Open for Ebusiness
Scott Stines - IDEAS Magazine - July/August 2000

Last month USA Today published an industry study reporting that 52% of U.S. households had an Internet subscription, while only 42% of households had a newspaper subscription. No, the study didn't take into consideration single copy sales or pass-along readership, but lets assume for the moment that Internet households will soon exceed newspaper households.

Now take into consideration that business Internet subscriptions and the percentage of companies doing business online is growing every day. Earlier this year, The Direct Marketing Association estimated interactive e-commerce would reach $84 billion by 2004. That projection, like all others related to the Internet, will likely be increased several times over the next few months.

With these trends in mind, doesn't it make sense that a key business strategy for newspapers, or any business with a future, should be the migration of customer and prospect transactions to the Internet? Easier said than done due to several barriers unique to our industry.

Content Is King

Newspapers initially embraced the Internet as another distribution channel for news and information. We translated our "ink on paper" model to a "text on screen" solution, failing to capitalize on the interactive capabilities of the Internet. A recent survey of 40 newspaper marketers attending an American Press Institute seminar revealed that every newspaper had a consumer web site. When asked the purpose of the web site, 95% indicated it existed to re-distribute news and information published in the newspaper. While every newspaper had a consumer web site, less than 15% of those web sites possessed e-commerce capabilities: place a classified ad, purchase a subscription, etc. Perhaps even more revealing, less than 5% of the newspapers had websites addressing the needs of current and potential advertisers.

Segregation of Resources

The same seminar participants were asked how online resources were organized at their newspaper. More than 85% indicated their newspaper's online resources were in a separate department, division, or in some cases, a separate company owned by the newspaper. Some would argue that this segregation of resources was necessary to focus attention on an evolving media channel. Others would suggest the segregation of Internet resources, combined with the focus on content, has stifled the adoption of interactive e-commerce capabilities and applications by newspaper circulation, advertising, and marketing professionals.

Return On Assets

Public corporations live and die based on their quarterly financial performance. Some argue that consolidation of ownership in the newspaper industry has resulted in a focus on short-term performance rather than long-term value. While most newspapers have invested heavily in online resources, few have generated a return on their investment. While the technology exists for newspapers to acquire interactive e-commerce capabilities, the prospect of having to invest even more money to transition to online transactions does not have short-term appeal. While the Internet provides the opportunity to conduct business at a fraction of the cost of traditional channels, an investment in e-commerce capabilities may not produce the desired impact on quarterly financial performance.

Breaking Down Barriers

It begins by recognizing that as competition increases and operating costs grow, the migration of transactions to the Internet will not only lower long-term operating costs, but will help us address the changing needs and preferences of our customers. What is the value of converting 10% of subscription renewals from telemarketing or direct mail to email? How much can be saved by allowing advertisers to proof ads online? How much more efficient can an advertising sales force be when supported by Internet marketing capabilities? How do customers feel when they can't do business when and where they want to do business? And how long will they wait for us to catch up?

We must align Internet resources so they are integrated with key circulation, advertising, and marketing functions. Internet staff should not be the strangers down the hall, but instead function as day-to-day partners with newspaper marketing professionals focused on increasing revenue and customer satisfaction and lowering sales and service costs. Internet resources should exist to support the implementation of key business strategies, not stand alone, detached from key functions.

Finally, we must take a hard look at how we are investing in Internet resources. Most of the marketing professionals attending the API seminar did not know how much their newspapers were investing to acquire e-commerce capabilities. Worse yet, more than 25% indicated their newspapers were not investing any money to acquire e-commerce capabilities.

One day USA Today will report that more than 65% of U.S. households have an Internet subscription. This will be welcomed news for newspapers investing in e-commerce capabilities today.

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