Are Newspapers Realizing the Ad Value of Online Property?

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Local market advertisers will spend $3.9 billion in 2005 courting customers online, a 46 percent increase from last year. And according to Borrell Associates, a Portsmouth, Va.-based media research and consulting firm, forty percent of that total – $1.25 billion – will be spent on newspaper Web sites.

Online advertising is the fastest growing source of revenue for newspapers. But is the typical local daily or weekly newspaper making the most of this opportunity? How can these papers grow their Web site ad revenues efficiently and effectively without taking away from the print side?

For a variety of reasons, many papers are growing their online revenue by default. That is, the market is pulling the publisher; online growth occurs despite the publisher’s actions or inactions. But this kind of growth cannot continue forever. Publishers need to actively develop and pursue online strategies by understanding the complete spectrum of available technology and better identifying existing and potential customers who belong online.

The inherent nature of the newspaper business often leads advertising departments to neglect Web site sales for the familiar print space. Clearly, advertisements in the newspaper’s print edition remain their bread and butter, but studies make it clear that it’s a mistake to ignore the growing online market. For example, nearly 30 percent of consumers went online for news in 2004, compared to a relatively slight 13 percent in 1998.

A good percentage of the sales force at daily papers have little understanding of – and no comfort zone with – online advertising tools such as rich media, rendering the staff ineffective in selling online space. Of online newspaper ad spending, more than 60 percent of it is on basic classifieds. And while display advertising is growing, the predominant format remains regular banner ads, which are lower performing ad units when compared to more cutting edge technologies such as rich media, including video.

After decades of selling print ads, with immediate knowledge of every available spot on each page, salespeople need to come to feel equally comfortable with advertising applied to their newspaper’s Web site. Until then, online ads will remain an add-on to a print package, rather than priced at the value they deserve.

We know the advantages: Unlike other media options, including billboards, print, radio and TV, online rich media lets users track how many people view an ad, what parts they view, how long they view it, and if they click on it or simply watch it. This same tool can also provide comprehensive reports based on this information, providing newspapers and their local market advertisers with critical information that they can use to refine subsequent campaigns.

However, simply transferring TV or print ads to a Web site is not an effective tactic. The truly effective online ad demands characteristics unique to its media. Likewise, the sales force needs to understand the nuances and benefits of a Web ad as intimately as it understands print.

On the front end, newspapers should make a commitment to their Web sites as a vehicle for getting the word out about their local market advertisers, from cars and cuisine to flowers and furniture. On the back end, they need to educate their employees to sell rich media and develop online ad strategy for advertisers. Once the sales force embraces the newspaper’s Web site as a viable property for ads, and once it is familiar with the variety of advertising options available, it can provide a wider range of service to local market customers, thereby maximizing online potential.

A strong rich media capability, combined with a commitment to developing the Web site as a significant advertising property, will allow newspapers to go after specific local markets that typically favor other advertising mediums. As evidenced by its recent growth in national advertising, as well as by projections and statistics for local market and newspaper Web sites, rich media has the potential to unlock vast amounts of advertising territory while complementing the daily print edition.

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