Wednesday, May 21, 2008

Dealer co-op programs on the web

I was having a conversation recently with a friend who works in the newspaper industry. This person, as befits a clear-eyed observer of current trends, was a bit downbeat as we discussed the future of his medium, particularly as related to the co-op advertising programs that have long been among newspapers’ major sources of income.

That newspaper circulation, ad linage, and income are plummeting is too well known to bother detailing. Perhaps less known is that more people than ever are reading newspaper – it’s just that they are doing so on-line. Newspaper web sites are among the most frequently visited sites, garnering more than enough visits to offset the many (myself included) who have cancelled their print subscriptions. The problem, my friend lamented, was that the papers had proven unable to translate these web visits into advertising revenue.

Classified ads have moved to Craigslist or or Auto Trader, and the biggest stores are diverting more of their advertising to in-store promos. Which leaves the papers more and more dependent on that oft-neglected stalwart, the independent local retailer (aka, Mom & Pop).

Neither Mom nor Pop is a fool, and they recognize the declining readership of the papers, and therefore question the value of continuing to advertise there, especially given the rates the papers charge. (As an aside, the newspapers seem to think that the way to offset declining circulation revenue is to raise ad rates -- is there any question why they're in trouble with thinking like that?) But, to return to Mom & Pop, they can’t move to the web because they don’t have the slightest idea how to create a web ad (do you? me neither), and because their vendors won’t pay for it.

The vendors won’t pay for it because they don’t trust the rates for web advertising, and because they’re tired of the administrative burden of dealer co-op generally and have no intention of adding another difficult medium.

To survive, the newspapers need to move their advertisers to the web, and to do so, they need to offer the manufacturers three things:
  • Transparent pricing
  • Reduced administration
  • Measurable results

Concurrently, they need to offer Mom & Pop three things:

  • Ease of use
  • Reasonable pricing
  • Measurable results

These things are do-able. Although the newspaper industry has a history of offering the most bizarre rate cards imaginable, they realize (I hope) that that has to end, and the web offers the capability to offer measurable pricing via pay-per-click. Sites have recently been developed (here’s one of them, AdReady) that allow the rankest amateur to easily build a web ad in multiple sizes and formats from templates (I created one in less than five minutes on my first try). If a newspaper licensed such technology and stored manufacturers’ templates, local dealers would have an incentive to run ads, which could then be billed directly to the manufacturer (no claims) on a per-click basis, with both manufacturer and dealer getting a record of the clicks.

The manufacturers would have their transparent pricing, no administrative burden, and measurable results. The dealers would have ease of use, reasonable pricing (since the web is, for now at least, much cheaper than print), and measurable results. The newspaper would get … advertising.

It’s a win-win-win.

It’s going to take an honest broker to get the newspapers and a decent core of manufacturers together to work out the mechanism for a test of such a system. I suggest the TPMA (I would suggest the Newspaper Association of America, but their track record in putting anything together, in my experience, is not good).

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