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Pay-for-Inquiry Ad Model Gains Modest Traction at Newspapers

Publishers Emulate Pay-Per-Click, Experiment With Move Away From CPM Model With Campaigns for Marvin, DirecTV

By Published on . 3

NEW YORK (AdAge.com) -- Newspapers' resistance to pay-per-inquiry advertising may be beginning to crack a little for an industry beset by recession, digital competition and other changes. Just last Monday, East Bay Newspapers in Rhode Island began running ads for a local Marvin Windows distributor that won't earn the publisher a dime unless potential customers pick up the phone.

It's an experiment, according to East Bay president and publisher Matt Hayes, but one well worth trying particularly amid growing competition and a very difficult economy. "I have a sense we're not in the same position we were, to command guaranteed prices whether or not we performed," he said. "My feeling was we as a newspaper company needed to offer an option to the appropriate businesses that would emulate what they're getting from an electronic source."

"If you get a response, you're going to pay," Mr. Hayes added. "If you don't, you don't."

Marketers have long been able to secure radio, TV and internet ads whose price depends on how many consumers respond to those ads, but newspapers have almost completely frozen that approach out. It was harder to execute in print but also less welcome among publishers, who didn't want to undercut their existing sales model.

Introducing pay-per-inquiry ads might undermine the standard CPM model, in which rates are set against simply reaching a thousand readers, Mr. Hayes acknowledged. "Absolutely, it may," he said. "But if I'm right and this works to the degree I think it will, our CPM will be 25% higher than we'd be charging for the same advertising at a flat rate."

More newspapers, including The Christian Science Monitor's print weekly and papers owned by Heartland Publications, are running pay-per-inquiry ads supplied by an online marketplace called MediaBids.com. Marketers that have run pay-per-inquiry ads in newspapers using MediaBids include DirecTV, Vonage, LifeLock and ProFlowers.

"Pay-per-click online advertising opened up a Pandora's Box that's tough to shut," said Jedd Gould, president of MediaBids. "If you want to compete with the Googles and Yahoos of the world, you have to play their game."

Mixed signals
Lynn McLamb, publisher of Heartland Publications' LaGrange Daily News in LaGrange, Ga., said the system was delivering dollars from marketers that Heartland hadn't seen before. "These are advertisers that as a general rule don't spend money in print," Ms. McLamb said. "We tested it in two markets, thought it did pretty well and decided to launch it companywide."

At the Christian Science Monitor, which has been running pay-per-inquiry ads via MediaBids since last spring, it's more a production tactic than an ad-revenue strategy. "We had a drop-off in advertising, so we had a certain amount of advertising space that needs to be filled," said Jim Woodward, ad-operations manager for print and online at the Monitor. Sometimes that space goes to public service announcements, but other times it goes to per-inquiry advertising.

"It's a new deal that people are starting to look at," said Al Cupo, VP-operations at the Suburban Newspaper Association. "I think that it will be something that will gain traction -- completely depending on the mind-set of the publisher."

Media buyers are definitely hoping to open more publishers' minds. "Their advertising model is being challenged right now so I'd be looking at a lot of different models," said Steve Friedman, managing director at Halogen Response Media, part of Starcom MediaVest. "Their revenue is going down, their perception as a viable advertising medium is being diminished and accountable marketing is certainly becoming more and more prominent. Some sort of pay-as-you-go model should make sense down the road."

Just don't expect a rush from publishers, or much bragging about it as long as there's concern over undermining current rates.

Not Pella
Some observers have suggested Pella Windows, which has been running heavy rotation of direct-response-based ads in national papers, is buying this way. It was the subject of a Suburban Publisher piece, for example, about "the pay-for-performance proposition that Pella Windows is offering." But that program does not include per-inquiry advertising in newspapers, according to Gregory Welteroth, CEO of Gregory Welteroth Advertising, which is executing the program.

In this case, newspapers are paid on a standard CPM basis, he said, but the program includes heavy measurement of the performance of various ad sizes, frequencies, days of week, markets where ads run, sections, and other factors. The "for performance" approach has been a Welteroth Advertising approach for years and isn't specific for any one client, he said. Pella declined to comment.

USA Today, The Wall Street Journal and The New York Times declined to comment, but an executive at one of those papers described rebuffing a major marketer's pay-per-inquiry pitch last year. "When a national advertiser selling an expensive product all of a sudden said, 'Hey, I want to do this with you,' we went, 'Whoa,'" the executive said.

"There's an openness to discuss alternatives and new ides," said another newspaper-industry veteran. "That's what's changed a lot, for an idea that might have gotten rejected out of hand two or three years ago. Now there are people really willing to discuss it. But I think the situations where it might be ideal ends up being a narrow set of circumstances or categories."

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