Online Newspapers Grab Ad Spending

SEPTEMBER 21, 2007

An old media dog learns some new tricks.

The Newspaper Association of America has reported double-digit growth for the last 13 consecutive quarters of online newspaper advertising spending, which reached $795.7 million in the second quarter of 2007.

Randy Bennett is vice president of audience and new business development at the NAA. eMarketer spoke with him about what factors are driving this growth, key issues of the day and how newspapers are adapting to online publishing.

eMarketer: Online ads seem to be a bright spot for newspapers these days. Why?

Mr. Bennett: Part of it has to do with online ad growth overall. But newspapers are also making aggressive efforts to make their sites more compelling.

Online newspaper site content is more than just news. It includes community sites and content created around them, including user-generated content and video. This changes the value proposition. If you want to buy local ads, newspapers are a hub with a connection to the community. Advertisers can trust that ads will appear next to respectable content. Having varied content also draws a wider audience.

You can geotarget through a portal site, but news sites are where people are talking about things that affect their lives.

eMarketer: Some observers have said that only the largest newspapers are profitable these days. At the same time, local news site ads are picking up. What's the relationship between a paper's size, site and profitability?

Mr. Bennett: That's not true. Profitable newspaper sites come in all sizes. It's not so much a question of size as the amount of effort put into a site. Success is related not to cost-cutting, but to making the content better. Expanding content and the types of media available on news sites helps bring in more readers and helps with ad sales.

eMarketer: Small papers do seem at a disadvantage for offering robust content on their sites. Is there a trade association that helps them with the scale of what they carry?

Mr. Bennett: Newspapers handle content creation and packaging well, and their connection to the community is a core competency. Building platforms is not, so some newspapers are partnered with Yahoo! [in] the Newspaper Consortium. This includes smaller sites, since there's a desire to bring the local newspaper experience to a national audience, especially for marketers.

eMarketer: What types of local ads work best?

Mr. Bennett: There's nothing unique. Search is successful both locally and nationally. The thing is, newspapers are both online and offline. Bundling ads which use both media tends to be a good way to lift brands and spread messages.

eMarketer: What's the role of online video on news sites?

Mr. Bennett: We're still trying to figure that out. Newspapers with a local broadcast presence are trying newscasts. Some are using video for entertainment value. It just makes for more compelling content overall. Newspaper sites are still experimenting and there are lots of different approaches.

Some of it is definitely working. Newspapers capture half of online video dollars, according to Borrell Associates.

eMarketer: How do forums and the community portions of news sites fit into the news site mix?

Mr. Bennett: Consumers are looking for a one-stop shop for their community. Newspaper sites can be that. They don't just focus on breaking news, but also on what's going on in the community. Site users in forums are asking things like "How can I live my life better?"

eMarketer: Is there anything that online advertisers or marketers want from news sites that they're not getting, such as support for various ad types, campaign types or metrics?

Mr. Bennett: Metrics are a key issue. How do you tell the story that despite declines in traditional products, there is a growth story to tell?

[Ed. �" Mr. Bennett is referring to the drop in print newspaper ad revenues. The drop has overall news ad revenue growth trending negative, despite online newspaper ad growth.]

The Audit Bureau of Circulations used to just report circulation, but now they're reporting who's reading, how often print copies are passed along, total readership and online readership. Scarborough Research has also started reporting total readership, online audience and reach.

The issue is that it's not your father's newspaper. Newspaper sites are not just the newspaper online. As a result, they can deliver segmented audiences.