Business Model: Online Business Model: Online Advertising Is Breaking Advertising Is Breaking

Records, But Is It Enough Records, But Is It Enough to Finance journalism?to Finance journalism?

International Symposium on Online Journalism

University of TexasApril 8, 2005

Jim Debth, Internet General Manager

It better be…!It better be…!

My job…and yours My job…and yours depends on itdepends on it

A CaricatureA Caricature

A Story…In the BeginningA Story…In the Beginning

• Are we part of it…or do we compete Are we part of it…or do we compete against it?against it?– RadioRadio– TVTV– AudiotexAudiotex– BBSBBS

……And nowAnd now– InternetInternet

In the “Olden Days”In the “Olden Days”

• Experiment

• Value added

• Shovelware content

• Small audience

• Understaffed/overstaffed

• Expenses hidden

• Revenue inflated

A Whole New BallgameA Whole New Ballgame

• ExperimentExperiment

• Value addedValue added

• Shovelware contentShovelware content

• Small audienceSmall audience

• Understaffed/overstaffedUnderstaffed/overstaffed

• Expenses hiddenExpenses hidden

• Revenue inflatedRevenue inflated

• It’s a businessIt’s a business

• Where’s the revenueWhere’s the revenue

• 24-hour coverage24-hour coverage

• Huge audienceHuge audience

• ……YTDYTD

• Expenses scrutinizedExpenses scrutinized

• Double-digit growth…Double-digit growth…

expectedexpected

A Symbiotic Relationship…Still

• Content is KingContent is King

• Advertising pays the billsAdvertising pays the bills

My Hero…Online to the RescueMy Hero…Online to the Rescue

• $1.19 billion industry segment$1.19 billion industry segment• 3% of newspaper company revenues3% of newspaper company revenues• 45% of newspaper advertising growth45% of newspaper advertising growth• ¾ of consumers use the Internet¾ of consumers use the Internet• Local advertisers spent only 2.1% of ad budget onlineLocal advertisers spent only 2.1% of ad budget online• 44% of local advertising went to newspaper sites44% of local advertising went to newspaper sites• 70% from classified categories ofreal estate, automotive 70% from classified categories ofreal estate, automotive

and recruitmentand recruitment

Borrell & Assoc.Borrell & Assoc.

““What Local Web Sites Earn: 2005 Survey”What Local Web Sites Earn: 2005 Survey”

The LandscapeThe Landscape

• People want more and more informationPeople want more and more information– Information seekers - eyeballsInformation seekers - eyeballs

• More and more news is availableMore and more news is available– Information providers - usInformation providers - us

• 24-hour a day information24-hour a day information

It’s All About EyeballsIt’s All About Eyeballs

• Advertisers go to where they can find themAdvertisers go to where they can find them• We are in a position to provide a broader We are in a position to provide a broader

audience combining print and onlineaudience combining print and online• Print circulation declining…or maintainingPrint circulation declining…or maintaining• Online circulation explodingOnline circulation exploding

A Strong 8-5 AudienceA Strong 8-5 Audience

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

12am 2am 4am 6am 8am 10am 12pm 2pm 4pm 6pm 8pm 10pm

Target AudienceTarget Audience

Pages ViewedPages Viewed

Unique VisitorsUnique Visitors

Statesman Web sites AudienceStatesman Web sites Audience

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

AgeAgeMedian age** = 35Median age** = 35

77% are ages 25 to 5477% are ages 25 to 54

Household IncomeHousehold Income60% with incomes of $50,000 or more60% with incomes of $50,000 or more

40% with $75,000+40% with $75,000+

EmploymentEmployment85% are Employed85% are Employed

60% are in Multi-Income 60% are in Multi-Income HouseholdsHouseholds

EducationEducation40% have a 40% have a

College DegreeCollege Degree

* visited statesman.com, Austin360 or classifieds on statesman.com in the “past 7 days”** among those age 18+. total metro = 40 years old

