New Ventures Add Value.

B2B initiatives deliver big benefits to the newspaper industry.

THE NEWSPAPER ASSOCIATION OF AMERICA, VIENNA, Virginia, launched its online for-profit venture early in 2001. The Newspaper Industry Communication Center (NICC) and its electronic insertion order system (eio) streamline the ad-placement process, benefiting the newspaper industry, advertisers, and advertising agencies. See sidebar, "Subsidiary Simplifies Vital Process," for a description of NICC.) The online tool enhances NAA's Newspaper National Network (NNN), its first initiative designed to sell national ads in multiple newspapers.

The idea behind both subsidiaries is simple. If technology and customer service can make it easier to advertise in newspapers, the newspaper industry--and association members--could benefit from a potential increase in ad placements. Neither subsidiary is meant to replace or compete with anything that newspapers are already doing. Instead, they are designed to supplement the traditional process of placing ads in the paper.

Through the vision and implementation of its two for-profit subsidiaries, the association is leveraging its leadership position by banding newspaper companies together for the benefit of the entire industry.

Sustaining industry health

A trade association representing more than 2,000 daily and weekly newspapers in the United States and Canada, NAA focuses on six major areas: diversity, industry development, marketing, newspaper operations, public policy, and readership. All of the association's operations ultimately converge to assist newspapers with sustaining the health of the industry.

The staff targets delivery of products and services to top industry executives, as well as line managers in a variety of departments. The goal is to provide members--which account for 87 percent of U.S. daily circulation-with information and activities that improve business.

Capitalizing on the consumer reach of the collective readership of its members, the association helps to strengthen the industry in a way that would be more challenging for newspaper companies acting alone.

Recognizing the role of advertising

Newspapers deliver the world to readers every day in one convenient package, yet consumers pay less for that service than the cup of coffee they drink while reading it. Newspapers are able to do that because of the revenue generated by advertising. Association activities designed to preserve and grow advertising represent a big value-added service for members.

More than $46 billion was spent to advertise products and services in newspapers across the country in 1999, an increase of 5.4 percent over 1998. That growth continued through the first three quarters of 2000, which saw newspaper ad spending grow by 5.6 percent. In addition, nearly 6 out of 10 adults read a newspaper on an average weekday. Obviously, many advertisers understand the value of newspapers, but others are only beginning to recognize how reaching consumers through the newspaper can benefit their bottom line.

As a group, however, newspapers often fall short in selling the benefits of their product to advertisers and ad agencies, perhaps assuming that the value of newspapers is understood. But in today's increasingly competitive media environment, with more ways for advertisers to deliver their messages, the industry no longer can afford to make this costly assumption.

In the midst of this competitive environment, the board of directors of NAA moved purposely to promote the value of newspapers as an advertising medium and to help make newspapers more accessible to advertisers and agencies. The board timed these actions to thwart actual, perceived, or projected downturns in the industry's core revenue base.

Taking the first steps

In 1994, NAA's board voted to establish the Newspaper National Network as its national advertising sales and marketing arm in New York City. The network and its salesforce provide a simplified one-stop shop for national advertising clients, placing ads in any newspaper in the United States, regardless of whether the paper is a member of NAA.

NNN was born in the midst of a recession, when newspapers' share of the national advertising market had fallen substantially. Automotive manufacturers and the makers of packaged goods and food products, toiletries, cosmetics, household supplies, over-the-counter and prescription pharmaceuticals, alcoholic beverages, and soft drinks had almost completely abandoned newspapers. Among the reasons were that advertisers found it difficult to execute multinewspaper buys in markets across the country, and they demanded consistent, high-quality color.

After identifying target categories, NAA leaders designed NNN to focus specifically on increasing national ad placement by offering a network that would provide a measure of uniformity across the industry. The subsidiary added computers and dot-com businesses to its list of target categories in 1998.

Creating a one-stop shop

NNN filled a void that could not be addressed by individual newspapers. Before NNN began its service, an advertiser planning to run an ad in 100 newspapers would have to contact each paper's ad representative individually, deal with 100 different ad rates, and place 100 different insertion orders.

This inefficiency made it extremely difficult to execute a national ad buy. The association's challenge was to corral the industry's unmatchable reach, which was necessary to reverse the trend of plummeting national ad sales. The board's actions regarding NNN proved to be the right decision at the right time.

Today, growth in national advertising expenditures outpaces the growth rate for advertising expenditures as a whole. In fact, it is the industry's star performer. In 1999, national advertising showed an increase of 17.7 percent to $6.7 billion, the largest percentage gain for national advertising since 1976. And it continues to be strong, rising 15.8 percent during the first nine months of 2000 to $5.7 billion. This put the category $800 million ahead of the same period a year earlier, despite a cooling economy.

While NNN, with its 900-plus newspaper network, certainly does not take credit for the growth in advertising, it clearly has been a catalyst in the increases enjoyed throughout the industry.

