Newspapers Cope With Ad Slowdown: Hold Back On Inventory And Ad Nets
The NYT weighs in on newspapers’ struggles amid the online ad slowdown and surveys a number of different strategies being employed. McClatchy, for one, says they are decidedly reducing the number of online ad units in inventory. “It is a case where yeah, you could probably sell another advertiser by creating another ad space,” but that would tend to depress overall revenue, says Christian Hendricks, VP for interactive media at McClatchy (NYSE: MNI). The publisher’s Q2 internet revs climbed 12.5 percent, which represents about 11.8 percent of its total ad revs from that period.
—Setting limits: John Frelinghuysen, a partner at Bain & Co., tells NYT that limiting the ads on a page is a good idea. “That high level of unsold inventory often creates a real challenge in terms of sustaining pricing or growing pricing. In most media, especially in television, the traditional model has been that you drive sellout, and that gives you the ability to drive pricing over time.” The piece looks at non-newspaper sites like Weather.com have been doing. Paul Iaffaldano, the general manager of the TWC Media Solutions Group, which sells ads for Weather.com and its sister cable channel, says it holds back ad space daily. As a result of the reduced inventory, Iaffaldano tells NYT that the site’s CPMs have risen 10-15 percent over the last year.
—Avoiding remnant nets: McClatchy is also planning on reducing its reliance on ad nets. Hendricks: “We don’t want to get in the habit of filling every little space we have with remnant.” NYTimes.com is also pulling back on the use of ad nets. Denise Warren, the chief advertising officer of The New York Times (NYSE: NYT) Media Group, says the company sees some value in using remnant ad nets when the site experiences a sudden surge in traffic—such as when coverage of the chaos in the financial markets led to ballooning pageviews recently. Warren: “We couldn’t sell that inventory because we didn’t know it was going to exist, so if we have an ad network we’re able to have all those extra CPM’s.”
Related StoriesPosted In: Advertising, Media & Publishing, Newspapers, Companies, McClatchy, New York Times
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Comments (3)
Oct 13, 2008 6:27 AM
I think we should not really link this particular fall to the economic meltdown only - another important reason is how newspapers handle advertising on their own sites, how they rely on CPM mostly (which will certainly be viewed by many advertisers as a potential loss). There are many things to that and of course the online advertising industry will need serious restructuring but that does not mean every type of publishers will be damaged equally.
Oct 13, 2008 10:40 AM
supply & demand. if you look at yahoo’s media businesses which make far more than aol or msn’s—you will note that they have far fewer ad units that result in much higher yields meanwhile you see folks like CNN Money with Cheerio ads on their top page which has got to be a network.
Oct 22, 2008 9:25 AM
Something is really rotten in “Denmark”. It’s high time newspapers learn from Google’s REAL brilliance—before it’s too late. http://blog.pastramitopublishing.com/2008/10/22/hurting-industries-like-newspapers-should—learn-from-googles-real-brilliance.aspx