Front Page of Journal to Get Ads (NYTimes, 7/19/06)

July 19, 2006
Advertising
Front Page of Journal to Get Ads
By JULIE BOSMAN and KATHARINE Q. SEELYE
The Wall Street Journal calls it a “jewel box,’’ but readers of its front page will know it by its common name: advertising.
The Journal confirmed yesterday the speculation that it would open its front page to advertisers, probably in September, a move that could bring in tens of millions of dollars a year in revenue.
“The Wall Street Journal will provide the most valuable opportunity anywhere in any medium for advertisers who want to reach a large, affluent and influential audience,” L. Gordon Crovitz, publisher of The Journal and executive vice president of The Journal’s owner, Dow Jones & Company, said in an interview.
Mr. Crovitz said that internally The Journal referred to the front-page ad as a “jewel box,” and indeed, it will showcase some of the paper’s biggest, most valued advertisers on some of the most prominent real estate in the print industry, commanding premium rates. The Journal, with a print circulation of about 1.7 million, has the second-highest weekday circulation in the country, after USA Today.
The ad, which can be in color, will probably be more or less square-shaped and run in the bottom right-hand corner. A second option might be a strip ad along the bottom of the page.
The move is one more sign of the relentless financial pressures that have forced newspapers to consider new ways of raising money — like giving prominence to advertisers in areas of the paper once considered sacred.
Because of The Journal’s prominence and adherence to tradition, the decision could be influential. American newspapers ran front-page ads in bygone days, but in modern times, most have not done so.
USA Today, owned by Gannett, has run a strip ad on the bottom of its front page since 1999, and most Gannett papers also run front-page ads.
Last year, The Journal began selling ads on the front of some of its individual sections and on the front pages of its overseas editions.
This month, The New York Times began selling ads on the front of its business section; the paper had already been selling ads on the front of The Metro Section on Sundays and has run small classified ads on its front page for years. In Britain, front-page ads appear in both The Daily Telegraph and The Financial Times (which is also distributed in the United States).
“As a traditionalist, I’m not thrilled by the idea,’’ said Bob Steele, who specializes in ethics and values at the Poynter Institute, a school for journalists in St. Petersburg, Fla. Front pages, Mr. Steele said, should be reserved for what the collective community considers to be news.
“Gannett has changed this equation considerably in the last few years with section-front and front-page ads, and now the Internet has presented a whole new tabletop,’’ he said. “The question becomes, How do newspapers protect their journalistic integrity at the same time they develop new revenue streams?’’
While journalists may grumble about ad creep, Mr. Crovitz said that readers, at least those in Journal focus groups, did not care. “We had a question about how readers would react to the front-page ad, and we were struck by how insignificant an issue it was,’’ he said.
The addition of advertising on the front page means less space for news. Mr. Crovitz said The Journal would keep the same number of articles on its front despite the ad.
With the price of newsprint climbing, many papers are moving to a smaller page size. In January, as part of a $100 million overhaul, The Journal will be redesigned and the width will narrow to about 12 inches from about 15 inches.
It plans to add two or four pages to its average daily run of 54 pages, but will still lose about 10 percent of the space it devotes to news. The company has said the changes will save $18 million a year in newsprint costs.
The New York Times announced this week that it was also moving to a smaller size, in 2008, shrinking one and a half inches in width, to 12 inches. The Times will lose about 5 percent of the space it now devotes to news.
It is unclear what price a front-page ad in The Journal might command. Media planners, who advise clients where to place advertising, speculated that such ads could bring anywhere from $75,000 to somewhere in the low six figures, several times the cost of a similar-size ad inside the paper.
Mr. Crovitz would not comment on the cost of the ads or say who had committed to buying ad space. But, he said, “We are making this opportunity available to our largest advertisers, and that seemed like the fair way to do this.”
A full-page color ad in the national edition of The Journal, if purchased on a noncontract basis, costs $248,060.32, according to The Journal’s Web site. A black-and-white ad costs $193,797.12.
In USA Today, a front-page ad sells for $27,350 in the Monday through Thursday papers, and $33,390 in the Friday edition, which has a higher circulation and remains on newsstands through Sunday.
One media buyer predicted that the space would be highly attractive to any advertiser seeking widespread exposure among an influential, elite audience.
“Everybody’s looking for the beachfront real estate,’’ said Charlie Rutman, the chief executive for North America at MPG in New York, the media agency owned by Havas.
But readers may view the move as an intrusion onto front-page editorial space.
“It’s a two-edged sword,’’ said David Sklaver, president of East Coast operations for the media agency KSL Media in New York. “Sometimes putting ads where readers don’t want them is, in a way, like being spammed.’’
When asked about the new offering, several companies that already advertise in The Journal were noncommittal. “The big question for all of us is, Will the pricing be offset by the return?’’ said Nicholas A. Utton, the chief marketing officer for E*Trade, in an e-mail message.
Another regular advertiser, Mercedes-Benz, indicated that it would hesitate to place ads on the front page. The company often runs a small ad on Page A3, near an ad for Tiffany & Company. “The idea is to be around brands of a similar caliber,’’ said Donna Boland, a spokeswoman for Mercedes. “So I’m not sure that strategy would lend itself to Page 1.’’
And she cited another drawback: “Honestly, I think that would be a really expensive ad.’’

