Online Publishers Search For New Revenue Streams

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The Wall Street Journal Online has 620,000 paid subscribers to wsj.com, its subscription to advertising revenue ratio is 60:40 and its business coverage is unrivaled.


Yet despite those strong points and a two-year, $28 million system revamp, wsj.com is toeing a line shared by fellow members of the Online Publishers Association as it looks to develop new sources of online income.


"I think the whole industry right now is trying to make the shift from being more direct marketing to being more focused toward the brand-building and brand awareness and the intent side of advertising," said Neil Budde, publisher of wsj.com, South Brunswick, NJ. "I think there's always going to be a direct marketing component to online because it's such an easy vehicle in certain cases to generate direct response and to get a measured response. But we also recognize it's a good vehicle for other forms of advertising to achieve other ends."


As online publishers struggle to define their revenue streams, news sites owned by major publishing groups are becoming more cash flow positive through online classifieds or listings, archives, syndication, bundled online and offline packages, and larger, more creative display ads.


"The key to building a sustainable [online news] business is the diversity of revenue," said Michael Zimbalist, president of the Online Publishers Association, New York.


Washington Post Newsweek Interactive, the online arm of the Washington Post Co., this year aims to get advertisers to measure washingtonpost.com and newsweek.msnbc.com not merely on clickthroughs, but on the same terms they would radio, television and print.


A study by the publisher among Washington-area retailers found that 20 percent of customers who walked into stores said they had seen the shop's ad on washingtonpost.com. Ten percent said they came into the store because of its ad on the site.


Like many online papers, the Post's two brands allow for creative ad units that go beyond a banner to grab readers. The New York Times Co.'s NYTimes.com is in the vanguard of such rich-media ads, particularly online trailers from movie studios.


"Entertainment companies are generally more inventive than others," said Jason Krebs, vice president of advertising sales at NYTimes.com. "That's basically due to the highly stylized nature of their offline products and their Web sites to boot. Travel advertisers are also experimenting with breakthrough creative due to the competitive nature of the market online."


But these new types of ads are not for all advertisers. Washington Post Newsweek Interactive will go only so far in conjuring creative ad units.


"The one sacrosanct rule that I give to my creative [team] is do not break somebody once they've begun to read or begun to look at a piece of video or audio or what have you," said Chris Schroeder, CEO and publisher of Washington Post Newsweek Interactive. "Once you begin a sentence or two and an ad pops up in front of you, all you're going to do is annoy the hell out of people who're watching you."


In their quest for revenue, publishers also are resorting to required user registration for more targeted advertising. Forbes.com has even developed a new reach buy. The online arm of Forbes magazine will sell advertisers a defined number of unique individuals at some frequency of advertising.


"We're going to guarantee 800,000 unique individuals who'll see your ads at least twice," said Jim Spanfeller, CEO of Forbes.com, New York.


Gannett Co. Inc.'s USAToday.com division has launched a Newstracker product. For $4 a month, users get USAToday.com's content through a screen saver.


Unlike other publishers, USAToday.com is not totally in favor of selling its offline and online properties in a package.


"We're presenting integrated advertising packages, but we don't force any of our packages across platforms," said Jeff Webber, senior vice president and publisher of USAToday.com, McLean, VA. "We package things together for the convenience of our customers. But the Internet is not tossed in as added value. It's an add-on, it has its own pricing structure."


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