Report indicates profits for online news publications

ZURICH: A report by The Interactive Publishing GmbH consultancy provides good news for the online news services still standing after the dotcom bloodbath.


IP Zurich Report: "Interactive Publishing Industry Europe 2003 - 2005" by The Interactive Publishing GmbH consultancy, analyses the comments of 20 industry "thought leaders" who gathered for two days of meetings in Zurich, Switzerland, in mid-January.

The findings include

- A business model will emerge for online news operations that works, and makes money.

- The industry will fairly quickly begin to tap its revenue potential. (Sites are current tapping only 20-30 per cent of their revenue opportunities, the group estimated.)

- Media-company top management ranks will see a swift change, with traditionalists replaced by executives who understand how the Internet fits into the big picture.

- Advertising will remain the dominant online revenue source, with paid content supplementary.

- Most pure paid-content models on the Web will be shown to be failures.

There was a strong belief that news-media companies are about to see a wave of new executive appointments. Many existing media-company top executives remain mired in offline-media-first thinking, but this group felt that these people are on their way out in the next two to three years -- replaced by individuals from the online generation, who have spent their media-industry careers working in the Internet era.

"No more page impressions!" That's one of the stronger messages sent by the Zurich online leaders in the area of advertising. While the ad industry wants and needs improved metrics to assess online performance, news website leaders say that other ad-sales techniques make more sense in the long run.

Fattal, from the Israeli newspaper Ha'aretz, reported success in selling fixed ad spots by position and time posted on the home page -- advertisers pay a fixed sum regardless of how many ad impressions are served. Models that are closer to newspaper or television ad metrics -- where branding reach is of higher importance that specific ad-clickthrough numbers -- may be in order.

Online publishers need to become more adept at selling themselves to the ad community. They need to lobby and create awareness about the numbers they are getting to their site. They need to increase revenues by developing the market and also to increase the share that content providers take, as opposed to, for example, the portals.

Online publishers also need to educate advertisers about the damaging effects of pop-ups and other intrusive ad spots.

Further the leaders believe that advertising revenues will grow substantially, but at the same time the emphasis on free content will be reduced. The group felt that multiple revenue streams will be critical for future success. A combination of generating new revenue streams and getting better at cost control should create "profitability across the online publishing industry" in the next two to three years.

Publishers also need to tackle problems relating to online news content. These include the fact that it is too general and aimed at a mass audience; it lacks entertainment value; very often it is redundant to what's published in print or broadcast.

The leaders also stressed the need for a more integrated media strategy at news companies -- at all levels, from editorial to advertising, to marketing, to production, to technology.

They particularly emphasised the need for integrated sales departments, and think that there will be progress in the area of print sales people selling online placements as part of cross-media advertising deals. Within this two- to three-year time frame, advertisers will begin to get the message that "online and paper together reach a much more interesting critical mass than paper alone."

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