The No. 1 method used by newspapers to make money on the Internet is to add a surcharge and post their print classifieds to the Web - but are we getting as much out of online classifieds as we should? Below are some revenue enhancement ideas.
It's important to note that posting classified liners to the Internet has been very successful. For most papers, these surcharges amount to 50 to 100 percent of their online revenue.
Readers and advertisers like classifieds on the Internet. Typically, 25 to 30 percent of a newspaper's web traffic is recorded on classified pages. This means the online classifieds are a marketplace.
Once newspapers establish themselves as an online marketplace, competitors have a hard time establishing online products. Although many local Internet Service Providers (ISPs) tried to get in the classified business, few gained much traction if the local newspaper offered a good product.
Some radio stations - especially those owned by Cumulus and Clear Channel - have successfully launched online specialty classified products, usually for employment and auto listings. Those efforts have been beaten back by newspapers that make aggressive efforts with these "vertical" classified products.
Some newspapers have added classified display ads to the mix. (With TownNews.com technology, classified display ads are made searchable right along with the classified liners.) This technology is especially appealing for auto, employment and real estate ads.
This technology does double duty as well - competitors are blocked and revenues are increased.
Some newspapers are looking at other ways to get more revenue out of their online classifieds.
The first place to look is rates. Typically, newspapers added $1 or $2 per classified liner when the paper first began publishing an online edition. Since the first day of publishing online editions, most papers have seen huge increases in Web traffic - but may not have raised rates.
Here are a couple of options to look at:
1. Many papers charged the $1 or $2 surcharge for a week on the Internet in addition to one insertion in print. Some papers are adding the surcharge for EACH DAY the ad is on the Internet, with a one or two-day minimum. Thus, seven days on the Internet would mean a $7 surcharge.
2. Some papers are now bundling print and online and allocating a percentage of the total (typically 3-5 percent) for online. The growth in online circulation helps justify overall classified rate increases.
3. NH.com - published by Telegraph Publishing Co. - UNBUNDLED print and online last January, and charged more for the Web. New Media Manager Kathy Schwartz said she budgeted for a 35 percent take-rate, but achieved a 60 percent take-rate in the first quarter. She said she expects to reach a 75 percent take-rate this quarter. "We switched for the … ability to charge more; add products to up-sell (…web photos and Web Plus Text); and create a value both inside and outside the company for online classifieds."
Schwartz told the New Media Federation message board: "I was very nervous about giving up the ‘guaranteed' revenue but would not bundle again if asked to."
I would be careful about unbundling, but newspapers ought to look carefully at offering additional classified web up-sells.
Unlike print, it costs the paper nothing more to run more words or include photos with classifieds online.
Online classifieds have credibility. With little cost, newspapers can offer advertisers many options - photos, extra text, email links, web page links and searchable display ads, Top Jobs, Top Cars, Top Homes, etc.
Newspapers typically own both the print and online classified marketplaces. Papers historically have "leveraged" their ownership of the print classified marketplace.
Now may be the time to leverage their ownership of the online classified marketplace.