It is almost impossible to find an article, news report or analysis in the past five years that does not forecast doom and gloom for the newspaper industry. Few would argue that the newspaper industry is in crisis, with falling circulation, repeated rounds of layoffs, fleeing advertisers and a chain of bad earning reports. Analysts attribute the downfall to multiple factors, but consensus is that the dominance of the Internet has shaken the newspaper industry to the point that many believe its future looks grim.

But can looks be deceiving? Is there a silver lining in this proverbial cloud? We believe that the current newspaper crisis is really an opportunity in disguise and propose a new paradigm and business model for the flailing industry that will bring hope and prosperity to publishers and advertisers.

Enter the ad widget.

In response, NewspaperDirect created an advertising platform it coined the Adget, a new version of a microsite/advertising widget engineered for newspaper advertisers.

Simple concept

The concept behind Adget is simple: Customers can use the Adget to transact business while reading their local online newspaper.

Rather than clicking through to a dedicated Web site of a service provider or shop, readers can now interact with a small business’ microsite that has been embedded in the newspaper content.

In other words, Adget is similar to the eBay mini-site, where sellers gather to a specialty page within eBay to maximize their sales potential.

Photos: NewspaperDirect
Adget allows readers to view ads, and even place orders for products without exiting the newspaper page they were reading.
These graphics show examples of ads that offer users the ability to order products or make appointments within the ad page.
 

But for those who sell services — which comprise 85 percent of businesses — there has been no eBay equivalent, until now. With Adget, newspapers can leverage their local presence and garner the attention of their local audience. Advertisers, meantime, can better engage and interact with prospects while they read their local paper.

Here’s how it works: When a reader opens a newspaper page he will see an advertisement for a service (e.g. furniture store) with an embedded video, audio file or graphic that promotes new products or special offers.

Within the ad, there are buttons or links through which the reader can click to transact — in the case of a furniture store, for example, to order a printed catalog. And because the reader is already registered with the newspaper, with just that one click, a catalog order form will be displayed that already includes his personal information, which he can edit if he chooses.

Happens within newspaper

One more click and the catalog is on its way to his home mailing address. Everything happens within the newspaper. Customers do not have to exit the page they were reading to connect to the store’s Web site. It’s simple, fast and completely secure.

Consider a local restaurant looking to announce its grand opening. Within an Adget-based ad, the restaurant could present videos of the dishes being served, testimonials of other patrons and daily specials.

With one click, a reader could make a reservation and have a confirmation sent to her e-mail or phone via SMS. The same is true for booking a test drive with a car dealership or an appointment with a dentist.

Adget offers different design templates and a library of transactions to businesses, depending on the type of lead the business is looking to receive, such as booking an appointment, requesting more information, downloading a coupon, buying a product, subscribing to a magazine, donating to a charity, etc. without ever leaving the newspaper.

Another unique feature of Adget is its subscription capability.

With Adget, readers can subscribe from within the newspaper for special offers from different types of businesses. For example, if a customer’s car lease is about to expire, he could subscribe for special car deals or financing options through the newspaper.

The publisher could easily present to local car dealerships an aggregated view of what customers are looking for, which provides dealerships with opportunities for very targeted exposure to highly qualified buyers.

For customers, the search for the car that meets their needs is greatly simplified and once they have found the car they want, they can unsubscribe from all offers, ensuring that they are not pestered by ongoing unwanted solicitations.

Better value

The Adget model provides a much higher “value for the buck” than today’s common cost-per-click (CPC) or banner advertising models.

Whereas the average CPC on the Internet is worth about 20 to 50 cents, an Adget transaction (e.g. making a dentist appointment) can be worth hundreds of dollars. This gives publishers a much greater opportunity to capitalize on more sophisticated transactions by pricing them much higher. Advertisers are willing to pay more because they receive a much higher return on their advertising investment.

NewspaperDirect is in a good position to drive this new model forward. Today, its (SmartEdition) ePaper technology is completely integrated into the workflow of hundreds of publishers. It operates premium sites for local, national and international newspapers around the world, including the Washington Post, New York Post, Newspapers & Technology, The Daily Telegraph, The Times Online, Daily Mail, Le Figaro and dozens of other prominent titles.

Adget will let SmartEdition users capitalize on their growing Web site traffic by generating substantial revenue-per-transaction in a more efficient, reader-driven way, and simultaneously take advantage of interactive Web. 2.0 features.

With Adget, publishers will be able safely migrate from print to online with confidence in their future, and enjoy an advertising solution that is easy to sell and yields higher ad revenues. Combined with a healthy, growing online readership, this new business model will ensure a bright and profitable future for newspapers.

Current trends

That’s key, because as newspapers’ economic fortunes continue to decline, publishers are faced with the challenge of how to not only attract new advertisers, but to hold on to those readers whose loyalty is shifting to other media outlets.