Keeping it super simple

On January 8, the association launched the Newspaper Industry Communication Center. Using NICC's electronic Insertion order system, advertisers can plan, place, and track their ads in multiple newspapers using a few clicks of a mouse and a standard Internet connection. Unlike NNN, the communication center does not sell advertising. Rather, NICC provides a rich database of information that potential advertisers can use in planning and preparing ad campaigns and keeping track of advertising insertion orders placed via NICC.

To use the service, advertisers simply log on to the Web site (www.nicc.net). After completing a participation agreement, they can access the database, which currently includes more than 1,300 newspapers. Advertisers pay no fees to use the system. Newspapers pay a percentage of the gross ad revenue, with a cap per transaction.

The database contains profiles of each participating newspaper, with information such as key contacts, circulation figures, standard demographic data, regular sections and their frequency, rates, media specifications, and anything else the publisher deems pertinent. This information enables ad buyers to plan a campaign from the start via one convenient Internet location.

NICC developed the electronic insertion order system in response to advertisers large and small in markets nationwide, who asked for simplification of the ad-placement process. Seeing the huge potential offered by the Internet by 1998, the association hoard approved research on options for using technology to address the nagging issues surrounding newspaper ad-buying.

The board asked association staff to produce an action plan that would simplify operations and provide a standard tool kit for 2lst-century advertisers. It took nearly three years before the system could be launched in 2001. Consultants conducted a feasibility study, which took nearly a year. During the next two years, consultants developed the technology component of the concept and then tested and executed the final product.

Enhancing efficiencies

While NICC and it's electronic insertion order sustem were being developed, NNN was searching for an effective back-office-processing group to handle the growth of its sales transactions. The California Newspaper Network had been operating such an enterprise on behalf of its parent, the California Newspaper Publishers Association, Sacramento, for several years and won the bid for the business. NAA acquired the California network in the fall of 1999 and renamed it NICC-West in anticipation of NICC's electronic insertion order total-service operation.

The combined staffs of NAA, NNN, and NICC now total approximately 300 people, of which NAA and its foundation make up slightly more than half. Each of the two subsidiaries has its own staff, with professionals attuned to the specialized services it provides. Nevertheless, NAA and its subsidiaries also share certain services for efficiency, which benefits all operations.

Building on success

NICC's electronic insertion order system is a technology-based tool that facilitates how advertisers tap information about more papers in more communities with just the click of the mouse. Similarly, NNN gives national advertisers in key product categories a simplified way to execute a national ad buy. By streamling operations, both help retain current multimarket advertisers and attract new ones.

The two subsidiaries form the basis for an end-to-end, business-to-business system within the newspaper industry. For association members, they offer the potential for more advertising in their papers. For advertisers, they offer the increased exposure, reach, and targeting that only newspapers can offer-now with ease and efficiency.

John F. Sturm is president and CEO of the Newspaper Association of America, Vienna, Virginia. E-mail: [e-mail]

Subsidiary Simplifies

Vital Process

Launched this year, the Newspaper Industry Communication Center, with its electronic insertion order system (eio), makes life easier for advertisers and agencies that deal with newspapers. Relying on e-commerce technology, the system streamlines the ad-placement process and makes buying newspaper advertising easier, faster, and cheaper. Here are six ways advertisers and agencies benefit from the services of this for-profit subsidiary.

1. RESEARCHING NEWSPAPERS. The eio system features a comprehensive database of newspaper profiles to assist advertisers in the prebuying process. After logging on, ad buyers are just a click away from circulation figures, readership data, market demographics, contact names, and more for hundreds of newspapers across the United States and Canada.

2. PLANNING CAMPAIGNS. NICC helps advertisers manage multiple campaigns and keep their campaigns neatly organized in their own workspace on NICC's Web site. Timesavers, such as cut, paste, and delete buttons, allow buyers to duplicate and modify campaigns quickly and easily.

3. PLACING INSERTION ORDERS. Advertisers complete insertion orders electronically for as many newspapers as they would like, accessing information on ad rates, position reports, and order status. Each insertion order is conveniently filed in a campaign folder, and buyers have the ability to submit, recall, and cancel insertion orders simply and quickly via the Web.

4. INSERTION ORDER REVIEW BY NEWSPAPERS. On the receiving end of the electronic insertion orders, newspapers review each order via the Internet. Notification of pending insertion orders is sent to the newspapers existing e-mail system. Whether they accept an insertion order immediately or respond with a query for more information, newspaper ad sales representatives can do the majority of their communicating with ad buyers from their desks.

5. TRACKING ORDERS. The electronic insertion system allows ad buyers to track the status of their insertion orders throughout the placement process. The status column indicates where new and pending orders stand, plus users can view and confirm ad rates. A separate column lets buyers know when their ads will run, and a "print 10" icon allows users to print hard copies of their insertion orders.

6. CONSOLIDATED BILLING. Once the order has been completed and the ad campaign's selected newspapers have run the ads, NICC sends the advertiser consolidated bills in a standardized invoice on an ongoing basis, along with the requisite tear sheets.