SAN FRANCISCO, 3 NOVEMBER 2008 - In case you haven't noticed, there's a bit of a crisis in the newspaper industry.
Print readership is down, and along with it, print advertising and subscription revenues. Online readership is up -- in some cases, way up -- but most sites are having a problem monetizing page views.
This may seem strange, considering online spending by local companies and national companies targeting local markets is surging. The New York Times, citing research from Borrell Associates, reports that local advertisers are projected to spend US$12.9 billion online this year, five times 2004 levels. But newspaper sites are only getting about $3.5 billion. The remainder "is mostly going to portals and stand-alone Web sites," says the article.
The Times goes on to describe what's happening at Scripps, which is belatedly moving its sales force away from a print-centric focus and using Yahoo Apt to display local ads and target local users who use Yahoo services.
However, I have to question how effective this effort will be. My doubt basically centers around the following question: Even if newspaper companies build an online sales force and tools to serve local ads, will local ad clients come?
I'm not so sure.
Let me describe a recent encounter, which will help explain where I'm coming from. At the WebbyConnect conference two weeks ago, I spoke with the online marketing manager of a large American outdoor products manufacturer, and several staff from the company's ad agency over dinner. I won't reveal their names or the names of their firms -- this was a casual setting and I did not indicate that I would be writing about them. However, I believe their experience helps illustrate a potential roadblock in the transition to local online advertising.
By many measures, the company is doing extremely well. It's an old, closely-held firm that not only turns a profit every year, but also has greatly expanded its American workforce. The products are selling well through a network of local retailers, including Home Depot. The company has a well-trafficked website that customers often use to research specific products, and print out spec sheets. There is also an online club for a small group of its most loyal customers, who want to connect with the company through the site and e-newsletters.
What about online advertising? When I asked this question, the marketing manager had to admit that there was very little. It's not that she and the agency didn't want to try an online campaign, it's that the CEO and other senior executives -- the ones that hold the purse strings -- didn't see the value.
These are men in their 60s. Older boomers, and maybe even a few guys from the Mad Men generation. They have grown up with print, radio, and television, and have built a successful business using traditional advertising print and broadcast campaigns on the local, regional, and national level. Print and broadcast advertising is where their comfort zone is.
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