All The News That Clicks
Newspapers, radio, TV, and magazines are scrambling to boost their Web presence.
As broadband connections become more widespread, television networks rely on Web video to deliver news to people where and when they want it. Both CBS and CNN recently expanded their free online offerings to viewers, with video clips accompanied by advertisements that cannot be skipped as they can on TiVo. And U.S. News is expanding its own Web offerings, particularly in the areas of education and consumer health.
Even radio is rapidly responding to the changing environment in its own unique way. The growing popularity of portable audio players has created a new market for podcasts, downloadable audio clips, which can come with brief advertisements or sponsorships. "Radio buyers are a lot more savvy than they were three years ago," says Marc Horine, who oversees new media for ABC Radio. "I get questions about podcasts every day now."
Faster Internet connections are allowing more creativity in online ads, which publishers expect will help lure more traditional advertisers online. Those ads that move across your screen and the video clips in the corner may be an annoyance to Web surfers, but they are gold to advertisers. And so far, it seems advertisers and publishers are not concerned about consumer backlash as Web pages become even more crowded and flashy. "Many people say they skim by ads online. On TV, it's time to go make the popcorn," says eMarketer's Hallerman. "It's called ignoring."
While many people ignore the ads, it's the ones who respond to them who matter most to advertisers. And it's not yet known what they are worth to advertisers. Some publishers selling integrated packages want advertisers to pay a flat fee for them, while others insist on charging by the click. Many content providers are still trying to figure out if they should be charging for their material. The New York Times will soon start charging for some of its editorial content, but not all. About the only thing that is certain in the economics of Web publishing is that nothing is certain.
Underpricing. At the Wall Street Journal , which pioneered the art of charging for editorial content and has 744,000 paying subscribers and among the highest online advertising rates in the industry, executives are still trying to figure out how online ads will change as more blue-chip firms enter the fray. "I think the industry is significantly underpricing online ads," says Crovitz. "The traditional laws of economics have not appeared in the online equation in terms of value delivered and value received."
Publishers are pitching advertisers using the specific demographics of their online audiences, with the hopes that a more targeted delivery of ads will lure a new class of advertisers. "Advertisers are used to thinking in terms of cost per click and cost per acquisition," says Caroline Little, CEO of Washingtonpost.Newsweek Interactive. "We have to really walk them through what it is they want to achieve online and how to do it. You can't just take a 30-second TV spot and slap it on the Web."
For many in the ad business, the memories of the dot-com meltdown loom fresh in their minds. They are leery of paying too much or committing too soon. Publishers, meanwhile, are loath to give up on a business model that has served them well for decades. For now, the two sides are jockeying for position--and power--while trying to grab as many of the dollars being tossed around as possible.
OLD MEDIA LEARNS NEW TRICKS
Major media companies have been spending money to beef up their online offerings. A sampling of recent deals:
Media Company CBS
Strategic Move Launching 24-hour, on-demand broadband network at CBSNews.com
Media Company Dow Jones
Strategic Move Acquired online financial site MarketWatch.com for $528 million in January
Media Company The New York Times Company
Strategic Move Bought information site About.com for $410 million in March
Media Company News Corporation
Strategic Move Acquired Intermix Media last week for $580 million; formed Fox Interactive Media division
Media Company The Washington Post
Strategic Move Acquired online magazine Slate.com for undisclosed amount in December; launched dual home pages
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