Tuesday, December 19, 2006

Online tops newspaper job-ad sales

Employers spent more money on Internet recruitment advertising than in newspapers in 2006, making this the first time any of the traditional newspaper categories has been surpassed by the digital media.

The aggregate $5.9 billion expected to be spent this year at Monster, Hot Jobs, Craig’s List and the other online job sites eclipsed the $5.4 billion forecast for newspapers, according to Borrell Associates, an independent market research firm.

If it’s any consolation to publishers smarting over the loss of their historic dominance in this highly profitable category, recruitment revenues this year appear to have gained nearly 6% from $5.1 billion in 2005.

Unfortunately, the brisk market for employment advertising wasn’t enough to overcome the steady inroads that online job sites have made over print in the last 12 years. Unless something changes, the outlook is for further deterioration of newspaper market share, say the analysts at Borrell.

“When the history of Internet advertising is written, recruitment sites will undoubtedly dominate the first chapter,” says Borrell. “In 12 years, these sites have grown from a few job boards to hundreds of niche competitors. Online recruitment now accounts for 25% of Internet advertising.”

The drop to second-place status in recruitment advertising is the first time that online advertising expenditures in any of the traditional newspaper categories – retail, national, recruitment, real estate and auto – have overtaken the amount spent on print.

Recruitment advertising was the largest of the three classified categories in 2005, accounting for 10.8% of the $47.4 billion in print newspaper revenues, according to the Newspaper Association of America, the industry’s trade group. The industry notched $2 bllion in online sales in 2005. The relative importance of the top newspaper print ad categories is illustrated in the chart below.

All the newspaper revenue sources are under increasing pressure. Retail and national advertising have been constricted, respectively, by such things as the combination of major cellular phone companies and the merger of the largest department store chains.

Automotive advertising, which is expected to hit a 10-year low, has been affected by both the financial distress of the three domestic car companies and competition from the online sites that enable consumers to conveniently shop for cars by model, features and price. Real estate advertising could suffer in a prolonged slowdown of the housing market.

Online job sites have been undercutting the historic dominance of newspapers in two ways.

First, they are beating them on price. A job listing on Craig’s List, the cheapest of them all, costs $75 in San Francisco, $25 in New York and is free in Chicago and most other markets. Newspapers accustomed to charging hundreds of dollars for listings can’t compete with those predatory economics.

Second, a growing number of highly targeted sites have outflanked newspapers by becoming the de facto marketplaces for nurses, chemical engineers and even journalists. With ads for everything from accountants to X-ray technicians, newspapers indeed have the broadest array of listings, but they cannot match the depth of offerings possible on sites dedicated to individual professions.

As much as the employment advertising business has changed in the last decade, it is likely to morph even further in the years ahead.

Borrell believes niche job sites will continue to proliferate, putting pressure on not just newspapers but also on the online mega-sites that have siphoned away so much of the market.

It’s also possible that the days of help-wanted advertisements may be numbered, regardless of whether they are rendered in print or pixel.

A growing number of online employment sites are encouraging visitors to add their resumes to databases that the sites rent to employers seeking to recruit individuals who are not actively searching for jobs.

To the degree employers embrace this approach, which would give them access to a far greater population of potential candidates than the typical want-ad can produce, they will divert their recruitment dollars away from ads and into database subscriptions. When job seekers recognize this is a better way to advance their careers, they will stop reading and responding to traditional help-wanted ads.

To compete with the growing trend, newspapers ought to be assembling deep and detailed resume databases as fast as they can. Instead, newspapers to date have attempted to compete with the potentially endangered online Monsters by emulating them.

Gannett, Tribune and Knight Ridder, to their credit, invested in Career Builder, and their efforts actually contributed to the online job-site revenues that overtook print. In an extremely tardy bid to catch up with the big boys, a group of smaller publishers just 30 days ago affiliated with Yahoo’s Hot Jobs.

These palliative efforts, while better than nothing, essentially enable newspapers to compete with the marketplace that evolved over the last dozen years. Optimizing these belated initiatives, unfortunately, will not necessarily equip publishers to compete effectively with the recruitment market of tomorrow.

If publishers want to remain major players in recruitment in the future – and they can’t afford not to be – then they need to get ahead of where they are today. If not, the growing number of resumes filling the Internet may include their own.