A while back, there was speculation that the online operations of newspapers would be able to turn around these disturbing trends so that online ads would compensate for the losses in print ad and circulation. But, in reality, the speed of growth of online ad revenues has fallen far short of expectations. Only last year, it was predicted that in 10 years, online and print ad revenues would be relatively equal; that optimism is quickly waning. The online publishing business is currently 10 times less profitable than printing newspapers. More troubling, online revenues today represent only 5.4 percent of newspapers’ overall revenues — a fraction.

While some publishers may appear unruffled by these trends and present a case that revenues are not declining, they cannot afford to stick their head in the sand and pretend that they are immune to the inevitable change in their business model. In today’s healthy economy, some newspapers are holding steady, but a downturn in the market is only a matter of time, and with it, newspaper advertising revenues will suffer more than any other form of media. The effects will not be equal across the board — newspapers will be first in the list to experience serious cutbacks in ad spending and will be hit the hardest overall.

Still optimistic

So how can anyone, especially a company that has been up close and personal in this business for over seven years, believe in a prosperous future when the rest of the industry wants to roll over and play dead?

First, NewspaperDirect believes the foundation of this industry is still sound. Whether in print or online, consumers place a high value on original content. Even in today’s social media explosion with pervasive user-generated content, we are constantly reminded that “original content is king.” We witness this daily, when a seemingly unknown blogger can have her blog rise to the top among millions of others simply by bringing “newsworthy content” to the attention of their audience.

The great beneficiaries of the new Internet are the creators of “original content.” And so by the virtue of having a professional newsroom, publishers are in an excellent position to continue to create unique and original content that will continue to attract readers.

A second, very important factor is that newspapers have a strong presence in local markets. In fact, “local” is the unique value proposition for newspapers, which play a critical role in the metropolitan economy where consumers spend 80 percent of their income.

But what is very interesting is that the penetration of Internet advertising into local markets is only about 3.8 percent — surprisingly low.

Helping small businesses

Only a few years ago, it was assumed that small companies were just not aware of all the benefits of Internet advertising, but this assumption has been proven incorrect. People have been using the Internet for many years and the usage of the Internet for performing day-to-day tasks and transactions is continuing to grow at a rapid pace. However, local business owners are still unwilling to spend money to promote their local businesses online. What is holding them back?

The first is global competition. When business owners attempt to advertise online they are not only exposed to a global audience, they are also confronted by global competition. And since most customers find businesses through the first page of results from an online search, only the 10 top results really matter. What chance does a local car dealership have to compete successfully with www.cars.com or other professionally designed Web sites that address the needs of the same target audience? How does a local “brick and mortar” insurance or mortgage broker compete with global corporations who can “look local” by playing the Internet game and offer their products and services online in any city?

If one were to assume that local small businesses can be successful on the Internet promoting their services, then you would have to assume that thousands of other local small businesses are just as successful, which brings us back to the problem of being a needle in a haystack: How do small local businesses all capture the attention of their local audiences in an overcrowded medium?

Better than cost-per-click

Today, CPC advertising is prominent on the Internet, where small businesses can buy traffic to their sites from Google, Yahoo and, more recently, Microsoft. CPC does bring its fair share of people to their Web sites, but herein lies the second factor that limits the success of promoting small businesses online — low conversion rates.

In order to convert anonymous traffic that CPC buys them, businesses need a very sophisticated Web site, which uses modern technology with lots of graphics, Ajax and dynamic HTML. These technologies help make the customer experience innovative, comfortable and compelling, which makes consumers more willing to transact online.

Most small businesses cannot afford to invest in the creation and ongoing maintenance of these sophisticated Web sites that exploit search engine optimization and social media marketing.

So they are stuck. Yes, they can buy cost-per-click traffic, but they are more likely to attract global traffic they don’t want, and then struggle to convert any local traffic they might receive into a sale or other transaction.

Given this, it is no wonder that small businesses are typically not successful competing on the Internet. And although many have their own Web sites, they do not consider them serious lead generators.

Despite the wealth of technology available to them, local small businesses have little choice but to settle for advertising the traditional way — yellow pages, newspapers, radio, direct mail, flyers, billboard advertising and inserts into newspapers.

Adgets, by contrast, offers advertisers a dynamic tool that provide a rich media and easy-to-transact experience for prospects. For customers, it is a convenient and secure way to interact with vendors to which they choose to do business.

With Adget, customers don’t need to learn different interfaces on different Web sites. It’s much like YouTube-like because viewers can watch a video and then click to transact. They can even share links to Adgets/microsites with their friends. Adgets works for businesses of all sizes, from a local hairdresser to a bank or large supermarket.  
 

Alex Gruntsev is vice president, digital for NewspaperDirect Inc. He can be reached at grampo@newspaperdirect.com.