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Panpa Bulletin : May 2006
26 | PaNPa bULLETIN May 2006 Martha Stone, special projects manager for the World Associa- tion of Newspaper's 'Shaping the Future of the Newspaper'project, shared strategies on boosting newspapers' online revenues. Newspaper advertising and revenues are on the decline in much of the world. There is some light on the horizon as online revenues have shown significant growth --- between 30 and 50 per- cent a year in the United States. While the profit margin for online sales hovers around 75 percent versus a 20 percent profit margin for the print product, advertising online typically returns only one- tenth the revenue earned through newspaper advertising. Stone took a closer look at the strengths, weaknesses, opportu- nities, and threats facing newspa- pers' online operations: Strengths: The newspaper can expand the brand's readership and advertisers' reach through online offerings. Weaknesses: Newspapers are still relatively new to capitalising on online. Success will not likely be quick and many advertisers are sceptical about online invest- ments because of their lower ad- vertising rates. Opportunities: Advertisers and the newspaper's sales staff can be educated about the value online represents.Web sites' value can be raised through improved content in advertising and editorial. Threats: Across markets world- wide, non-traditional competi- tors, such as Google, Yahoo, and Craigslist are moving into terri- tory once the exclusive domain of newspapers. To achieve profitability in this new environment, Stone sug- gested five proven steps to boost online revenue. The first focused on rebuilding the 'culture' of newspapers' adver- tising sales departments. Manag- ers should recognise that they are no longer running an exclusively print organisation. The second step is to push up- selling advertising on the web site. Many North American and some European newspapers have insti- tuted a 'Top Ads' programme. This is a classified advertising upsell for jobs, real estate, or automo- biles. The advertisement is placed on the newspaper's web site and links to the classified listing. The third recommendation Stone made was for newspaper companies to diversify their rev- enue streams. Doing so can hedge against advertising downturns. The fourth step centred on the competition newspapers face. New entries into the local ad- vertising space - such as Google, Yahoo, and eBay - are competing with newspapers worldwide. New strategies to bolster newspapers' local presence are necessary to outmaneuver this encroachment. Finally, Stone advised her au- dience on the importance of improving the quality of news- papers' web sites. Good design drives more traffic to the web site. Classified advertising is also of- ten one of the biggest drivers of online traffic. Develop editorial content that the audience would be interested in, including photo galleries, breaking news, and community-generated content. Meanwhile, don't be afraid to in- corporate recent media advance- ments, such as podcasting, video, and blogging. Packaging multiple print prod- ucts into advertising sales Aleksander Strakhov of Russia's Komsomolskaya Pravda spoke about leveraging existing titles in the launch of a new print product and the development of an effi- cient system of packaged adver- tising sales. While Russia's advertising mar- ket reached US$5 billion last year, most of that money goes to television. Furthermore, the print media's share of that mar- ket is decreasing. It slipped from 31 percent in 2004 to 28 percent in 2005. Individual publications cannot compete with the reach of television. In response, Kom- somolskaya Pravda (KP) sought to combine the audiences of multiple publications in a single market. To improve the position of Komsomolskaya Pravda in the Moscow market, the company sought to develop a new strategy that attracted new advertisers and greater shares of its exist- ing clients advertising budgets. Most importantly, the new strat- egy had to have strong competi- tive advantages in circulation and readership. The newspa- per's advertising department sought to increase advertising revenues through packaged sales of advertising across the titles the company controlled in the Moscow market --- the daily Komsomolskaya Pravda, the weekly Komsomolskaya Pravda, Express Gazeta, TELEprogram- ma, and Sovetskiy Sport. They also had to protect the level of advertising revenues per project and each brand's independence in the advertising market. The programme's aim was to max- imise synergies resulting from the combined efforts of the indi- vidual titles' advertising depart- ments. The plan faced some ob- stacles, including advertisers' hesitancy in accepting the new programme, stumbling blocks in the internal organisation of Komsomolskaya Pravda's sales staff, and the need to recruit new advertising clients to avoid just redistributing the five titles existing advertising revenues. In facing these obstacles, Strakhov said the newspaper made some mistakes. These included prob- lems with rate-setting and dis- tribution advertising revenues among the company's titles, project revenue planning, sales teams and marketing proposals working at cross-purposes, and revenue losses. The process taught the news- paper what changes to make to its organisation to answer these issues. Today, it uses dif- ferent approaches in working with advertising clients that take into account the specific characteristics of the different titles within its portfolio. It has also strengthened the way it protects the advertising rev- enues of the various titles. Contact with major clients is centralised within one group to maximise revenues from package sales and prevent confusion. While the proft margin for online sales hovers around 75 percent versus a 20 percent proft margin for the print product, advertising online typically returns only one-tenth the revenue earned through newspaper advertising The world of The World Association of Newspapers’ World Advertising Conference was held in Paris on February 23 and 24. INMA reported on four talks that were presented.