by Rob Runett
Runett is NAA’s manager of electronic media analysis.

During the dot-com boom, trade publications and mainstream media outlets lavished all the attention on high-flying start-ups with lots of pep but zero potential for profit. Newspapers’ new-media operations thrived away from the spotlight. When analysts and investors began to punish revenue-poor companies last year—in part, contributing to the current climate of retrenchment—traditional media companies avoided the harsh criticism.

Those days are gone. Acidic press scrutiny once reserved for choking e-commerce sites and ’Net-only publications now spotlights large media companies, which only six months ago appeared immune to the “dot-bomb” syndrome. Each day brings news of layoffs from the likes of New York Times Digital, CNN, NBC Internet Co., The Industry Standard publisher Standard Media International, and others. In unison, online publishing executives extol the positive characteristics of a shakeout. And they’re right: Those who prosper during this tumultuous period of the ‘Net’s evolution ultimately will be regarded as champions. They’ll operate leaner, efficient and more profitable operations, creating value for their parent companies and advertisers.

Looking forward to that moment is one thing; surviving the rugged day-to-day journey, entirely different. Advertisers read the headlines that shout “Media Companies Are Deathwatch Victims, Too,” from industry site TechWeb, and they hear the horror stories: The Industry Standard’s “Layoff Tracker” has recorded 51,408 ’Net-related layoffs since December 1999.

Meanwhile, local merchants, particularly those who still aren’t sold on World Wide Web advertising, must shake their heads and wonder if they’ll get their money’s worth when so many publishers scale back. One member of NAA’s New Media Federation described the phenomenon as a “malaise” that seems pervasive in light of an unsettled stock market and anemic revenue projections.

Some worries are warranted. “I am concerned that the negative Internet hype we’ve been hearing will cause advertisers to be more cautious in Internet spending,” says Michael Romaner, director of online services for Morris Communications Corp. of Augusta, Ga.

Romaner suspects advertisers will cut some types of online expenditures but continue to spend for Internet-specific services. Newspaper-affiliated sites can make money and cement relations with local businesses by offering Web-site development and other services, says Romaner, first vice president of NAA’s New Media Federation Board of Directors.

The cynics who monitor the industry—and the chief financial officers who look for ways to cut expenses—may be surprised to know the good news. KnightRidder.com has aggressive viewer traffic and revenue goals for 2001, “and [we] have every reason to believe we will meet them,” writes Fred Mann, KnightRidder.com regional vice president, in an e-mail. “Local advertisers recognize the power of what we bring to the table and want to be part of it.”

Local audiences want to be part of their local newspaper’s online operations, too. Daily newspaper sites attract more users than other local media outlets in 51 of 81 markets covered by The Media Audit, a syndicated media survey from International Demographics Inc. of Houston. Other studies released during the second half of last year reported similar findings (Presstime, November 2000, p. 14).

It’s time for new-media managers and salespeople to attack the market, regardless of their concerns about advertisers’ psychology. The combination of weakened competition, blockbuster internal and third-party traffic reports, and a multitude of creative bundling opportunities forms unbeatable packages. When they pierce through the bubble of negative hype, newspaper-affiliated sites will attract media attention for all the right reasons.