GenderGender52% Male52% Male

48% Female48% Female

Source: 2003 Gallup Poll of Media Usage and Consumer Behavior, Austin MSA

Newspapers…the Information ProvidersNewspapers…the Information Providers

• We have the editorsWe have the editors

• We have access to the informationWe have access to the information

• We have the staff in the newsroom and the We have the staff in the newsroom and the feet on the streetfeet on the street

• We have multimedia…We have multimedia…– PhotosPhotos– ……now Videonow Video

It’s All About AudienceIt’s All About Audience

The Statesman Family of Web sitesThe Statesman Family of Web sites

Source: Sage Metrics, Site Log file analysis

Austin’s Leading Local News and Information Web sitesAustin’s Leading Local News and Information Web sites

• Austin 360Austin 360

– Entertainment, Family Activities, Movies, DiningEntertainment, Family Activities, Movies, Dining

– 2/3 of Austin360 visitors don’t generally visit 2/3 of Austin360 visitors don’t generally visit statesman.comstatesman.com

• StatesmanClassifiedsStatesmanClassifieds

– Austin’s #1 Employment, Real Estate, Auto,Austin’s #1 Employment, Real Estate, Auto,

and Merchandise source and Merchandise source

• Over 28.8 million Page Views / monthOver 28.8 million Page Views / month to Statesman.com sites to Statesman.com sites

• Over 991,000 Unique VisitorsOver 991,000 Unique Visitors (March 2005) (March 2005)

• Over 260,000 Registered UsersOver 260,000 Registered Users and growing and growing

– 78% of registered users do not subscribe to the paper78% of registered users do not subscribe to the paper

– 24% of registered users say they don’t read the paper at all.24% of registered users say they don’t read the paper at all.

Source: Sage Metrics, Site Log file analysis

America’s “Most Wired” CityAmerica’s “Most Wired” City

Source: Scarborough Research 2003, r2-12

% Go To Newspaper Web sites (past week)% Go To Newspaper Web sites (past week)

RankRank Top 5 Media MarketsTop 5 Media Markets11 Washington, D.C.Washington, D.C. 29%29%

22 AustinAustin 23%23%44 BostonBoston 21%21%

33 AtlantaAtlanta 20%20%

55 Seattle/TacomaSeattle/Tacoma 19%19%

% Use the Internet (past 30 days)% Use the Internet (past 30 days)

RankRank Top 5 Media MarketsTop 5 Media Markets

11 AustinAustin 72%72%22 Washington, D.C.Washington, D.C. 71%71%

33 Seattle/TacomaSeattle/Tacoma 71%71%

44 DenverDenver 70%70%

55 San Fran/San JoseSan Fran/San Jose 69%69%

% Bought Items Online % Bought Items Online (past yr.)(past yr.)

RankRank Top 5 Media MarketsTop 5 Media Markets

11 Austin Austin 53%53%22 San Fran/San JoseSan Fran/San Jose 53%53%

33 Seattle/TacomaSeattle/Tacoma 52%52%

44 BostonBoston 52%52%

55 Washington, D.C.Washington, D.C. 51%51%

Austin residents Austin residents are online…are online…

……they buy they buy online…online…

……and they use their and they use their newspaper’s Web sitesnewspaper’s Web sites to get what they want!to get what they want!

Source: Scarborough Research 2003, r2-12

Austin360: The Entertainment GuideAustin360: The Entertainment Guide

Source: October 2004 online survey of Autin360 visitors

• Movies, Music, Family Events, Movies, Music, Family Events, Personals, Dining, Games, and Personals, Dining, Games, and Message BoardsMessage Boards

• Connects with Austin’s active and Connects with Austin’s active and fast-paced lifestylesfast-paced lifestyles

• A recent survey of Austin360 A recent survey of Austin360 visitors said that…visitors said that…

– 85% have broadband Internet 85% have broadband Internet accessaccess

– 60% go to movies in a typical 60% go to movies in a typical monthmonth

– 64% dine out in a typical week64% dine out in a typical week

– 78% went to a a movie, concert 78% went to a a movie, concert or other activity because of or other activity because of Austin360Austin360

