When Hearst purchased Northern California's biggest newspaper, The San Francisco Chronicle, in August 2000, Bob Cauthorn VP Digital Media, was one of the first execs they brought in to help run the place.
Cauthorn is fairly well known in the newspaper industry as the guy who makes online divisions profitable. In direct opposition to this ethos, the Chronicle's online division SFGate was fairly typical of its time and place. More cash was gushing out than coming in.
Luckily selling online ads was incredibly easy.
"Crazy amounts of money were being thrown at it. The dot-com money was tossed around with a kind of shocking abandonment. We were able to sop up money from people not interested in talking to anything more than a fraction of our audience." (i.e. impressing venture capitalists.)
After a downward lurch in January 2001, in April 2001 the music died.
"It was as if it was a fire hose one second and then a spigot. It just stopped. It vanished." Next most of Cauthorn's ad sales team also vanished in the inevitable round of budget cuts. CAMPAIGN
Cauthorn had a novel idea. Instead of going after the big national advertisers by offering expensive units such as rich media and unusual sizes, why not go after the small local advertisers with low-ball offerings?
Pricing would have to be what-the-heck low to entice locals to try out the new services, which meant sales and production costs would need to be reduced to almost nil to make the ad profitable.
Here are the four new units SFGate tested:
Local Ad Unit #1. Top Jobs: Launched Feb 2001
"I was trying to find areas that traditional media can't attack," explains Cauthorn. "Traditional media can't guarantee they're delivering the passive job seeker. The problem with existing recruitment ads is you only speak to people looking."
His big idea: Why not put job ads on regular site pages next to stories visitors were reading? It would hopefully boost regular page revenues, and classified response rates.
The service was sold by the Chronicle's regular classifieds order takers as $199 add-on to a print classified.
Advertisers got a guarantee that their ad would appear several million times a week on a vertical strip of up to 25 job ads at the side of stories. In order to guarantee pageviews, Cauthorn limited the service to 250 ads per week, broken into ten of these strips.
Ads were tagged by content type, so jobs in healthcare could appear next to health articles if advertisers requested it.Readers could click for more details and forward ads to friends.
Local Ad Unit #2. Personal Shopper: Launched mid-2001
"You can't have your print sales force selling typical banner campaigns, and you don't want them selling rich media," says Cauthorn. "They are best selling stuff that can be easily described and not prone to pageview shortages."
He gave the Chronicle's print sales team an easy upsell. For just $35-$150 a pop, a local print advertiser could have their paper ad scanned in and posted on the site for shoppers searching for their services. Plus, site visitors could sign up to be emailed ads of their choice depending on self-selected topic such as "shoes" and locations such as where they live, work and/or commute through.
Cauthorn figured online readers would like this because studies show about 30% of Sunday newspaper buyers get the paper explicitly for the ads and coupons it contains. "The fact that ads are content is massively misunderstood in the online newspaper industry."
He inspired print sales reps with numbers on how many visitors eagerly sought out these ads.
"We can leverage our print sales force if we look and say, 'Hey, we've got 150 people who want shoe ads in Concord California, and we don't have any. Go sell some because we've got a market of people who say that's important to them.'"
However, perfect production was mission critical because print sales reps were not about to take a risk upsetting a $30,000 account due to a $150 Web ad that was shown upside down or linked to the wrong place. Cauthorn suffered agonies when his first scanning vendor screwed up repeatedly, and made the replacement vendor jump through hoop after hoop before signing on.
Local Ad Unit #3. Self Serve Banners: Launched Dec 2001
Cauthorn realized that many smaller advertisers, such as the corner store or a neighborhood dry cleaners might want to test the site, but didn't have the resources to develop a banner ad.
He added a self-service banner-buying area to the site that is easy for even non-techies to use. It offers about 250 different templates of a standard 468x60 size banner for advertisers to use when creating their own.
Prices started at a couple of hundred bucks a month (expressed on the site as "as low as $7 a day") for run of site ads, which would be shown whenever there was not a scheduled advertiser.
