Business Model: Online Advertising Is Breaking Records, But Is It Enough to Finance journalism?

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Business Model Online Advertising Is Breaking
Records, But Is It Enough to Finance journalism?

• International Symposium on Online Journalism
• University of Texas
• April 8, 2005
• Jim Debth, Internet General Manager

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It better be!

• My joband yours depends on it

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A Caricature
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A StoryIn the Beginning

• Are we part of itor do we compete against it?
• Radio
• TV
• Audiotex
• BBS
• And now
• Internet

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In the Olden Days

• Experiment
• Value added
• Shovelware content
• Small audience
• Understaffed/overstaffed
• Expenses hidden
• Revenue inflated

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A Whole New Ballgame

• Its a business
• Wheres the revenue
• 24-hour coverage
• Huge audience
• YTD
• Expenses scrutinized
• Double-digit growth
• expected

• Experiment
• Value added
• Shovelware content
• Small audience
• Understaffed/overstaffed
• Expenses hidden
• Revenue inflated

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A Symbiotic RelationshipStill

• Content is King
• Advertising pays the bills

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My HeroOnline to the Rescue

• 1.19 billion industry segment
• 3 of newspaper company revenues
• 45 of newspaper advertising growth
• ¾ of consumers use the Internet
• Local advertisers spent only 2.1 of ad budget
  online
• 44 of local advertising went to newspaper sites
• 70 from classified categories ofreal estate,
  automotive and recruitment
• Borrell Assoc.
• What Local Web Sites Earn 2005 Survey

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The Landscape

• People want more and more information
• Information seekers - eyeballs
• More and more news is available
• Information providers - us
• 24-hour a day information

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Its All About Eyeballs

• Advertisers go to where they can find them
• We are in a position to provide a broader
  audience combining print and online
• Print circulation decliningor maintaining
• Online circulation exploding

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A Strong 8-5 Audience
Target Audience Pages Viewed Unique Visitors
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Statesman Web sites Audience

• When you advertise with the Statesman.com Web
  sites, you will reach a young, educated and
  affluent audience.

Age Median age 35 77 are ages 25 to 54
Education 40 have a College Degree
Employment 85 are Employed 60 are in
Multi-Income Households
Gender 52 Male 48 Female
Household Income 60 with incomes of 50,000 or
more 40 with 75,000
visited statesman.com, Austin360 or
classifieds on statesman.com in the past 7
days among those age 18. total metro 40
years old
Source 2003 Gallup Poll of Media Usage and
Consumer Behavior, Austin MSA
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Newspapersthe Information Providers

• We have the editors
• We have access to the information
• We have the staff in the newsroom and the feet on
  the street
• We have multimedia
• Photos
• now Video

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Its All About Audience
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The Statesman Family of Web sites
Austins Leading Local News and Information Web
sites

• Over 28.8 million Page Views / month to
  Statesman.com sites
• Over 991,000 Unique Visitors (March 2005)
• Over 260,000 Registered Users and growing
• 78 of registered users do not subscribe to the
  paper
• 24 of registered users say they dont read the
  paper at all.

• Austin 360
• Entertainment, Family Activities, Movies, Dining
• 2/3 of Austin360 visitors dont generally visit
  statesman.com
• StatesmanClassifieds
• Austins 1 Employment, Real Estate, Auto,
• and Merchandise source

Source Sage Metrics, Site Log file analysis
Source Sage Metrics, Site Log file analysis
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Americas Most Wired City
Use the Internet (past 30 days) Rank Top 5
Media Markets 1 Austin 72 2 Washington,
D.C. 71 3 Seattle/Tacoma 71 4 Denver 70 5 Sa
n Fran/San Jose 69
Austin residents are online
Bought Items Online (past yr.) Rank Top 5 Media
Markets 1 Austin 53 2 San Fran/San
Jose 53 3 Seattle/Tacoma 52 4 Boston 52 5 Wa
shington, D.C. 51
they buy online
Go To Newspaper Web sites (past week) Rank Top
5 Media Markets 1 Washington, D.C. 29 2 Austin
23 4 Boston 21 3 Atlanta 20 5 Seattle/Tacoma
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and they use their newspapers Web sites to get
what they want!
Source Scarborough Research 2003, r2-12
Source Scarborough Research 2003, r2-12
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Austin360 The Entertainment Guide

