In Cincinnati, Phil Harris has a dream. Scripps Howard’s director of business development for the Internet foresees a day when newspapers serve as clearinghouses for online shopping in their markets.
“As soon as we get smart enough to do it, we’ll have merchants funnel products into a central store sponsored by the newspaper. The newspaper will handle the transactions, do the fulfillment.”
In Minneapolis, Nick Rogosienski has a dream, too. The vice president of interactive media for the Star Tribune wants to “leverage our marketplace position in print to the digital world.” He doesn’t anticipate handling credit-card orders or delivering products. He sees newspaper
e-commerce sites playing the same role as Sunday newspapers—aggregating the information consumers need into an easy-to-use format so they can go to merchants’ sites and make purchases. “We guide and direct, connect buyers and sellers.”
Executives are still dreaming as well as doing 21 months after Presstime’s
February 1999 cover story on e-commerce because troubling realities give them
pause.
•Click-through rates for banner ads have plunged from 4-to-5 percent to 0.3-to-0.5 percent, The Wall Street Journal reported in September.
• Earning a share of merchants’ online sales produced a revenue trickle rather than a flood, and the e-vendor touting that model, Internet Tradeline Inc. of New York City, recently merged with competitor Koz.com Inc. of Durham, N.C. (see story on vendors).
• Online merchants, initially happy with plain-vanilla World Wide Web sites, demand 24-7 tech support, constant updates, creative targeting and other niceties that strain overburdened troops.
• Some merchants devoted time, energy and money to site-building, only to find that existing search engines and directory sites generate few sales, Harris reports.
• Local auctions flounder following the summer demise of auctions.com and Poweradz.com’s Auction Hill. Boston.com initially considered auctions “the best thing to happen,” to the site, as General Manager Lisa M. DeSisto once put it. By this summer, they accounted for about 1 percent of overall traffic (Presstime, July/August 2000, p. S7).
• Swarms of competitors, from traditional media to online city guides to entrepreneurial startups, pitch community Web sites that include e-commerce. In September, eNeighbors of Centreville, Va., proposed an ad-supported site for residents of one Virginia townhouse cluster, noting, “Just as local newspapers provide useful information and subsidize costs through advertising, eNeighbors sells advertising and sponsorships to local businesses in your community.”
Yet a recent survey of 10,000 online consumers in 17 markets found that two-thirds registered awareness of newspaper Web sites; only one-third were aware of competing local city-guide sites. NFO Ad:Impact, a syndicated local-market research-provider in Greenwich, Conn., also found that nearly half of these online consumers, surveyed between January and June, had visited a local-newspaper site, while 16 percent had visited such rivals as Digital City, Lycos Cityguide, Ticketmaster Online-CitySearch and Yahoo!Local.
NFO Ad:Impact estimated that nearly 5 million online users had visited the newspaper sites in the previous 30 days, “almost twice as many as the combined traffic of the local city guides assessed in those same markets.” The researchers estimated that 1.4 million of those users contacted a business, and half of those made purchases online or offline.
Vendors and newspaper executives agree that newspapers’ ability to drive traffic to e-merchants has emerged as a crucial strength, and one that could pay off this year.
Research
firm Gartner Group Inc. of Stamford, Conn., expects the fourth-quarter online
shopping pie to reach $10.7 billion in the United States, up by 65 percent from
$6.3 billion in 1999. The Kelsey Group, a research company in Princeton, N.J.,
projects that 40 percent of all small businesses will have Web sites by the
end of the year, and a third expect to use those sites for e-commerce.
While their concepts have endured some wear and tear, newspaper executives retain a keen interest in this growing business. “We are just as aggressive and excited as we have been all along,” declares Joe McGuire, new-media director of the Journal Star in Peoria, Ill.
Below, a sample of ways newspaper managers are handling online-retail challenges.
The Pottsville (Pa.) Republican’s four-person new-media department, reporting to the advertising director, oversees Web ads, e-commerce and the New Horizons Team audiotex system. NHT’s latest brainstorm, a “c-commerce” print-voice-Internet business directory, aims to facilitate community commerce.
