Insider Chatter by Donna Bogatin

” Advertising will pay the way” on the Internet, Viacom and CBS Chairman Sumner Redstone reconfirmed today at a New York City conference. At the same time, the New York Times attested to the power of ad-supported online media, at another NYC conference.

Nevertheless, NY Times $10 million Free News Bet NOT a Sure Thing I headlined when the old gray lady knocked down its pay wall. The GM of NYTimes.com suggested same this morning, during an Ad-Tech panel on “Publishing in the Digital Age, How Companies Are Extending Their Reach.”

Vivian Schiller began her presentation by sharing just how much the venerable “dead tree media” has extended its reach online since it dropped its fee plans for featured opinion columnists and the archives: Search referral traffic has increased 133%, Schiller said.

Nevertheless, “it is too early to declare victory,” Schiller advised. In other words, the content must be free game–at the cost of $10 million in yearly subscription revenues–is NOT a slam dunk.

Schiller remains bullish, however. Under the TimesSelect regime (which represented about 10% of content), direct navigation represented approximately 55% of NYTimes.com traffic, search referrals about 45%. Since opening up “opinion and archives,” search referral traffic has “tripled, quadrupled,” Schiller said.

For the NYTimes.com, online subscriptions and direct navigation is akin to “appointment viewing”; Share of such traffic has decreased, as search referral traffic increased.

Schiller extolled the New York Times brand and the quality of audience it delivers to its advertisers. During the Q & A, I discussed how overall audience quality is impacted by the new influx of search referred traffic.

I asked Schiller:

1) As search referred traffic outpaces direct navigation, how will advertisers react?

2) Are CPMs lower for search referred traffic versus direct navigation?

3) How does NYTimes.com deal with fickle search referred visitors who sometimes don’t even finish the clicked-on story, let alone browse other areas of the site?

NYTimes.com advertisers are pleased with the greater access to a higher number of monthly uniques representing new, diverse demographics, Schiller indicated. Moreover, CPMs for advertising at NYTimes.com are not based on source of visitor origination, so CPM dilution is not a concern, according to Schiller.

Schiller acknowledged that average, overall time spent at NYTImes.com will decrease as the percentage of search referred traffic grows. The site is subject to the typical 80-20 rule, whereby a small number of loyal users drive a large portion of revenues, Schiller indicated.

BUT, if it is too early for the New York Times to “declare victory” on the “opening up” of NYTimes.com, it may also be premature for the company to conclude that there will no negative impact on CPMs going forward. After all, while the New York Times may not break out traffic by source for ad pricing, advertisers may very well judge the overall audience quality inferior at some point, and subsequently put downward pricing pressure on NYTimes.com CPMs.

In analyzing the New York Time’s future CPM prospects when it announced its farewell to TimesSelect subscriptions, I underscored that as page view increases will be derived from fleeting search engine and link-fueled visitors, it is unlikely that NYTimes.com would be able to continue to command high CPMS as it has been accustomed to with its dedicated readership.

Rupert Murdoch did a silmilar analysis in reporting to Wall Street yesterday on the future prospects for WSJ.com:

The wsj.com, making it free, we are examining the possibilities of doing that. There are a lot of pros and cons. We passed 1 million people now who are paying for it, and getting very, very high cost per thousand for advertising.

On the other hand, if that was to jump to 10 million or 20 million people around the world, it could be a wonderful thing for the brand. We would be selling the ads at a lower cost per thousand but I think we’d be in front.

NYTimes.com has already bet that it will be in front.

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PLUS: YES! Facebook IS Scarier Than Google! AND WSJ.com Beware: Digg Users Plot Paywall Hack

CONTACT DONNA BOGATIN

Did the Berlin Wall just come down? NO! Blogosphere cheering is for the fall of the New York Times online pay wall. NOT all is necessarily good, though, despite blogger glee for more (unwanted by readers) advertising.

You can’t fight city hall, and the NYT can not (almost) single handedly demand that people open up their wallets to consume valuable content online. Nevertheless, all free is not necessarily a slam dunk.

First off, the NYT will lose $10 million in yearly subscription revenues. Naturally, the goal is to offset the loss with new ad dollars. IS IT DOABLE?

Given that the NYT says a principal objective of the open content move is to take advantage of search engine and link induced traffic, ad rates and volume are uncertain.

