In search of opportunities for small to mid-sized newspapers to increase revenue from online content, I have arrived at three critical factors that I believe will lead to success:

1. Identify natural segments within a newspaper site that will have strong appeal to local and/or regional advertisers and create a plan to develop strategies for serving these segments for custom ads.
2. Partner with companies that can enhance the segmentation capabilities based on their data, rather than just relying on the site usage in order to create more robust target segments.
3. Develop platforms and/or partnerships to serve these identified segments customized ads that bring in new advertisers (both locally and regionally) and increased CPM’s.

Through my research done this far, I have learned that most newspapers do not offer any strong online segmentation strategies which garner higher CPM’s in the online advertising arena. According to eMarketer.com, spending on behaviorally targeted advertising is expected to increase 55-63 percent in the next three years and represent over four million dollars by 2012.

Those newspapers that are offering behavioral targeting options are doing so through the resale of Yahoo local data and not through the segmentation of their own users. There are exceptions to this trend, but most of these papers are corporately owned chains in larger markets. McClatchy and Cox, for example, are both strong players in selling Yahoo’s behaviorally targeted local ads. The Kansas City Star is one of the top performers in this category and has begun to use Yahoo technology to segment KansasCity.com users to sell local advertising at higher CPM’s.

The Richmond Times-Dispatch, a Media General entity, and the Chattanooga Times Free Press have developed strong IP targeting options to serve ads based on the readers location. This allows the sites to monetize the 40-60% of users that are NOT in the local market. I will be working with both organizations to learn more about how they accomplish this and the revenue results.

Because small to mid-size papers have less traffic than national sites or larger cities, papers in my target range need to be creative in how they develop audience segments. I have explored and continues to explore potential partners that could assist with this process, including exelate, Quantcast, and BlueKai.

Once a newspaper can create meaningful segments of their users, they need to be able to monetize it. Through my research, I have identified two advertiser targets which would represent new revenue opportunities for news organizations: national/regional companies and small local retailers. Online newspaper sites are not currently attracting substantial revenue from either of these groups.

Regional/National advertisers typically use agencies and/or ad networks to place online buys. Traditional newspapers do not have strong relationships with these organizations and thus are not usually considered for these buys. In addition, the lack of targeting capabilities has hindered this progress. Once sites can segment, more doors can be opened. Newspaper-focused ad networks, such as 3iii Interactive and Centro, are strong partners. I will continue to interview active agency buyers to explore other options to raise the consideration and awareness of local print websites by national and regional advertisers.

I am also exploring avenues to implement self-pay platforms to attract and service small local accounts. Given the monthly spend levels, it is nearly impossible to develop commission structures that adequately reward a sales staff to service these accounts. In addition, small businesses may not have a store-front, making it hard to locate and meet with potential clients. If newspapers can identify and promote a self-pay option which allows local accounts to purchase only those segments based on behavior or location which make sense to that business, new revenue streams will be recognized. According to estimates by Morris Communications, this could be an extra ten percent in retail ad dollars. I am exploring self-pay display systems currently offered by Zedo and Ad Ready.

In addition, I have submitted a proposal to be a part of the NAA MediaXchange annual conference in April. I will be holding a thought leadership panel in February and attending Borrelle’s Local Online Ad Conference in New York in February.