The 30,448-circulation evening daily has six merchants online as part of a community Web site built by Koz at www.pottsville.com. Republican staffers sell e-commerce sites and, until recently, helped merchants set up. “Koz hosts the sites, but we can administer them. We also train the businesses to make changes,” says Charlie M. Trapani, new-media sales supervisor. Following the September Koz-ITI merger, he and his staff were mulling options, including one modeled on ITI’s Point & Shop.
| THE
SCAN PLAN
They are popping out on newspapers like angular tattoos. Cues. GoCodes. JumpCodes. Bar-code symbols now appear in print ads around the world. When mechanically scanned, they link computers directly to Internet sites via software created by the scanner manufacturers. All the code systems also require scanning devices and software installed on users’ computers. This software can build in user data, allowing instant online purchases. As of late September, only Windows-PC users could scan; none of these devices work with Macintosh computers. Another big drawback: No scanner reads the codes of any other scanners. Last May, The Post and Courier in Charleston, S.C., partnered with a local company, GoCode Inc., to blaze a trail along this interactive strand of the World Wide Web. As a test, the paper began printing GoCodes, scannable in type as small as 6 points, in editorial and advertising space. The newspaper gave away about a thousand scanners and implanted the codes for advertisers at no charge. The Post and Courier operates ShopCharleston. net, where many of its advertisers have pages. GoCodes were developed for business-to-business catalogs. The company sells $85 scanners designed for purchase managers placing large orders. GoCode managers see newspapers as a way to get ordinary people accustomed to using scanners frequently, explains Prioleau Alexander, vice president of marketing. The company plans a wireless version and one for Macintoshes. General-consumer scanners will sell for around $35. Eventually, the company plans to sell publishers licenses to create an unlimited number of GoCodes for a monthly fee of $4.50 per thousand subscribers. Licenses will include access to products for the print newspaper, including a daily guide to interesting Internet sites and tailored Net Check boxes with codes linking to sites in categories such as fashion and food. In August, GoCode announced “the world’s first bar-code-based e-commerce purchase from a daily paper.” A Charleston doctor spotted an ad for a florist, sat down at his computer, scanned the code, and was taken instantly to the florist’s page. He again scanned an offer for roses and, without filling out additional information, dispatched the flowers to his pregnant wife. Also in August, The Evening Post Publishing Co. announced plans to expand GoCodes to its other three dailies and seven nondailies. GoCodes’ ability to fit into classified ads was cited by The Gazette in Colorado Springs when it announced in September that it would begin printing GoCodes in editorial and display-advertising columns. Belo of Dallas, on the other hand, is rolling out Cues, larger bar codes read by CueCats, from a hometown company, Digital:Convergence Corp. Wired, Forbes and Parade magazines began printing Cues and distributing CueCats free to readers. Cues debuted in The Dallas Morning News and on Belo’s WFAA-TV Oct. 1; other Belo properties will follow. Television stations display codes and play a tone to alert viewers that more information is available. With Macintosh and wireless felines in development, Eric Rayman, Digital:Convergence senior vice president in the publishing group, says that his company intends to create an audience of CueCat owners big enough to attract advertisers, then license advertisers to create proprietary codes for their ads. Jumptech.com of Minneapolis banks on the popularity of a low-cost, wireless scanner to build a business with newspapers, magazines and catalogs. Dagens Nyheter in Stockholm, News.nl of Amsterdam and ID Systems, a trade magazine, publish JumpCodes. “We are serving the newspaper industry first, not going directly to advertisers. They are significant beneficiaries, but we want to help newspapers build their portals, not generate traffic to ours,” says Mark D. McCourtney, vice president for business development. Jumptech scanners store up to 100 codes for downloading later. Its software enables what McCourtney calls “dynamic personalization” of content. Jumptech has found a warm welcome in Europe, where multiple dailies still compete in many cities, cell-phone penetration reaches 60-to-70 percent, and wireless devices proliferate. “A reader can leave work, have a scanner in a pocket, read short stories and scan the jump code for more information,” McCourtney explains. Online and print critics question the scanner-to-print model as impractical. “Why would we want a device to chain us to our computers?” asked columnist Scott Rosenberg in Salon. Others worry about privacy. Scanning software tracks what sites users click on, though company officials claim they will not aggregate or sell personal data. Scanner executives voice enthusiasm about the codes’ ability to take readers immediately to the sites they want. Eventually, Rayman suggests, newspapers “will not buy and sell [e-commerce] sites, they will sell a link between print and the Internet.” |
The Republican home page illustrates the many disparate elements involved in e-commerce. Users clicking on Shop Online go directly to a page linking to merchants’ online storefronts. Those who click on a separate Marketplace button go to a page with hotlinks to business news, classified ads, a button to place a classified ad, a business directory, online Yellow Pages, a site for coupons from three local establishments, and a Shop Online Directory that includes the business directory and retailers, and, finally, Shop Online.