The NYT opinion columns which will now be available to all are nevertheless not expected to generate “much ad revenue.” What’s more, because search engine and link-generated traffic are generally drive by readers, off to the next off-site click before even finishing a story, flow through to other NYT high CPM content is not a given.

The NYT is not disclosing how much increased Web traffic it expects going forward, or what the projected new ad revenues will be.

Given that page view increases are targeted for the fleeting search engine and link-fueled visitors, it is unlikely the NYT will be able to profit from enhanced CPMs it derives from targeting its lknown, oyal, direct-navigation user base.

Who can argue, though, if an old gray lady finally gets Web 2.0 religion.

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The rumors of the death of newspapers, thanks to Google, have been greatly exaggerated, again. 

Have Google and the wires really “torpedoed” newspapers? If so, Google is late to the news submarine party, as the Associated Press reports itself, at Yahoo:

Yahoo Inc., along with other major Web sites such as Microsoft Corp.’s MSN and Time Warner Inc.’s AOL, have been featuring AP material for years.

What’s more:

Despite Google’s dominance in search, its news section lags behind several other rivals. In July, Google News attracted 9.6 million visitors compared with Yahoo News’ industry-leading audience of 33.8 million, according to comScore Media Metrix.

Google is NOT the root of newspapers problems, newspapers’ ill-advised dependency upon Google is, as I discuss in CNN Declares Google Dependence, BUT Reuters Independence.

MORE GOOGLE NEWS ANALYSIS: Buzz Kill: What Would Google Do? DON’T ASK! and  GOOGLE MEDIA: One-Stop News Empire for Stories, Videos AND Letters to the Google Editor 

PLUS: Google GPay SMS Payments Patent? GCash ALREADY Alive and Well and Google Phone? Six Fun Eric Schmidt Facts About GPhone

CONTACT DONNA BOGATIN

The CNN week that was: WHO needs Reuters? WE need Google!

CNN declares its money is best spent in-house in declaring independence from Reuters news service AND also declares it is fine with sharing its money with third-party vendors, in declaring an ad sales revenue share deal with Google AdSense.

CNN is putting its best news gathering face forward by spinning the Reuters dismissal as a way to achieve “greater control of our editorial product”:

To advantage CNN in the content marketplace and manage the continually rising costs associated with acquired assets, we are making significant investments in our own news gathering while simultaneously reducing our reliance on agency material.

CNN is not sharing what its “news gathering” investments are, however. Reuters has indicated though, that the bottom-line cause for the non-renewal of the 27 year relationship was the inability of CNN and Reuters to come to mutually satisfactory licensing terms. CNN is still retaning Associated Press news services.

If CNN is determined to chart its own fincial destinty, it ought to in-source all of its own ad sales as well. Who needs Google, AdSense revenue sharing that is.

After all, why not embrace “the control and independence needed to protect and extend online advertising revenue,” as Fast Search & Transfer’s AdMomentum, a representative private label contextual ad platform for media companies, exhorts:

As a media company, you know that search and contextual advertising is hte fastes growing online advertising segment. But how can you tap this explosive revenue opportunity when the “big three” dominate search-based advertiisng? Is out outsourcing your only option or can you compete on your own?

“Why shouldn’t you (CNN) be in control of your search and contextual advertising?,” Fast asks, and answers:

Gain Control & Flexibility.  Deliver your own branded advertising experience to advertisers and satisfy them with greater performance and more precise targeting.

Increase Revenue and Profit.  Reap 100% of your advertising revenue and boost profits with a highly configurable revenue engine that supports multiple bid models including auction, CPC, CPM and more.

Exploit Your Assets.  Tune the search relevancy to more effectively exploit your key content assets and increase ad performance.

Syndicate & Expand.  Extend your advertising platform to affiliate sites and alternative channels such as mobile and IPTV.

Perry Solomon, Fast, cut to the chase: after all, what publishers want “another hand in their pockets every time they are selling their ads.”

For CNN, Googley hands are the good ones.

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CONTACT DONNA BOGATIN

Old media is everyone’s favorite punching bag, especially those that believe paid content on the Web is anti-American.

Mike Masnick trots out his favorite old media accusations against old fogies at the old gray lady, offering ”THEY are still a decade behind the rest of US” because THEY just don’t ”seem to understand the basic workings of the Internet.”

Masnick apparently has the defintive handle on “how the Internet works” and is incredulous that the New York Times stubbornly refuses to play by the rules, OUR Internet rules.