– 82% are book buyers (past 6 82% are book buyers (past 6 months) and 81% bought months) and 81% bought recorded music or moviesrecorded music or movies

Source: October 2004 online survey of Autin360 visitors

Newspapers…What We DoNewspapers…What We Do

• Provide contentProvide content– Editorial and AdvertisingEditorial and Advertising

• Create an audience baseCreate an audience base– Circulation (offline and online)Circulation (offline and online)

• Market the audienceMarket the audience

• Put buyers and sellers togetherPut buyers and sellers together

• Sell advertising to support the effort Sell advertising to support the effort (journalism)(journalism)

Same Old…Same Old…Same Old…Same Old…

• We just need to find the successful We just need to find the successful business modelbusiness model

• Our new audience advantageOur new audience advantage– Mass (OK…old advantage)Mass (OK…old advantage)– Content targetedContent targeted– Demographic targetedDemographic targeted– Segment targetedSegment targeted

Let’s Assume…Let’s Assume…

• Journalism schools are assuming the Journalism schools are assuming the futurefuture– EditorialEditorial– TV - videoTV - video– Radio - audioRadio - audio– Internet - multimediaInternet - multimedia

The Internet…Whatever You WantThe Internet…Whatever You Want

• TextText• GraphicsGraphics• PhotosPhotos• VideoVideo• BlogsBlogs• EmailEmail• RSSRSS• MobileMobile

Online Needs to Stand and Deliver…Online Needs to Stand and Deliver…

• Banner adsBanner ads

• SponsorshipSponsorship

• Paid searchPaid search

• Text linksText links

• EmailEmail

• RSSRSS

Let’s Put Advertising into ContextLet’s Put Advertising into Context

• In print – ads with storiesIn print – ads with stories

• Online – ads with storiesOnline – ads with stories– Most effective position – ads in contentMost effective position – ads in content

It’s a Matter of PerspectiveIt’s a Matter of Perspective

• Page viewPage view– How interested are people in what I’m writingHow interested are people in what I’m writing– How much is the traffic worth and are people clicking How much is the traffic worth and are people clicking

away from the content to the adaway from the content to the ad

• ContentContent– News that people are interested in readingNews that people are interested in reading– Product that people are interested in buyingProduct that people are interested in buying

• LoyalLoyal– Reader that comes to our site to read content Reader that comes to our site to read content

regularlyregularly– User that advertisers can sell toUser that advertisers can sell to

How Content Drives RevenueHow Content Drives Revenue

• Homepage Homepage

• GlossyGlossy

• Banner adsBanner ads

• EmailEmail

• Story pagesStory pages

Homepage BannersHomepage Banners

Glossy – Special SectionGlossy – Special Section

Targeted PlacementTargeted Placement

BannersBanners are the Branding and Direct Response vehicles of the Internet. are the Branding and Direct Response vehicles of the Internet.

Advertisers can target specific channel’s based on demographic information Advertisers can target specific channel’s based on demographic information supplied by “user registration”supplied by “user registration”

468 x 60 Full Banner468 x 60 Full Banner

300 x 250 Medium Rectangle300 x 250 Medium Rectangle120 x600 Skyscraper120 x600 Skyscraper

120 x 240 Vertical Banner120 x 240 Vertical Banner

SponsorshipsSponsorships of key sections like Business, Health, Weather, of key sections like Business, Health, Weather, Sports, Music, Events and more…Sports, Music, Events and more…

Owners receive permanent placement Owners receive permanent placement and top billing on all pages within a and top billing on all pages within a section of statesman.com or Austin360.section of statesman.com or Austin360.

An ownership can be a powerful part of An ownership can be a powerful part of any marketing plan.any marketing plan.

Associate your brand with ours.Associate your brand with ours.