Visitors may search by name or category, but some categories contain no local representatives. Before the merger, Koz provided no links to online merchants outside the region. Some banner ads link to advertisers with Web pages but no online stores. From the local hardware-store site, for instance, users can link to a national hardware e-commerce site.
The Republican promotes its Easy to Surf Community Marketplace with ads in the paper, on InfoConnect audiotex lines and via its radio station, WMBT 1530. Republican staffers collect no statistics on e-commerce sales, but one Pottsville business, Matto Cycle, is profiled as a success story in a recent article at www.digitaledge.org/monthly/2000_09/ecommerce.html.
Bud Matto draws customers from around the world with a site he updates weekly and studs with motocross-racing news and photos, chat groups, cycling calendars and hotlinks to supplier sites. The Digital Edge reports that his site generates thousands of dollars each month for a few hundred dollars a month in hosting and online advertising fees. Another advertiser, McCormick’s Irish Imports, moves products with Internet contacts, too.
In contrast, Trapani says, A Trimmer Image has found little interest in body wraps and shampoos. The Digital Edge reports that many merchants “concede that they simply didn’t understand the Internet need for organization—for lining up text information, graphics, navigation choices, catalog selection, pricing decisions—even before you learn how to upload and reload.”
Nevertheless, no online merchant in Pottsville’s cybermall has closed, and Trapani continues “scouting prospects that have tangible, easily described products.”
Thousands of people visit Cape Cod every summer, but they usually have only a week or two to shop there. So the Cape Cod Times in Hyannis, Mass. (morning, circulation 46,761), designed www.capecodshops.com, an ITI Point & Shop site, to create more points of purchase for distinctly local items, explains Julie E. Dalton, strategic-ventures director.
Dalton’s department, Cape Cod Online, has a full-time Internet business-development manager, a full-time advertising Web designer and a part-time sales rep who works for a salary and incentives, plus a part-time news Web designer, a full-time online reporter and a full-time editor. Dalton spends 80 percent of her time on Internet business.
In late September, capecodshops.com had 42 stores online and four more about to open. Home-page visitors can click on banner ads, on four buttons that lead to local e-commerce sites, or on the 18 categories of shops that include the hundreds of distant retailers participating in the former ITI network. They cannot access local classified ads from that page.
Under the ITI model, newspapers earned a small share of online sales, but Dalton says that is not why her newspaper entered the business. It was not to gather major ad revenue either, because print advertising remains far more lucrative than online.
“We see it as very big in the future,” she says. “We are in it for market share and because we see it as a service to end users.”
Cape Cod Online draws 1.5 million page views and more than 300,000 users per month, with no retailer dropouts so far. “We average about 50 orders per month,” Dalton reports.
Dalton adds about two stores each month. “We would like to average more, but it is a lot of work.” Explaining e-commerce and producing a spec Web site are harder than creating a spec ad, Dalton says. An advertiser who decides to set up an Internet store must select items to sell—up to 30—and prepare descriptive copy and digital photos; sometimes the newspaper has to send a photographer. Once the prep work ends, getting a site online takes about two weeks.
The proprietor also has to be able to handle credit-card transactions. ITI provided a secure system and the option of dealing with a distant bank for credit-card verification, features that Koz will retain. Users reluctant to put credit-card numbers and passwords on the Internet have the option of calling a telephone number to submit information. Online credit-card sales remain balky. A September Wall Street Journal article reported that consumers query and refuse to pay for 1.3 percent of online credit-card purchases, a higher rate than for mail-order, 0.3 percent, or in-store purchases, 0.1 percent.
The Cape Cod Times has promoted Cape Cod Online with in-paper ads, Web banner ads and even a letter opener. “Next year, we hope to create a four-color leave-behind for advertisers to drop into the bags of tourists,” Dalton says. With a theme of “Visit the Cape anytime through Cape Cod Online,” the Times gives tourists year-round access.
In Peoria, Ill., the Journal Star, another ITI customer, has 16 online merchants at www.pjstarmall.com, a site similar to capecodshops.com. “A few stores do several thousand dollars a month,” reports Joe McGuire, new-media director for the all-day, 68,662-circulation daily. Even the merchants who see less Internet business “get e-mail and phone calls that lead to sales at the brick-and-mortar stores.”