Saturday, December 16, 2006

No gut, no glory

With the traditional media facing unprecedented change, many increasingly desperate practitioners are seeking the magic that will enable them to reclaim the economic and cultural dominance they previously took for granted.

Instead of attending more conferences, conducting more studies, running more surveys and writing more reports, they ought to take a cue from two major media forces who made the news this week: Ahmet Ertegun and Judith Regan.

Though they came from different eras and different backgrounds, the two share a common characteristic: Not just guts, but Golden Guts.

They used their gifted innards in very different ways. But their confidence and intestinal fortitude should be an inspiration to dithering media executives everywhere.

Mr. Ertegun, the founder of Atlantic Records who died last week, vastly enriched our culture and, in no small way, helped advance the cause of racial equality in the United States.

The well-to-do son of a Turkish ambassador the United States, Mr. Ertegun turned his love for jazz and the blues into the foremost record label bringing “black” music to white audiences. The music made him a lot of money and helped erode the racial barriers that had divided the nation since its founding.

Ms. Regan, who was unceremoniously dumped by News Corp. as the chief of her eponymous publishing imprint, was the person who produced the book and TV show on how O.J. Simpson would have killed his wife if he had done so. The public was spared this obscenity at the last possible moment when an increasingly embarrassed News Corp. pulled the plug.

With a pedigree including editorial positions at the National Enquirer and the Geraldo show, Ms. Regan is attracted to controversy like a moth to flame. One successful book she published was entitled “How to Make Love Like a Porn Star.”

Her gift, as Michael Wolff wrote in New York Magazine, is “the natural ability” to project her character as the character of her audience. “To be able to make that leap distinguishes you,” he continues. “What I feel, others feel. What I do, others do or want to do. No doubts, no shame here.”

Although Ms. Regan and Mr. Ertegun would not seem at first to have a lot in common, their careers both reflect a deep confidence that their insights and sensibilities would be shared by a sufficient number of other people to ensure significant commercial acceptance of their work.

In short, they had the guts to trust their guts. That’s the lesson for other media professionals.

Monday, December 11, 2006

Not your father’s UPI

Merriman Smith won the Pulitzer Prize for covering the assassination of President Kennedy, but he was perhaps even prouder of the bruises inflicted by a rival reporter trying to grab the phone he hogged to file the scoop of a lifetime.

On a day when every minute mattered in an era of slow-motion communication, the White House correspondent for United Press International seized the sole radiophone in the press car when he heard shots fired at the presidential limousine ahead of him in the Dallas motorcade. And he never let go.

Although the Associated Press reporter frantically clawed and pummeled Smith as the car driven by a Secret Service agent raced to Parkland Hospital at 60 miles an hour, the mustachioed Unipresser hunkered down and kept filing, scoring a clean beat.

Smith’s achievement is a perfect example of how the need for speed in the old days dominated the news business to such an extent that reporters would lie, cheat, beg, borrow or steal for a scoop.

But that was then and this is now. Nobody's working for Merriman Smith’s UPI. And speed, ironically, is far less important than it used to be.

Today, anyone with a TV or Internet connection can not only tap into an incessant flow of information but also contribute his own two cents through any of the several do-it-yourself media.

If newspapers have a chance at surviving in the future, they will have to stop trying to compete with Matt Drudge, Gawker and the picture-phone paparazzi – and start playing to their own formidable and sorely needed strengths. Those strengths, lest we forget, are the ability to deliver not just timely information, but also factual, fair and balanced reporting that identifies, explains and illuminates complex events.

For all that I have published here in the last two years, nothing has generated a stronger (or more interesting) response than my assertion that newspapers are squandering their increasingly scarce resources by filling their websites with 24/7 flashes about snowball fights, drive-through flu clinics and Christmas light shows at RV parks.

That is not to say it isn't a great thing to be the first to break a big story or that major news developments shouldn't be rushed online as fast as humany possible. But the sudden arbitrary emphasis on producing an all-day stream of trivial bulletins will dangerously devalue both the print and online products by taking time away from the work necessary to produce truly significant coverage.

The primary defense of quickie web coverage comes from folks who argue that any matter coming to the attention of a newspaper, ipso facto, should be published as rapidly as possible. With all due respect, this argument fails to comprehend the profound paradigm shift that has changed everything about the newspaper business.

When Merriman Smith worked at UPI, the problem the wire service solved was hastening the flow of scarce information to the limited number of newspapers and broadcast outlets with the capability to disseminate it. Because the major media had tight and inflexible production windows, late news was no news. And that was bad news.

The problem newspapers must solve today is quite the opposite. With everyone tethered to cell phones, cable TV news, instant messaging, Google News and so much more, consumers are overwhelmed with information every waking minute of the 10,080 minutes in a week.

Far from wanting a greater or faster quantity of information, what consumers need is an improvement in its quality. Newspapers, with their traditional reporting and analytical strengths, are well equipped to help. They can prosper in the modern world in two ways:

:: First, they can organize news and information in well conceived, well presented and coherent print, online and mobile formats.

:: Second, they can deploy interactive systems to give consumers the ability to slice and dice information in the way most useful to them.

With so much to be done, there’s no time for busy work.

Sunday, December 10, 2006

Spot check

Online advertising revenues are on track to surpass radio sales within a year or two, but Google’s seemingly helpful new plan to broker unsold radio inventory could hasten that day by undermining the price of radio spots.

With online ad sales continuing to grow at something like 30% annually, Internet sales are likely to equal or beat radio revenues in 2008 and almost certainly will overtake them in 2009, according to Zenith Optimedia, the marketing strategy arm of the giant Publicis advertising group.

In 2008, says Zenith, Internet and radio sales will be roughly $37 billion apiece, with radio possibly half a billion bucks ahead of online. By 2009, it will be no contest. Online sales of an estimated $42.7 billion will outstrip radio’s projected $39.5 billion.

Zenith’s take on the anticipated realignment of the media marketing mix is illustrated in the graph below. The data originally was published at eMarketer.Com.

In light of the likely trend in radio sales, it is perfectly understandable that broadcasters paid attention when Google, the biggest and most powerful online media company, came up with an idea to help them sell more advertising.

But there’s a catch. If Google’s system to broker unsold spots were widely adopted by radio advertisers, broadcasters would lose control of the pricing and customer relationships that substantially empower their franchises. This would turn them into second bananas, resulting in the consequences previously discussed here.

The radio ad initiative is similar to Google’s efforts to broker unsold space in newspapers and magazines, a notion that poses the same peril to publishers as it does to broadcasters. But the radio plan seems far more sophisticated – and thus far more dangerous to broadcasters – than Google’s rinky-dink fling to date at selling print advertising.

Google’s radio venture started earlier this year with the purchase of dMarc Broadcasting Inc. for $102 million, plus more than $1 billion in additional compensation, if the company performs as hoped.

Here’s how the business works: dMarc peers into the ad-trafficking systems of participating radio stations to identify unsold advertising spots. Then, it sells the excess inventory at discount prices in the way Wal-Mart dumps Halloween candy on Nov. 1.

Google intends to expand the potential universe of radio advertisers by selling spots through the sort of online bidding system it used to auction more than $9 billion in keyword ads in the last 12 months. Google lets advertisers target the day part, geography and radio genre they want for their ads.

When dMarc identifies an unsold 30-second slot meeting an advertiser’s specifications, it sends the radio station the spot previously recorded by the winning bidder. The station airs the spot, picks up some spare change and the dMarc guys close in on their billion-dollar earn-out.

Although everyone agrees it is better to get something, instead of nothing, for a spot you otherwise wouldn’t have sold, some broadcasters fear dMarc’s success could come at great expense to their business.

To the degree the system catches on, they reason, marketers will stop buying advertising from them at full price and start picking it up at discount rates from Google’s ever-growing inventory of unsold spots.

They could be right. Unless Google attracts a significant number of new advertisers to compete for the finite number of spots available through dMarc (which seems implausible), the market could become so efficient that the per-spot price of advertising would come down.

Although advertisers would win by cutting their costs and Google would win by growing its sales, a significant decline in the value of radio spots would be disastrous for anyone owning a broadcasting company.

Maybe this is why the folks running Clear Channel decided to take some of their chips off the table.

Thursday, December 07, 2006

Getting personal

Editors and broadcasters struggling to master cyber-journalism would do well to stop by CNET.Com today to see the effective and affecting way this tech site covered the tragic death of one of its own.

James Kim, a 35-year-old senior CNET editor, perished in a snowy ravine while trying to find help for his wife and two small children, who were trapped in their Saab on a remote road in the Oregon wilderness while driving home from a festive Thanksgiving weekend.

