ISOJ 2005

1. How Much is Enough?
International Symposium on Online Journalism
April 8, 2005

2. Online Advertising:
The Good News
• Is increasingly relevant to advertisers of all
types and categories
– Travel
– Business
– Education
– Finance
– Retail
• Provides recognized value in branding, reach,
cost-efficiency

3. Power of Online
in Affecting Consumer Behavior
 Last year consumers spent $130 billion at stores on Internet-
influenced purchases American Interactive Consumer Study, “The Dieringer Research Group, Sept.
2003
 For every $1 spent online, consumers are influenced by the
web to spend another $6 offline Jupiter Research, 2004
 For the full year, total online consumer spending rose by
26%, from $93.2 billion to $117.4 billion in 2004 emarketer, Inc., 2005
 69% of consumers use online information to help them select
a specific store and product Jupiter Survey, November 19, 2002

4. 53 52
42 41
37
20 22
38
8 5
10
14
29
23
35
31
13
20
23 24
0
20
40
60
80
100
Where I prefer to find out
about new products
Where I prefer to receive
information about
companies
Have advertising that is
rich in information
Have advertising that
helps me decide what to
buy
Internet TV Radio Magazines Newspapers
Total At Work Media User's Attitudes toward Advertising
At Work Users believe Internet advertising has
unique values …intrinsic branding attributes
Source: Online Publishers Association/MBIQ Media Consumption Study, May 2003
Q. 12: Please give your impressions of advertising you see on each of the following media. For each statement, please select all the different types
of media which you think apply. (Includes Duplication) Base: At Work (1053)
InPercents

5. Internet:
The Preferred Source for Local Merchant
and Store Search
Source: The Kelsey Group and Constat, Inc.,
March 2005; MediaPost, March 2005
70%
62%
70%
73%
75%
60%
Newspapers
Yellowpages
Internet
Feb-05 Oct-03

6. Newspaper Web Site users are
Your Ideal Consumers
• Newspaper Web pages reach more local online users than other
local media sites in 22 of the top 25 U.S. markets.1
• Local advertisers spent $811 million to promote their products on
newspapers' sites in 2003.2
• Newspaper Web site users spend almost twice as much time online
than other Internet users are more likely to have high-speed
connections. 3
• Newspaper Web site readers are younger, better educated and
more ethnically diverse compared with online audiences in general.3
• As a medium, Internet advertising is as likely as television to
influence purchases made by Internet users. 3
1. The Media Audit, April 2004
2. Borrel Associates, “What Local Web Sites Earn,” May 2004
3. @plan 2004

7. Registration:
What Have We Learned?
• Targeting ability has become the norm, not a
premium
– ZIP, age, gender, income
• Trade-offs between “permanent” registration
and “lite” registration
• Still missing key attributes
– Children in the household, interests, education
level

8. Changes in Advertising
• Larger ad units
• More video ads
• Targeting is the norm
• Text ads
• Pay for performance models
• Downward pressure on pricing
• Online evaluated by many in terms of direct
response

9. Paid Content:
What have we learned?
• Calendarlive.com re-launched as paid site on
August 4, 2003.
– $4.95/month or $39.95/year; free to 7-day
newspaper subscribers
– Included discounts coupons/card for entertainment
venues and events around Southern California.
• Goals:
– Test the market for premium content
– Provide additional value to subscribers
– Better monetize our entertainment site

10. The Results
• Calendarlive.com not well-known enough to
establish value.
• Marketing message to print subscribers was
too long for most sales channels.
• Online users generally not enthusiastic about
paying for this type of content.
• BUT… did generate more revenue (between
subscriptions and advertising) than before
(just advertising).

11. Online Revenue
• Interactive revenue up 40%+ YOY
• But still a very small % of total company
revenue
• Does not contribute to newsroom costs
• Does pay allocation for overhead, but
benefits from the company economies
of scale.

12. Where are we now?
• Newspaper circulation still declining
• Newsprint costs increasing
• Employee costs increasing
• Classifieds business moving online
• Display advertising under fire
– Department store consolidation
– Big stores that don’t advertise in newspapers
(Wal-Mart, Kohls, Costco)
– Advertisers looking for “sub-zip” delivery to make
their ads less expensive, more efficient

13. A Fictional Example
• Daily Newspaper
– 300 editorial staff ($20
million)
– 300,000 daily
circulation
– $300 million revenue
– $225 million expenses
– $75 million profit
•Dailynewspaper.com
–30 dot-com staff
($2.4 million)
–$13 million revenue
–$7 million expenses
–$6 million profit

14. How much is enough?
• Online sites are the future for
newspaper companies, and for better or
worse carry the burden of the revenue
growth for the foreseeable future.