Local web publishers' never-ending hunt for revenue streams and added value for their advertisers is driving a bigger push into electronic commerce solutions.
This week, two online newspapers, the Orange County Register and the Boston Phoenix, are expected to announce deals with software company Viaweb to offer commerce tools to their advertisers. Last week, Cox Interactive Media also signed with Viaweb to offer targeted solutions in each of its 20 markets including Atlanta, Miami, Phoenix and San Francisco.
"For publishers to enable transactions for advertisers, that's crucial," said Marc Johnson, analyst with Jupiter Communications. "It keeps the advertiser happy, but it also goes beyond what traditional media can do . . . enabling the transaction that closes the loop is the promise of online marketing."
A POSSIBLE ONLINE MALL
Boston Phoenix already has four advertisers using the Viaweb software--two car dealerships, a cigar retailer and a motor supplies seller.
Tony Lucas, manager of interactive media at the Boston Phoenix, said the software allows it to offer not only a sales channel, but also a new service to advertisers.
"The software is simple to use so it offers flexibility too," Mr. Lucas said. "So car dealerships can change things without having to contact me, like when they want to add new cars."
The Boston weekly also is in the process of signing up more advertisers and will eventually create an area to aggregate advertisers, maybe in an online mall or a directory of marketers and e-commerce partners, Mr. Lucas said.
MAKING E-COMMERCE EASY
Peter Winter, president of Cox Interactive Media, said advertisers on the Cox sites are interested in selling on the Internet, but while they recognize the potential, they've also seen the complex marketing and operational challenges e-commerce poses. With software like Viaweb, advertisers get ease of use, cost effectiveness and security, he said. Viaweb maintains the backend transactions within its own secure server to offer privacy and protection for consumers.
David Parker, general manager of the new media group at Viaweb, said these new clients are the first newspapers out of about 1,000 retailers or resellers already using the software. However, he expects the newspaper category to be strong going forward.
"We see newspapers as a strong provider of sites to us," Mr. Parker said. "While the numbers may be small for the next year or so, the potential for growth is tremendous. Newspapers are already positioned with strong relationships with local advertisers."
Viaweb's resellers pay a flat fee to the software company for each site; then the resellers--in this case, newspapers--negotiate fees and revenue sharing with the local advertisers. Newspapers receive a volume discount, depending on the number of advertisers using Viaweb.
Emily Green, analyst with Forrester Research, said local advertisers are starting to realize the opportunities in e-commerce.
"First you had the Spiegel's and J.C. Penney's heavyweight e-commerce [marketers] online and so people are looking at the maturing market and saying `So this is, what, a $1 billion a year industry now. Maybe this is going to be relevant for me', " Ms. Green said. "As the market enlarges, it's not one size fits all anymore."
MODELS STILL BEING DEFINED
While traditional newspaper publishers tend to have well-defined revenue streams such as subscription, newsstand and advertising with fairly steady proportional income, online publishing revenue models are still being defined.
"The eventual mix of revenue streams for online media is going to contain a larger percentage of transaction fees. It's just evolving to be different online. The really aggressive online publishers, the ones pushing hard to make a profit, are exploring lots of different ways to do transaction fees," Ms. Green said.
Copyright May 1998, Crain Communications Inc.