The mysterious disappearance of the family, the miraculous rescue of the mother and children, the desperate search for James and the eventual discovery of his body appropriately made this a big, emotional story. Traffic nearly doubled at the NBC affiliate in San Jose and page views yesterday ran as high as 3,300 a minute at the website of the San Francisco Chronicle, according to the Chronicle.

For all the considerable resources the broadcasters and newspapers rightfully poured into the story, however, they were beaten by CNET’s unfair advantage. CNET had a library full of James on video. And CNET used it brilliantly.

Going well beyond the limitations of conventional news coverage and talking-head TV, CNET produced a warm and witty video tribute to a cherished colleague by letting James be James.

In the moving CNET video, James jokes about the importance of keeping track of your power cord while heaving one wildly over his shoulder into a tangle of wires in the corner. He grins impishly and keeps talking as he accidentally yanks the arm off a robot in the middle of a product review. And there’s a poignant moment when he talks about how much his little girl liked testing a new MP3 player designed for kids. “She didn’t read the user’s manual, either,” he cracks. “Just like her dad.”

The CNET tribute surpasses conventional coverage, because it reflects an intimacy and immediacy that is impossible to achieve in the remote and mediated formats of traditional print, radio and TV coverage.

Although there is enormous continuing value to the classic forms of reporting, the mainstream media need to understand that they are competing not only with each other but also with new forms of instantaneous and emotional expression, including self-expression, that have compelling appeal for their readers and viewers.

Those who can’t or won’t respond effectively and responsibly in this realm are likely to see their audiences shrink and their franchises fail.

The resources aren’t available at any legacy media company to give every story the CNET treatment. And many stories don’t merit it, either. But traditional journalists need to be thinking about new, gripping ways to tell stories without pandering – and the ways to acquire community-produced assets so they can afford to do so.

To the extent it exists, online video at most newspapers today is bleak. Most TV stations run only warmed-over snippets of their already desiccated newscasts. And radio sites apparently haven’t gotten the memo about the moving-picture thing.

Instead of nasal videos of nattering newspapermen or plucky TV anchorettes plugging sleazy drug shootings, mainstream websites need to augment their limited resources by seeking out home-grown video that helps them tell stories and touch hearts.

Why not get videos from National Guardsmen serving in Iraq, sports highlights from high school teams or tributes from families marking a 50th wedding anniversary, a 100th birthday or the loss of a loved one?

The mainstream media can serve their audiences and help themselves by becoming significant contributors, promoters and beneficiaries of the 24/7 worldwide community.

Or, they can watch their franchises go down the tube. YouTube, that is.

Monday, December 04, 2006

Very dizzy busy work

The 24-hour online news desk is the worst idea for newspapers since publishers foolishly decided 10 years ago to put all their valuable content on the web for free.

On one hand, the 24-hour new desk proves publishers can come up with a fresh idea every decade, whether they need to or not. On the other, the concept is a disheartening strategic blunder with the potential to simultaneously degrade the print and online coverage at most newspapers for no discernable gain.

Unlike the online content giveaway, described here as the world’s longest running introductory offer, there’s still time to stop the industry’s stampede to create 24-hour news desks.

With any luck, the resources rescued from this ill-considered initiative could be deployed in a more productive manner. We’ll propose one idea in a moment. First, a bit of background.

The 24-hour news desk, which suddenly has been adopted everywhere from the New York Times to the Des Moines Register, dedicates groups of increasingly scarce reporters to continuously refreshing web sites with breaking news.

It makes sense for the New York Times to update its website if John Bolton quits the UN or for the Wall Street Journal to bulletin the $16.5 billion purchase of Mellon Bank. If these national news sites weren’t freshened for major events, they would become justifiably irrelevant in the era of the 24-hours news cycle.

But there’s no conceivable journalistic or economic reason for a company like Gannett to require its ever-dwindling number of reporters to continuously feed the web such routine stories as the eviction of mobile-home residents in Asheville, NC; a man attacking a game warden with a tree branch in Winneshiek County, IA, or an advance story on the inauguration of the governor of Hawaii that was posted 1 hour and 11 minutes before she was “expected” to take the oath of office.

Quickie web coverage seriously imperils the print product, because these down-and-dirty stories deprive reporters and editors of the time they need to consider – and report on – the major issues affecting their communities. If news staffs thinned by continuing economic cutbacks are stretched even thinner with busy work, who will write the compelling stories that merit the continued patronage of the print product by readers and advertisers?