His three full-timers and one half-timer include only one sales executive, making a vendor partner an important cog. Until recently, ITI offered no startup charge and required monthly hosting fees of $99-to-$299 and 5 percent of all transactions, split between ITI and the host newspaper. Koz expects to charge merchants moreŠup to $3,000 per year to run “a fully e-commerced site,” says Chief Executive Officer Linda McCutcheon.
Of course, as soon as a store appears online, competing site-builders such as BigStep, eCongo, FreeMerchant, FrontierStore and GoEMerchant send a barrage of offers to host the retailer for little or no money. For discussion of such rivals, see www.digitaledge.org/monthly/2000_09/ecommsidebar.html. As author Dominique Paul Noth points out, merchants may not realize that these deals often carry restrictions on how sites are networked and promoted—and promotion provides a key selling point for newspaper hosts. McGuire says merchants liked being part of ITI’s database of some 200 newspapers. A sale that comes via another paper’s portal “gets them pretty excited.”
McGuire intends to keep adding stores to maintain the paper’s high profile among Peoria’s consumers and businesses. “We want to be top-of-mind as far as online buying goes,” he explains. “We are making money, but not a lot. We look at this as a long-term project.”
He planned a major late-October campaign involving cable-television and radio commercials supporting online and newspaper ads, all funded by the Journal Star.
Based on his experience, McGuire offers merchants four rules for successful e-tailing: “You must have shippable merchandise. You must have some online acumen—be familiar with going online and having an e-mail account. You have to be credit-card enabled. And you have to be able to afford a nominal hosting fee.” It also helps, he adds, to have an unusual or exotic product.
In Minneapolis, Rogosienski urges all local businesses to set up Web operations. “Some are more successful than others, but every marketer has a customer base.” Whether that base is 100 customers or 100,000, the Star Tribune wants to manage campaigns for them.
Rogosienski heads a 60-person division that runs Startribune.com and everything related to it, including the Webdale shopping page at www.startribune.com/shopping, built by ITI. Its name parodies brick-and-mortar malls like Eastdale and Northdale, and the site boasts some user-friendly features.
The shopping page displays links to classified ads, including the national cars.com site; almost three dozen local e-merchants; the 800-store network built by ITI and now part of Koz.com; shopping and travel e-mail newsletters; contests; fashion news; and consumer-information sites such as Good Housekeeping and the Better Business Bureau.
Yellow Pages have moved to a separate site that invites consumers to post comments about their experiences with individual businesses. Not surprisingly, some advertisers resist this innovation. “What if someone says something bad? We tell them that is going on everywhere,” Rogosienski reports. “If you provide bad service, people talk.”
The Star Tribune’s Wordofmouth.com service, also rolling out to DenverPost.com, gives advertisers a place to respond online to negative messages and even get in touch with dissatisfied customers, something they cannot do with a whispering campaign, Rogisienski points out. “Our more progressive customers see this as a good way to get feedback,” he says. “Others see it as a threat.”
Ask Rogosienski whether the Star Tribune makes a profit on e-commerce, and he responds, “That’s hard to say. The up-front costs are very low. It depends on how you define e-commerce.” While his numbers show that, in August, Webdale garnered 23 million page views and 1.4 million unique visitors making nearly 4.5 million visits, e-commerce transactions were “not worth it to track.”
Rogosienski
and his staff study targeted e-mail newsletters, ponder the best use of their
growing database of contest participants, and explore the realm of “permission
marketing,” or making use of consumers who have volunteered information
indicating their interests. Other elements of the ultimate e-commerce
site will involve links to content and possibly bar codes. When scanned by consumers,
they link to retail sites (see story, p. 53).
A year ago, The E.W. Scripps Co.’s interactive-media division rolled out a custom-software application, ScrippsCommerce, to help its newspaper and television properties build individual electronic marketplaces. Some Scripps papers, such as the Knoxville News-Sentinel (morning, 118,212) and Naples (Fla.) Daily News (morning, 62,427) had already pioneered successful and profitable e-commerce sites with ShopSite from Open Market of Burlington, Mass. Scripps’ category TV and syndicate Web sites were bringing in revenue, too.
The ScrippsCommerce template, built on an Oracle database, gives publishers and broadcasters more options. So far, seven of the company’s 22 dailies and four of 10 TV stations have adopted ScrippsCommerce, reports Harris.