The latest NYT Internet faux pas, in Masnick’s play book: “My Times” on NYTimes.com, where “readers can create their own personlaized Web pages.” Masnick concludes his well-researched, detailed, insightful, analytical post– 4 sentences long–with the helpful:

it seems that the people figuring out the company’s digital strategy need to update themselves to the curent decade.

Really? President and CEO Janet Robinson seems to be a thoroughly modern woman AND she has good stats, digital ones.

Robinson to the Newspaper Association of America in June 2007 (sorry, more than 4 sentences!):

As the advertising market has changed, so has our approach to selling. With an integrated print and digital sales staff leveraging our R&D capabilities, we are able to develop robust integrated and creative programs that result in meaningful incremental spending in Times products. An example is our leadership position in mobile. While the marketplace for mobile advertising is still young, The Times leveraged our Mobile.NYTimes.com site with Microsoft, providing it with sponsorship of the site. We went on to provide cross-promotional opportunities with our other larger products, including NYTimes.com and the newspaper. So while many companies struggle to monetize the still nascent technologies of mobile, we were able to build a multi-million-dollar program leveraging the interest in mobile across our entire portfolio.

“How do we plan to grow our digital businesses?” It is a very important question and one that we are devoting a great deal of time to, and it is an area where we are deploying multiple approaches to fully capture the growth potential.

When we presented at this conference last year, we estimated that we would generate $250 million in digital revenues in 2006. This projection proved to be too conservative. In fact, we recorded approximately $275 million in digital revenues. Last year at this time, about 7.5 percent of our revenues came from our digital properties. To date in 2007, nearly 10 percent of our revenues are Internet-related.

Going into 2007, we anticipated that our online revenues would grow at a rate of 30 percent this year. Earlier this year when digital advertising slowed across the publishing industry, we revised our guidance. Nonetheless, we do believe that online revenues will still show strong growth this year and they are up 22 percent year to date May.

Currently the Times Company is the 11th largest audience aggregator on the Web, with 43.8 million visitors in May, up 11 percent from May of 2006. We expect to grow this audience through continued application of search engine optimization to expose our world-class content to search engines and other forms of Internet distribution, as well as new products.

A good example of this is our build out of NYTimes.com’s content areas. Last year we focused on developing our real estate, entertainment and travel sections and these verticals saw page view growth three times the site’s average. In 2007 we are focused on building out NYTimes.com’s verticals in business, health and technology. We are adding more features and functions to enrich our users’ experience, including multi-media, video and more user-generated content, and making them all easily searchable. We have also invested in video, personalization and community tools, and other features to attract new users and deepen engagement with existing users.

In order to leverage our very large audience into these content areas, we are investing in advanced analytics. This enables us to test different presentations of our content and page layout in order to deepen the engagement with our readers. It will also help us optimize both display and pay-per-click advertising placements.

We are also beginning to sell our entire digital audience, across all of our properties, in a coordinated fashion. This provides advertisers with greater reach, better targeting and the convenience of buying all the quality Web sites of the Times Company with one order, one invoice and one report.

And we are finding new ways to generate revenue from our sites through additional ad positions, listings and e-commerce.

YOU GO, JANET!

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CONTACT DONNA BOGATIN

Who says it is not an exciting time to be in the newspaper business? Wall Street Journal veteran Norman Pearlstine is looking forward to the “excitement” a News Corp. Rupert Murdoch owned Wall Street Journal will bring to the business of journalism.

The fireworks may soon be starting: The New York Post is “reporting” a rumor that NYTimes.com will imminently be 100% free online; Perhaps in preparation for prospective News Corp. changes at WSJ.com, the Times aims to dismnatle the for-fee TimesSelect content pay wall.

The timing is fortuitous as online advertising is projected to explode, according to a Veronis Suhler Stevenson report:

The fastest-growing media segments over the next five years will be pure-play Internet and mobile services, branded entertainment, out-of-home media, outsourced custom publishing and public relations. Projected total Internet advertising is $61.98 billion in 2011, surpassing newspapers as the nation’s largest ad medium.

At last week’s American Society of Business Publications Editors conference in NYC, Pearlstine underscored “We are at the dawn of a new age of extraordinary transformation. No one can predict what will happen. Models that have been enormously successful are collapsing all around us.”

The next collapse? Watch out for a crumbling New York Times pay wall.

SEE: Norman Pearlstine ‘Excited’ by a Rupert Murdoch Led Dow Jones

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CONTACT DONNA BOGATIN