WSJ on Online Newspaper Prospects

Here’s a longish article from the WSJ on the apparently slowing ad revenue growth at online newspapers:

Last week, that lifeline began looking frayed. New York TimesCo. warned Thursday that online advertising growth this year won’t be as strong as the 30% it had projected. On the same day, Tribune Co. reported that the growth rate for first-quarter interactive revenue was sharply lower than a year earlier. Gannett Co. likewise said online revenue growth slowed in the first quarter from a year earlier.

Several other major U.S. newspaper companies have yet to report for the first quarter, including McClatchy Co. and Washington PostCo., although on Friday the chief executive of Washington Post’s online arm, Caroline Little, said growth was “slowing slightly across the board but is still very healthy.”

The explanation in a word — online competition:

Media buyers also indicate marketers are beginning to look beyond traditional journalism sites, realizing many news junkies go elsewhere, too. “Advertisers are getting less scared of blogs and newsgroups and now are beginning to take money away from the traditional newspapers’ sites,” says Greg Smith, chief operating officer of Neo@Ogilvy, an interactive ad agency owned by WPP Group’s Ogilvy & Mather, New York.

But there’s more complexity here too. The historical lack of reach of online newspapers and the challenges of buying placements (notwithstanding Centro) at newspaper sites has been a deterrent for national advertisers. Free sites and numerous competitors (esp. verticals) have eaten away at the newspapers’ ability to capture classifieds revenues online too. This is why the Yahoo! deal is potentially key but it’s not yet clear how it will all play out. Regardless, participating in some sort of network that makes it simple for national advertisers to buy local placements on newspaper sites is also key. Right now that looks like Centro or Yahoo! or both.

They could also work with Adify to rep other local sites and create local ad networks. And they probably need to rep local businesses (as some are doing with WebVisible) to the broader Internet. And they should work with AdMission to surface ads from other parts of their sites on their most heavily trafficked pages.

Newspapers have very desirable, high quality audiences. But in addition to some of the suggestions above they should create new online-only properties and new destinations such as what WPNI just did with Sprig or new local sites to really compete for ad dollars beyond their current footprints. I realize all these suggestions implicate scarce resources. Yet newspapers need to experiment and take some bold action — now.

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Related: MediaPost on slumping real estate classifieds.

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2 Responses to “WSJ on Online Newspaper Prospects”

  1. Newsvine, Competition and RSS « Screenwerk Says:

    […] one of the factors that was reportedly hurting or slowing online newspaper advertising — Centro CEO Shawn Riegsecker argues it’s not in fact slowing — is competition […]

  2. links for 2007-04-26 at Uno se Blog Says:

    […] WSJ on Online Newspaper Prospects « Screenwerk (tags: advertising online) […]

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