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SAN FRANCISCO-Daily newspaper advertising is expected to show the biggest percentage gain in six years and hit record levels in 1994, but publishers aren't ready to celebrate just yet.

Publishers at the annual Newspaper Association of America convention here last week said they were cheered by an improved economy, strong first-quarter ad results and a projected 6% gain in ad revenues to $33.8 billion for the year.

But most gains have been driven by strong employment and automotive classified advertising, while real estate classified advertising has been weaker than expected. The all-important retail category has been moving forward but in unpredictable fits and spurts.

National advertising for most papers remains stuck in neutral, though some major market papers saw a strong first quarter with airline, financial and telecommunications ads.

"It's not boomtown, but it's sure a lot better than what it was a year ago," said Charles Brumback, the NAA's new chairman and chairman-CEO of Tribune Co., Chicago.

Tribune Co. posted a 9% increase in newspaper advertising for the first quarter over the same period last year. Knight-Ridder recorded a 5% gain. Even Times Mirror Co., which has been suffering with the California economy, showed positive results at the Los Angeles Times and its Eastern newspapers-for an overall 2% gain in advertising for the first quarter.

"People are cautiously optimistic, but no one is bullish because the last five years have been tough," said Dick Harrington, CEO of Thomson Newspapers Corp. U.S., Stamford, Conn. "We've had positive spurts before only to be followed by a disastrous month or quarter."

Advertising has "been inching forward," said John Curley, chairman, president and CEO of Gannett Co. "It's been slow and steady growth for the past 20 months."

Newspapers in 1994 will begin working harder to get national ad dollars. In hopes of improving its less than 5% share of the $80.5 billion category, the NAA in June will launch the long-awaited Newspaper National Network, giving national advertisers and their agencies one-stop shopping for multimarket ad buys.

The network's VP-general manager, Patricia Haegele, and a six-person sales staff will target the automotive, cosmetics, food, beverages, household supplies, package-goods and toiletries categories (AA, Dec. 20, et seq.). A negotiated cost-per-thousand rate will be offered for each customized buy.

"This is a critical time in the newspaper industry," said Nick Cannistraro, the NAA's senior VP-chief marketing officer. "It's maybe our last best chance to recapture lost [national] advertising."

The top 50 newspapers have pledged $6 million in funding to support the network for the next three years. Newspapers pay nothing to join, but a 5% commission will be charged, plus a 3% transaction fee. Non-NAA member newspapers or ones that don't sign a participation agreement pay a 10% to 20% commission.

Nine of the largest newspapers have already agreed to participate, including The Boston Globe, Chicago Tribune, Los Angeles Times, The New York Times and The Washington Post. Others are being solicited now.

"The prospects are enormous," said Jeremy Halbreich, president of The Dallas Morning News, which will participate in the network.

"I think smaller to middle-size newspapers also will benefit, because they were never even considered before as part of national advertising buys because the buying process was so difficult," said George Arwady, publisher of the Kalamazoo (Mich.) Gazette.

Newspapers are also working to be more user friendly to retailers. The NAA is encouraging papers to adopt a standardized advertising invoice by September. Also, it's testing electronic data interchange, an electronic ordering and billing system, with Dillard Department Stores and Fred Meyer Inc. and several newspapers. The Associated Press in September plans to introduce AdSEND, which will transmit print ads digitally by computer from the advertiser or agency to the newspaper.

But even as publishers look toward potential gains in national ad revenue, they must face the coming of the much hyped electronic information superhighway and the new competition it will bring. The publishers were urged to experiment with new electronic products that include news and advertising-though no one has a clear vision of what products will prevail.

"There is no reason in the world newspapers can't be the winner in this $3.5 trillion game," said Tom Peters, best-selling author and management consultant. "But the question is not `Can you?' but `Will you?'*"

"The window to take advantage of these multimedia opportunities is open," Mr. Brumback said. "If we don't act now ... someone else will."

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