Page & Channel OwnershipsPage & Channel Ownerships

Get your ads extra attention with Get your ads extra attention with animation and videoanimation and video

Rich Media AdsRich Media Ads

Flash ads provide Flash ads provide action and sparkleaction and sparkle

Ads with embedded videosAds with embedded videos

Newsletters & Special Offer EmailsNewsletters & Special Offer Emails

• Email Newsletter SponsorshipsEmail Newsletter Sponsorships offer offer the opportunity to put your message the opportunity to put your message into a daily email for one week which into a daily email for one week which allows for repeated frequency of your allows for repeated frequency of your message.message.

• Newsletters*Newsletters*Weekend Best Bets – 28,000+ subscribersWeekend Best Bets – 28,000+ subscribersDaily Headlines Daily Headlines – 22,000+ – 22,000+ subscriberssubscribersLonghorns Longhorns – 21,000+ subscribers– 21,000+ subscribersAfternoon Updates Afternoon Updates – 25,000+ – 25,000+ subscriberssubscribersLegislative Special Legislative Special – 17,000+ – 17,000+ subscriberssubscribers

Seasonal NewslettersSeasonal Newsletters• Legislature, Tour de FranceLegislature, Tour de France

• ““Special Offers” advertising to Special Offers” advertising to newsletter subscribers who have opted-newsletter subscribers who have opted-in to receive advertiser messages in to receive advertiser messages – – 69,000+ subscribers69,000+ subscribers

*January 2004 average

Oops…Let’s Not Forget…ClassifiedsOops…Let’s Not Forget…Classifieds

• Number one in revenueNumber one in revenue

• Number two in trafficNumber two in traffic

Let’s not forget…Let’s not forget…

It’s content tooIt’s content too

The Top Local Sales Sites …The Top Local Sales Sites …Statesman.com is where Central Texans go to shop online for Statesman.com is where Central Texans go to shop online for Autos, Homes, Jobs, and Classified merchandise.Autos, Homes, Jobs, and Classified merchandise.

The metro’s most extensive and most popular listings.The metro’s most extensive and most popular listings.

Statesman CarsStatesman Cars

Statesman JobsStatesman Jobs

Statesman ClassifiedsStatesman Classifieds

Statesman HomesStatesman Homes

The Local Marketplace…AlmostThe Local Marketplace…Almost

Monster, Trader.com, craigslist, ebay, etc.

Are we tipping the scale?Are we tipping the scale?

A real world example – A real world example – Radio and TVRadio and TV

It’s a Balancing ActIt’s a Balancing Act

ContentContent

• How much content do we put online and How much content do we put online and whenwhen– Does online content take away from the print Does online content take away from the print

product?product?– Does online content enhance the print Does online content enhance the print

product?product?– Are we building readership?Are we building readership?

• Are circulation numbers going down?Are circulation numbers going down?• Are registration numbers going up?Are registration numbers going up?

• Citizen journalism???Citizen journalism???

AdvertisingAdvertising

• Is the advertising value added?Is the advertising value added?

• Is it incremental revenue?Is it incremental revenue?

• Are advertisers spending more money Are advertisers spending more money online?online?

• Are they decreasing their print spending?Are they decreasing their print spending?

• Are the dollars they spend online equal to Are the dollars they spend online equal to the dollars they spend in print?the dollars they spend in print?

CirculationCirculation

• Are we gaining a new audience?Are we gaining a new audience?

• Are we losing the one we currently have in Are we losing the one we currently have in print?print?

• Are we reaching a new demographic?Are we reaching a new demographic?

• Aren’t we really talking about readership Aren’t we really talking about readership (eyeballs)? (eyeballs)?

Bottom LineBottom Line

• 35 employees35 employees– 11.5 content (journalism)11.5 content (journalism)

• 260,000 subscribers and growing260,000 subscribers and growing

• 28.8 million page views and growing28.8 million page views and growing

• 2004 – 30%+ revenue growth2004 – 30%+ revenue growth

• 2005 – more of the same2005 – more of the same

At the End of the Day…At the End of the Day…

Our future and our jobs depend on Our future and our jobs depend on our success…and our ability to our success…and our ability to

“figure it out”“figure it out”

Oh…Right…Oh…Right…

The Answer to the Question…The Answer to the Question…

Yes!Yes!