• Movies, Music, Family Events, Personals, Dining,
  Games, and Message Boards
• Connects with Austins active and fast-paced
  lifestyles
• A recent survey of Austin360 visitors said that
• 85 have broadband Internet access
• 60 go to movies in a typical month
• 64 dine out in a typical week
• 78 went to a a movie, concert or other activity
  because of Austin360
• 82 are book buyers (past 6 months) and 81
  bought recorded music or movies

Source October 2004 online survey of Autin360
visitors
Source October 2004 online survey of Autin360
visitors
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NewspapersWhat We Do

• Provide content
• Editorial and Advertising
• Create an audience base
• Circulation (offline and online)
• Market the audience
• Put buyers and sellers together
• Sell advertising to support the effort
  (journalism)

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Same OldSame Old

• We just need to find the successful business
  model
• Our new audience advantage
• Mass (OKold advantage)
• Content targeted
• Demographic targeted
• Segment targeted

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Lets Assume

• Journalism schools are assuming the future
• Editorial
• TV - video
• Radio - audio
• Internet - multimedia

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The InternetWhatever You Want

• Text
• Graphics
• Photos
• Video
• Blogs
• Email
• RSS
• Mobile

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Online Needs to Stand and Deliver

• Banner ads
• Sponsorship
• Paid search
• Text links
• Email
• RSS

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Lets Put Advertising into Context

• In print ads with stories
• Online ads with stories
• Most effective position ads in content

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Its a Matter of Perspective

• Page view
• How interested are people in what Im writing
• How much is the traffic worth and are people
  clicking away from the content to the ad
• Content
• News that people are interested in reading
• Product that people are interested in buying
• Loyal
• Reader that comes to our site to read content
  regularly
• User that advertisers can sell to

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How Content Drives Revenue

• Homepage
• Glossy
• Banner ads
• Email
• Story pages

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Homepage Banners
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Glossy Special Section
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Targeted Placement
Banners are the Branding and Direct Response
vehicles of the Internet.
Advertisers can target specific channels based
on demographic information supplied by user
registration
120 x 240 Vertical Banner
468 x 60 Full Banner
120 x600 Skyscraper
300 x 250 Medium Rectangle
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Page Channel Ownerships
Sponsorships of key sections like Business,
Health, Weather, Sports, Music, Events and more
Owners receive permanent placement and top
billing on all pages within a section of
statesman.com or Austin360. An ownership can be a
powerful part of any marketing plan. Associate
your brand with ours.
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Rich Media Ads
Get your ads extra attention with animation and
video
Flash ads provide action and sparkle
Ads with embedded videos
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Newsletters Special Offer Emails

• Email Newsletter Sponsorships offer the
  opportunity to put your message into a daily
  email for one week which allows for repeated
  frequency of your message.
• Newsletters
• Weekend Best Bets 28,000 subscribers
• Daily Headlines 22,000 subscribers
• Longhorns 21,000 subscribers
• Afternoon Updates 25,000 subscribers
• Legislative Special 17,000 subscribers
• Seasonal Newsletters
• Legislature, Tour de France
• Special Offers advertising to newsletter
  subscribers who have opted-in to receive
  advertiser messages
• 69,000 subscribers

January 2004 average
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OopsLets Not ForgetClassifieds

• Number one in revenue
• Number two in traffic
• Lets not forget
• Its content too

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The Top Local Sales Sites

• Statesman.com is where Central Texans go to shop
  online for Autos, Homes, Jobs, and Classified
  merchandise.

Statesman Homes
Statesman Cars
Statesman Classifieds
Statesman Jobs
The metros most extensive and most popular
listings.
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The Local MarketplaceAlmost
Monster, Trader.com, craigslist, ebay, etc.
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Are we tipping the scale?
A real world example Radio and TV
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Its a Balancing Act
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Content

• How much content do we put online and when
• Does online content take away from the print
  product?
• Does online content enhance the print product?
• Are we building readership?
• Are circulation numbers going down?
• Are registration numbers going up?
• Citizen journalism???

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Advertising

• Is the advertising value added?
• Is it incremental revenue?
• Are advertisers spending more money online?
• Are they decreasing their print spending?
• Are the dollars they spend online equal to the
  dollars they spend in print?

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Circulation

• Are we gaining a new audience?
• Are we losing the one we currently have in print?
• Are we reaching a new demographic?
• Arent we really talking about readership
  (eyeballs)?

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Bottom Line

• 35 employees
• 11.5 content (journalism)
• 260,000 subscribers and growing
• 28.8 million page views and growing
• 2004 30 revenue growth
• 2005 more of the same

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At the End of the Day

• Our future and our jobs depend on our successand
  our ability to figure it out

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OhRight

• The Answer to the Question
• Yes!