Waiting for the Dough on the Web (NYTimes, 6/25/06)

June 25, 2006
Media Frenzy
Waiting for the Dough on the Web
By RICHARD SIKLOS
NOW and then, an executive whose brain I'm siphoning will turn the tables and pose a question. And lately, I've been getting a few versions of this: "You talk to a lot of the traditional media companies. Who do you think has got this Internet thing figured out?"
That is a tough but very pertinent question, given all the digital hurly-burly of the past decade or so.
Rupert Murdoch and the News Corporation, for instance, get points for their speed and resolve to gain traction online. The company's moves have included the purchase last year of the teenage hangout MySpace.
Robert A. Iger at the Walt Disney Company is notable for being the first to put television shows, his from ABC, on iTunes and then to try streaming them on the Web, supported solely by sponsors.
Time Warner has the AOL paradox on its hands: it owns one of the top Internet destinations but is clouded by the service's daunting business challenges.
Viacom has made some small but clever acquisitions — Neopets and iFilm, for instance — and has a proven record for knowing what young people want and giving it to them on MTV and Nickelodeon.
Among newspaper companies, I'd posit that the Washington Post Company and Dow Jones — and, yes, The New York Times Company — stand out for their online strategies.
And, for cable television channels, CNN and MSNBC seem to have staked out prime real estate online.
But one could make a case that the amount of focus on — and hype about — Internet activities at media companies has some kind of inverse relationship to the amount of near-term revenue they represent for these companies.
We're still in the early innings, but given how much the Internet has already transformed the media and society, it's surprising how little money traditional media companies make directly from it.
Don't take my word for it. Flip through the financial statements of some of the biggest names to see what they say about their Web sales and profits. You won't find separately broken-out figures at Disney, Viacom, or Time Warner (aside from AOL).
Even at the News Corporation, the combined Internet operations, including the increasingly popular MySpace, don't merit being listed separately on the income statement. Rather, the company focuses on seven somewhat old-fashioned "industry segments," including cable network programming, television, newspapers and filmed entertainment. Online activities are lumped into a category called "other," which includes billboard companies in Russia and Eastern Europe, a record label in New Zealand, an Israeli technology company and a business that owns the broadcast and sponsorship rights to the 2007 Cricket World Cup.
In the nine months ended March 31, "other" represented not quite $1 billion of the News Corporation's total revenue of $18.5 billion, and posted an operating loss of $68 million at a company that showed total operating income of $2.84 billion. In other words, the Internet was a rounding error.
Some companies are starting to give glimpses of how they are doing online. For instance, the Tribune Company, which owns dozens of newspapers and television stations, said that digital media revenue would total $225 million this year — or 6 percent of its publishing revenue, a percentage that it said it expected to double by 2010.
Disney's chief financial officer, Thomas O. Staggs, recently told an investors' conference that the company was generating roughly $500 million in online advertising sales across its properties, which include ESPN.com. But this is at a company that, over all, is expected to generate revenue of $34 billion this year.
A while back, I paid a visit to Sumner M. Redstone, the chairman of Viacom, at his home in Beverly Hills. While perusing his collection of saltwater fish — the world's largest such collection, he says — I ran by him my theory that strikingly little money is being generated online despite all the activity among the media cabal. "I'm expecting we'll have a $500 million business in three years' time," Mr. Redstone said. "That may not be a lot of money to you, but it is to me."
So maybe I was being a little cheeky. The optimist's view is that the spoils from this new frontier are still very much up for grabs. Only about 6 percent of all advertising spending in the United States went to the Internet in the first quarter of the year, according to Merrill Lynch. But it was clearly the fastest-growing category — up 38 percent year over year. And PricewaterhouseCoopers forecasts that Internet ad spending over the next five years will more than double globally, to $51.6 billion.
The less-cheerful view of the traditional media companies is that all their online efforts will not translate directly into more revenue or fatter profits. Thanks to aggregators, file sharers, pirates and other disruptors, more value will leak away or be stolen than will be gained by these companies.
THIS is not to say that online will never be an important — if not central — financial contributor to media businesses of all kinds. For some companies, though, it could serve increasingly as a promotional or marketing outlet, or as a cut-rate but widely distributed version of what consumers can buy in conventional formats. (A case in point: if you are reading this on newsprint, the chances are that you paid for it one way or another. If you are reading it online, there is a decent chance that it is coming to you free. But, then again, it didn't cost very much to make it available to you digitally.)
For now, though, the question of who among the media companies has this Internet thing figured out remains open. But at this time of upheaval and gloom about media's prospects, it is funny to think about how much money there is still to be made in the good old offline world.