The industry inadvertently undermined the value of the newspaper by making the decision more than a decade ago to give it away for free on the web. It is a modest consolation that newspaper sites generally present the most thorough, thoughtful and rational coverage on the web. If they start trivializing themselves with fender-benders and mattress fires, who will want to read them?

Quickie online coverage of inconsequential news won’t please traditional newspaper readers or attract the young, restless and wired consumers that newspapers need to sustain and build their multimedia franchises.

If you are wondering what might attract both traditional and new readers to newspaper web sites, take a look at the new city sites just launched by Ask.Com.

By typing in “Italian food” and your Zip Code, you can get a map showing all the restaurants in your neighborhood, as well as detailed reviews, menus and driving directions. In some cities, you can make online reservations, too.

You can locate nearby merchants, clubs and theaters – and even buy advance tickets to a performance. With a few more clicks, you can customize the map to tell your friends who is joining you for dinner, that it’s a surprise birthday party and where to hide in the restaurant.

Almost every newspaper has deeper community information and better reviews than Ask.Com ever will. The technology to index and display this data is easily and affordably accessible.

Newspapers shouldn’t have been beaten at their own game by Ask, the No. 4 search engine. But they were.

Now, Ask – like Google, Yahoo and others before it– is out to sell ads against newspapers in almost every significant local market . How’s that for a quickie news bulletin?

Sunday, December 03, 2006

Bulls, bears and ostriches

Facing historic declines in readership, revenues and profits, newspaper executives could use a groundhog-like critter to help them assay the future. Unfortunately, the leading candidate appears to be the ostrich.

With publishers heading to New York to forecast the future performance of their companies for increasingly skeptical investors, a surprising survey on the eve of Media Week found that the executives of 14 leading privately held newspaper companies believe ad sales will increase by an average of 1% to 2% next year.

Their prediction is surprising, because the authoritative industry newsletter published by John Morton and Miles Groves says this year's decline in print advertising actually will accelerate in 2007.

As detailed in the following table, the Morton-Groves Strategic Newsletter says print ad sales will fall 2% to $45.62 billion in 2007 after dropping 1.7% this year to $46.54 billion. Another year of double-digit online sales will mitigate the impact of falling print ad volume on total industry revenues, but total ad sales still are expected to fall 0.5% to $48.97 billion in 2007 after tumbling 0.4% this year to $49.52 billion.

The bullish – or, is it ostrich-like? – sentiment expressed by the surveyed newspaper publishers also surprised Paul Ginocchio, the securities analyst at Deutsche Bank who conducted the poll. Splitting the difference between the two extremes, Paul believes newspaper revenues will gain a modest 0.5% in 2007.

The disparity among the predictions is understandable, given the many variables roiling the newspaper industry. But the industry's recent track record, as portrayed in the graph below, hardly warrants irrational exuberance.

Starting at the macro level, Miles is concerned about “a slower economy, international uncertainty and stressful energy costs,” adding that “any prudent planning for 2007 should include the prospect of a recession.”

Paul thinks newspaper sales were so dismal in 2006 that 2007 won't look too bad by comparison. He believes retail advertising will stabilize after such seismic shocks as the Macy’s consolidation and the auto sales collapse.

Both analysts are concerend that demand may deteriorate next year for recruitment and real estate advertising.

Despite inroads by the online recruiting sites, help-wanted advertising was reasonably solid in 2006 for newspapers. The success of the Career Builder collaboration with Gannett, Tribune and McClatchy/Knight Ridder has encouraged other publishers to hook up with Hot Jobs or Monster. Thanks to the new alliances, this category, if the economy falters, may trend better than otherwise would be expected.

Real estate has continued to be strong despite the malaise in the housing market, because agents and homeowners hope additional advertising will stimulate slow-moving sales. To the extent that discouraged owners start pulling their listings off the market, real estate advertising could take a dive.

In Paul’s survey, 8 of the 14 the publishers predicted that profits will rise in 2007, thanks to falling newsprint prices, lower energy prices, headcount reductions and economies achieved through the industry’s growing use of innovative outsourcing.

Although the executives responding to Paul’s survey publish papers of all sizes, the group is weighted somewhat disproportionately toward small and medium publications, which typically have been less affected than metro papers by the deep declines in advertising from national and major retail accounts.

The views of these publishers may be affected by the comparative ease to date of operating their franchises in relatively isolated and defensible local markets.

Or, it might be the sand.