San Diego Paper Mulls Digital Plans after Web Exec Layoffs

When combating steep print revenue declines and slowing online revenue growth, it may seem foolhardy for a newspaper publisher to fire its top interactive execs. That’s just what San Diego Union Tribune did last month as part of a broader consolidation of its print and digital operations. Now the firm is fighting the same uphill battle it was before, without the people who helped it gain its reputation as a Web innovator.

While most traditional publishers have long divided their print and digital operations, The Union-Tribune Publishing Co. paper is among those moving to an integrated setup built around audience segments and content verticals rather than platforms. According to San Diego Union Tribune VP Strategy Mark Davis, last year the company created business channels organized around market segments such as local geographic communities, lifestyles, and standard classifieds categories like autos or real estate. Each channel is headed by a general manager who leads sales, content and product development teams.

“In this reorganization those GMs are responsible for both print and online for all channels,” explained Davis, noting sales teams also now sell both print and digital products. “This reorganization is something that we’ll keep fluid,” he added.

Similarly, Gannett Company has moved into an even more specific audience-based direction. Starting audience-based sales efforts over a year ago, the company sells groups of users as opposed to ad products. Gannett reportedly plans to offer its mommy-centric sites including IndyMoms.com and CincyMoms.com to advertisers as a package-buy for advertisers targeting household decision makers.

The San Diego Union Tribune’s audience-centric approach includes developing content geared towards its readers’ needs and interests. To better understand its audience, SignOn San Diego is undergoing a business review which has entailed surveying focus groups and individual San Diegans about how they use the Web.

Building traffic by better serving users is one way to spur more advertiser interest, but it takes time. Another way is to partner with a publisher that already has lots of easily-targeted ad inventory to spare. “We’re also looking at the Yahoo consortium,” said Davis. Several newspaper publishers already have aligned with Yahoo to distribute its HotJobs ads, display its search results, and in some cases, sell Yahoo inventory to their local advertisers and allow Yahoo to sell newspaper site inventory to national advertisers.

The ability to sell Yahoo inventory would “increase local reach for us,” said Davis, who stressed San Diego Union Tribune has not signed any contracts to join the Yahoo group. The ability to use Yahoo’s ad management system through such a deal might be part of the allure; Davis indicated the company is working towards offering more robust ad targeting capabilities.

Also on SignOn’s list of possible ad products appealing to local advertisers: self-serve display ads. “We’re looking at self-service applications,” Davis told ClickZ News, adding, “It sort of has to be done.” The New York Times is the latest publisher to offer an ad platform for easy display ad creation aimed at small and local businesses.

Eventually, a SignOn San Diego redesign also is anticipated. Still, before any such initiatives are implemented, back-end infrastructure work takes priority. “We’re in the midst of implementing a content management system now,” said Davis.

Referring both to the Tribune’s splintered approach as well as that of the entire newspaper industry, Davis admits segregating print and interactive was “probably the right thing to do early on.” But that may be no longer true. “As we mature we have to begin to think like an integrated media company,” he continued.

Shifting personnel is a start, but traditional media publishers also must break free of old print sales habits as well as not-so-old online ad sales habits. Selling run-of-site or standard display ads alone is “a mindset we need to get out of,” believes Davis, who wants SignOn to provide advertisers with “more custom offerings.”

Part of the newspaper’s recent staff changes included dropping three of its top interactive evangelists. In May, VP of Internet operations Chris Jennewein was laid off, along with two close colleagues from the paper’s Internet operation: Ron James and Jim Drummond.

Jennewein was instrumental in launching SignOn’s streaming radio station, Amplify SD Radio. Davis said the radio project will not be shuttered, noting, “We probably could put a little more focus on” selling in-stream ads there.

Peter Krasilovsky, program director of marketplaces for local media research firm Kelsey Group, lauded the publisher’s digital efforts under Jennewein, such as development of various directories. He wondered, “Will they have the resources to continue building these types of things?”

Of course, shedding interactive execs, while breaking down media platform walls, also helps cut costs. The fact is newspaper firms don’t appear to be weathering the economic downturn as well as they need to in order to counteract plummeting print ad revenues. The Newspaper Association of America reports the rate of year-over-year online ad revenue growth slowed from 22 percent in Q1 2007 to 7.2 percent in the first quarter of 2008.

“The San Diego Union Tribune, like every other newspaper in the country, is battling declining revenues and needs to figure out where it can cut costs; it also needs to seize on genuine growth opportunities,” said Krasilovsky. “If it retrenches online operations back into the newspaper, will it see all the opportunities for new growth?'”

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