Online growth rates from the third quarter, according to Media Post:

 

Gannett (excluding USA Today): 7.5% (compared with 21 percent
in the third quarter of 2006)
Tribune: 9 percent (compared with 28 percent a year earlier)
McClatchy: 1.4 percent (compared with 16.3 percent)
Dow Jones: 8 percent (compared with 13 percent)
E.W. Scripps: 19 percent (compared with 40 percent)

 

Rick Edmonds, media business analyst gives the reasons for the slowed growth. He says as the online base continues to grow, very high rates are simply harder to sustain.

 

Analyst Paul Ginocchio of Deutsche Bank Securities feels the standstill of online ad revenues "is all to do with classified upsells." Classifieds usually make up around 70% of newspaper online sites ad revenue. Now classifieds have the most significant losses.

 

Edmonds writes, “The industry understands that diversifying that base will be necessary to keep growing online.  But that takes a number of years, not a few months.” In 2005, Edmonds wrote an article saying that a decade of 33% growth plus enough new initiatives to respond to competition would be needed for “online to rescue the newspapers.”

 

Now Edmonds says, “I am hearing three main scenarios for a second-stage booster to online growth.  They are not mutually exclusive; the industry could regain some momentum from any mix.”

 

The first scenario is the Yahoo deal and nationally networked ad buys. A year ago more than 200 newspapers made a partnership with Yahoo. Now most are working with its Hot Jobs Service. Edmonds writes, “architects of the arrangement, like Dean Singleton of Media News and Robert Decherd of Belo, have been promising that the real action will kick in mid-2008 when technology is in place to allow Yahoo to sell national ads on a common platform in any combination of the member papers.”

 

If the Yahoo deal works, it takes away the problem of national advertisers having multiple contacts and varying specifications. However, earlier this month several of the Yahoo participants said that they are considering a separate national online sales effort. However, Edmonds feels there is still huge potential in the Yahoo plans.

 

The next scenario is improvements in search and video. A report from Borrell Associates, a firm measuring and forecasting online ad growth, says video is expected to double in the next year. A number of newspapers are developing local search and local video. Some examples of this are The Atlanta Journal Constitution’s Kudzu.com, is now expanding Craigslist-style to many other markets. The Evening Post of Charleston South Carolina, with PalmettoBizBuzz.com, is billed as a guide to 200,000 local businesses. These sites do not look at all like newspapers sites. They have some content, user reviews, but are basically about shopping with no news.

 

Borrell of Borrell Associates estimates that only about half of newspaper sites have the technology for video. Borrell thinks that local online will go the direction of longer information videos, maybe even actual infomercials.

 

The third scenario deals with Newspaper Next, a guide for the newspaper industry to getting better at innovation. The guide says newspapers need to target audiences and then use trial and error to make quick and cheap products that meet the needs of that audience. Through trial and error these small businesses could stabilize, therefore bringing in new revenue.

 

One success of Newspaper Next is a site that targets busy moms. It has developed a repeat audience and can advertise goods and services that connect to that audience.

 

To sum this up, Edmonds think there is hope for future online advertising, it just won’t happen so quickly, which could mean more cuts in the newsrooms. Edmonds also points out “the resources and focus of newspaper organizations will tilt even more to the new stuff and perhaps to ventures that have nothing much to do with journalism but everything to do with the financial muscle to support it.”

 

Source: Poynter Online