One typical site, www.shop-abilene.com, is run by the four-person new-media department of the Abilene (Texas) Reporter-News (morning, 38,740). The home page lists a mall directory of 22 categories with check-off boxes, a button that reveals a list of 15 online stores, featured specials, and a site for chamber-of-commerce members. “We build the stores and the advertiser has the option of maintaining it or having us do so,” explains Danny Reagan, new-media director.
Using ScrippsCommerce, Scripps outlets have put some 300 stores online, but the company does not plan a national portal. Harris finds that some retailers want to maintain and update their online stores themselves, while others pay the host newspaper to perform such chores. Revenue sharing has not proved popular.
“It’s another percentage off the profit,” Harris notes, and tough to sell to shopkeepers who get only 15 or 20 online transactions per month. They also struggle with Internet credit-card verification, inventory updates, delivery and customer service.
With
all these challenges, some Scripps papers have experienced e-tailer churn. Few
consumers place online orders for “toiletry items, things that you go to
the store to buy on a regular basis,” Harris notes. Unusual products or
items of interest outside a local market—like the University of Tennessee
sports memorabilia that has made the Knoxville News-Sentinel site a hit—provide
the best candidates for Internet sales.
“Retailers have such limited budgets, they don’t want to promote online,” Harris says. “There is no mechanism to drive traffic.”
As his vision reveals, he sees newspapers occupying a much larger position in e-commerce than they have in the brick-and-mortar world. “Our core competency is changing,” Harris says. “We need to play a more critical role in transactions.”
In addition to the challenges mentioned above, publishers struggle to create one, seamless, searchable, e-commerce model that encompasses:
• Online directories and Yellow Pages offering general infor-
mation about stores and businesses
• Classified ads with timely items for sale now
• Banner ads
• Local-store sites offering a limited number of products online
• Distant store sites that require shipping
• Consumer news and information.
Such integration seems elusive.
“We have a lot of things slapped together,” complains Rogosienski.
“We have failed miserably in every business directory we have tried,” Harris concedes. Banner ads present opportunities that merchants could take better advantage of, he notes. Instead of simply linking to a Web site with general information, a banner ad could link to an online version of a store’s print-display ad, complete with specials.
Ad reps at the Naples Daily News experiment with this at www.goshopnaples.com. Buttons on the home page link to categories such as restaurants and bars. Within each category, the ads rank advertisers that offer Web sites, e-mail and coupons; those with Web sites and e-mail; those with Web sites or e-mail; and those with links to digital copies of print ads. Visitors search the home page by categories or key words and a direct link to e-commerce sites. One daily “featured business” has a link from the home page to its print ad, Web site and e-mail address.
Online auctions, “absolutely will revive,” Rogosienski insists. “The question is how.”
One possible step: Morris Communications Corp. of Augusta, Ga., has allied with Nescrow Technologies Inc. of Mission, Kan., provider of integrated purchasing and fulfillment for online sales, such as auctions.
Meanwhile, another contender for digital buying and selling emerges: wireless mobile devices that could provide what has been dubbed m-commerce. NAA is compiling a directory of newspaper wireless
services to kick off a presence in this field.
Publishers are testing e-commerce at several hundred dailies, but no one has an exact number of sites. As a first step, every newspaper must become “e-commerced,” says Peter M. Zollman, principal of Advanced Interactive Media Group LLC in Orlando, an independent consulting group. This means:
• Offering print newspaper subscriptions online with credit-card payments
• Marketing online advertising
• Promoting online services in print ads
• Selling classified advertising over the Internet with credit-card payment
• Offering front pages from special events or special dates, or as commemorative gifts
• Providing editorial content from the paper or other sources
• Making archives available
• Posting the annual community or progress edition
• Selling hats, mugs and other tchotchkes
• Providing Web development and hosting services.
But Ruth Niermeier, new-media director at the Princeton Packet in New Jersey, takes issue with that last recommendation. After four years of ever-mounting expectations and demands from retailers, she recently decided that providing Web sites is outside her staff’s core competency. For one thing, her company’s server cannot provide 24-7 service. She now urges retailers to register their own URLs and recommends outside Web-site developers.
Niermeier wants an integrated e-commerce presence, where a search through the classified ads, for instance, will bring in related ads and hotlinks to simple but pertinent business-directory pages. Niermeier supports the view that newspapers must establish a niche in the online-retailing universe. Rather than a vision, she says, “I see light at the end of the tunnel.”
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