting subscribers who are about to lapse to renew online or sending content links free to current subscribers, but asking a fee from non-subscribers.

But just as important as understanding how news site audiences differ is to understand how they are similar so that they can be sold as a larger package to advertisers. While registration is probably the most complete way of capturing demographic data, it can also be done via online renewals, contests, sweepstakes or simple questionnaires launched in response to popular content. Knowing the age, gender and ZIP code of your on- and offline readers is sufficient to sell to most advertisers.

Demographic data used in combination with online behavior (such as clicking on auto classifieds or frequently checking online stock portfolios) produces audience segments that can be marketed to advertisers. Audience-targeted ads produce far superior results than run-of-site banners or even contextually-placed ad units resulting in happy advertisers who are willing to pay premium CPMs (cost per thousand) to reach desirable audience segments (such as home owners, car buyers or business travelers.) Happy advertisers tend to renew and expand their ad schedules.

The Internet isn't simply a matter of "build it and they will come." No business enterprise becomes profitable without some risk taking, lots of management attention and some forward thinking. With upwards of 140 million people in the U.S. now connected to the Internet and many using it as their primary source of news, the newspaper industry cannot simply hope that they will come.