National ads kick it up a notch

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National advertisers gave newspapers a banner year in 2003, and 2004 appears to be on track to be almost as strong.

Revenue from national advertising grew 8.1% last year to $7.8 billion, according to the Newspaper Association of America. That acceleration topped the gains of both the retail and classified segments. Each of the latter two types of advertising, however, generates at least twice as much revenue as national.

Early indicators that 2004 will be nearly as good include generally strong results in January and February; an uptick in the NAA's 2004 estimated increase, to 6.5%, for national ad sales; and expectations that the Summer Olympics and national, state and local political campaigns will drive some advertising dollars from broadcast to newspapers.

Also in play are efforts by the newspaper industry to make it easier and faster for marketers to buy ads through the Newspaper National Network and Newspapers First, both based in New York.

Knight Ridder, the nation's second-largest newspaper publisher, reported national was up only 1.4% in the first two months of 2004, but its paper in Fort Wayne, Ind., The News-Sentinel, soared past that level with a 49.5% increase.

Many newspapers in smaller markets like Fort Wayne are enjoying big gains since national advertisers are seriously starting to pay attention to them for the first time.

Other publishers in markets long brushed aside by national advertisers, in favor of broadcast ads, reported significant percentage jumps in national ad sales for January and February.

Lee Enterprises, a chain based in Davenport, Iowa, reported a 16.4% rise in national advertising over the two-month period for its group of midsize dailies. National was up 6.9% for Journal Register Co., Trenton, N.J., while its cluster in upstate New York enjoyed a 46.8% jump.

Jim Conaghan, the NAA's VP-business analysis and research, is optimistic, though he admits that two months do not make a year. "I don't see anything that would alter my forecast," he says, citing three categories as expected strong performers-travel, telecommunications and factory automotive. It will be "a more normal year," Mr. Conaghan says, but not a boom year.

not going through roof

"National is doing better, but it's not going through the roof," says analyst Edward J. Atorino, managing director of Blaylock & Partners. Mr. Atorino calls national "a tremendous opportunity for newspapers" in an era of fragmented broadcast audiences and a decline in network TV viewing. But he cautions that national ad buyers face too many hurdles with publishers, such as rate cards that vary by market, an increasingly older readership base and a lack of experience in meeting national advertisers' needs.

"If you're a national advertiser used to moving quickly, newspapers are not your bag," he says.

This year, the newspaper industry sees new sales opportunities.

"TV is under an awful lot of pressure these days," says NNN President-CEO Jason E. Klein, noting that the medium no longer can deliver the huge national audiences of the three-network era.

"We're already in discussions about advertisers who are not looking to spend as much money in the upfront and move money from television to newspapers," he says, referring to the May broadcast sales bazaar where TV airtime is locked up months in advance.

Double-digit growth in newspaper revenue in select national ad categories was common last year, Mr. Klein says, with toiletries and pharmaceuticals up 28%, alcoholic beverages rising 35%, food up 30% and public service utilities (telecom) climbing 24%. NNN revenue exceeded $200 million, but Mr. Klein declines to disclose by how much.

cite 16 categories

A for-profit entity created by the NAA 10 years ago, NNN has a mission of winning over national dollars in 16 ad categories, from food and pharmaceuticals to cosmetics and restaurants.

"We're the developmental arm for the industry," Mr. Klein says. In that vein, NNN has begun selling ads by newspaper section, such as business-to-business in the financial pages, or home improvements in food or home sections. It's all part of what Mr. Klein calls "using the medium properly."

With its one-buy, one-bill access to virtually every daily U.S. newspaper, NNN can create an ad hoc marketing group comprising four papers or 400 papers.

Newspapers First, owned by 14 publishing companies, operates similarly to NNN except it doesn't limit itself to 16 ad categories. The cooperative, able to place ads in more than 40 papers, is also optimistic about 2004.

"I think it's going to be a strong year for the industry," says President-CEO Jay T. Zitz, listing likely top performers as autos, financial, pharmaceuticals and travel. Mr. Zitz also sees good prospects in this election year with advocacy ads, especially in states like California and Texas, where propositions will appear on ballots.

With these two groups, as well as three powerhouse national dailies, all chasing national advertisers, their executives downplay any possible competition among papers to attract the same ad dollars.

looking for high reach

Each of the three national papers-The New York Times, Gannett Co.'s USA Today and Dow Jones & Co.'s The Wall Street Journal-sells a nationwide demographic, Mr. Klein says, while NNN offers "high reach" regionally or across the country.

"You have certain reasons you want to buy The Wall Street Journal or USA Today," he says, "and you also want to get a broader reach using local newspapers. It tends to be far more complementary than competitive."

Mr. Zitz of Newspapers First says: "There doesn't tend to be much overlap [between his group and NNN]. They focus on underdeveloped areas [ad categories], and we try to focus on areas where ads are already being placed."

"We sell brands," Mr. Zitz says, ranging from Knight Ridder's The Philadelphia Inquirer to Freedom Communications' The Orange County Register.

Newspapers First targets ad buyers that are already using newspapers, and advertisers that can be persuaded to shift money out of their spot broadcast budgets. "We've made significant gains in that regard," the executive says.

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