SFGate serves millions of pageviews a month, so the chances were rare that a self-serve advertiser would actually see his or her own ad displayed. Including easy-to-use results reporting was critical for repeat sales. That way people would be assured that their ad really did run.
Local Ad Unit #4. Web Ads Classifieds: Launched June 2002
"With the advent of eBay, an entire class of advertisers who used to turn to classifieds to sell things like antiques no longer turn to us. Plus in the Bay area, there are all sorts of free online classified offerings. We've lost our primacy for some advertisers we formerly enjoyed. For lower end merchandise people are moving their money to other places," says Cauthorn.
He worried the trend might turn into a "classifieds death spiral over time" as readers got used to not seeing for-sale-by-owner ads for things like used bikes, so they did not place them.
SFGate now offers visitors the chance to place classifieds for free. The site notes that some categories, such as wedding announcements and housecleaning services will go paid-only after the introductory period. Most categories offer some enhancement upsell, such as a small charge for adding a photo to your ad.
The print classifieds team already upsell advertisers on including online distribution for "another couple of bucks" to cover admin costs. Soon the online form will upsell back to print, completing the cycle in the reverse.
Categories include jobs, but Cauthorn does not worry this will cut into the pricier employment classifieds, "A restaurant owner doesn't want to spend $75 to hire a dishwasher."
Just as with build-your-own banners, everything is automated. Which was cause for some initial concern. What if people used discriminatory language in a job listing, or posted a sexually explicit ad?
Instead of resorting to expensive filters, the design team added a "Report a Bad Ad" function to the site so visitors could police things.
"I'm pleased to tell you we're making more money this month than we did at the height of the dot-com boom. The site's having record revenues," says Cauthorn. "The split is not unlike normal print, 65-70% is classifieds and the rest various forms of display."
-> Top Jobs is "the money machine." Cauthorn says the program has made, "in excess of seven figures each year" without any creative accounting from the print side.
Readers click like crazy. "There's never been an ad that wasn't opened hundreds of times over the course of a week. Many ads get opened several hundreds of times per day. The average is running 1,400 opens per day, slightly less on the weekend."
However, two of his projections were completely wrong. The forward-to-a-friend feature is not used nearly as much as Cauthorn had optimistically expected. Still, each ad gets forwarded about 1,000 times on average, which is not bad.
Also, it turns out employers were not terribly interested in placing their ads in context next to related industry stories. They wanted run of site. Surprisingly, when SFGate switched Top Jobs to run-of-site, click throughs were not really affected.
"The open rates changed by less than 3%. The message was pretty clear. People are much more general readers than you think. Segmentation really didn't matter with people opening jobs."
-> The personal shopper service has been widely copied by other newspapers online. Cauthorn has spotted 23 now offering it. He says, "More important, both advertisers and readers love it."
-> About 60% of self-serve banner advertisers have returned after their first try to buy again and again. The service is popular enough that Cauthorn's getting ready to also offer skyscraper options and short-term campaigns.
-> Although Web Ads Classfieds launched just six weeks ago "in the middle of the summer, which is the worst time in the world to launch something like this," early indications show the offering will meet Cauthorn's aggressive sales goals.
Out of "hundreds and hundreds" of ads placed so far, readers have reported that only two had problems. "The complaints were not grave, but were more related to somebody posting a job ad requiring to call a 900-number. It's been so much less of a problem than we worried, it's been stunning."
Cauthorn notes that these remarkable successes would not have been possible without the support of the paper's print execs.
He says, "I've got to give praise to these folks. Most of my [online] colleagues face harrowing resistance from traditional media groups.
"I have a happy good relationship with the print side of the house and a remarkably enlightened group of colleagues in print. They understand it's all about the total health of the franchise going forward." Useful links relating to this article:
Vendor Cauthorn uses to republish print ads online:
Vendor Cauthorn uses to automate banner buys online: