Outsourcing ad production to overseas firms is picking up steam as cash-strapped newspapers look for ways to control costs.

More than 100 U.S. newspapers are already relying on overseas providers to produce ads and other materials and that number could easily double in the next 12 months, vendors say.

 

The lure: the chance for publishers to lop off as much as 40 percent from ad production budgets as they exploit the lower costs associated with compensating workers in India, The Philippines and other overseas countries.

 
Among major papers outsourcing their ad production today are the San Jose (Calif.) Mercury News, Fresno (Calif.) Bee, (Minneapolis) Star Tribune, the Columbus (Ohio) Dispatch and the State in Columbia, S.C.

Pleased with results

The Commercial Appeal in Memphis, Tenn., will begin farming out its ad production work early this year as will McClatchy Co.’s Bee newspapers in Sacramento and Modesto, Calif. Additional McClatchy properties are also expected to follow suit as are dailies owned by other major publishers.

So far, so good, says one early adopter.

“It’s working, and we are very pleased with the results,” said Mary Evans, director of advertising operations at the Mercury News. The paper, as well as about 40 other northern California newspapers owned by MediaNews Group, outsourced ad production to Express KCS Inc. last year (see Newspapers & Technology, January 2007).

Evans said Express KCS processed more than 45,000 ads for the paper since taking over prepress work. “There have been growing pains, but no fatal flaws. People need to be attentive to materials that are turned in,” she said, citing the cultural differences that can occur. “We do our best and transfer as much knowledge as we can. But this whole process has made a believer of me that the world is flat.”

Express KCS, which maintains U.S. offices on the West and East coasts as well as a production facility in Gurgaon, India, has seen interest for outsourced production blossom, said Chief Executive Officer Robert Berkeley. In addition to the MediaNews properties, Express KCS also handles ad production for the Star Tribune, Sacramento Bee, Fresno (Calif.) Bee, Commercial Appeal and many others.

Progress

“We have made great progress,” Berkeley said. “We’re getting more business and groups are now beginning to come back for more,” he said.

Berkeley said Express KCS is now handling ad production for more than 100 newspaper titles worldwide from its Indian base, which has been beefed up with additional workers and a bolstered communications infrastructure. “We have increased our reliability, and we now have lots of fiber where we formerly had copper (wires)” to handle data transfer.

The company is also branching out to other areas of production, including designing spec ads and creating specialty publications. “Spec ads in particular is a growing area,” he said.

Next up: pagination, where Express KCS workers handle editorial layout, headline writing and perhaps even some copy-editing duties for clients. “It’s an area that could really take off,” he said.

Express KCS is one of a growing number of firms offering outsourcing services to U.S. newspapers.

Enormous challenge

Los Angeles-based 2AdPro, backed by Indian software developer Ninestars Information Technology Ltd., is also making solid inroads, said Todd Brownrout, chief marketing officer and co-founder.

“Business is growing remarkably well,” he said. “It’s a time of enormous change for newspapers and the market is responding positively to our story.”

Brownrout declined to identify any of 2AdPro’s clients, but said the number of papers using the firm’s JobDirect software exceeds 50. Among them is a top-25 daily and Brownrout said he’s close to signing a groupwide outsourcing contract with a leading U.S. publisher.

“We are well beyond the stage of discussing whether outsourcing is a viable concept,” he said.

“We are now in operation across a wide spectrum of customers.”

As with Express KCS, 2AdPro has bolstered its offshore capabilities, opening a second office in Bangalore, India, that complements its existing Chennai facility. The addition brings 2AdPro’s production capacity to 600 seats, Brownrout said.

New module

2AdPro also worked with Database Publishing Systems Inc. to develop a module of its AdTracker software that links with JobDirect, giving clients an ad production tracking app they can use to monitor their ad files’ progress.

“With the integration, a publisher can retain its own ad production software but send files to us and still get the benefit of tracking their ads. It really flattens the playing field,” Brownrout said.

2AdPro offers its ad production on a per-transaction basis, an approach Brownrout contends makes his service more economical.

“They buy from us what they need, so they are not tied into a rigid contract,” he said.

Not every transition is smooth, however, even as additional papers begin to outsource their ad production.

Bumpy transition

The Columbus (Ohio) Dispatch, which in November 2006 tapped Affinity Express to process its ad production work, said that while ads are now being produced “effectively,” the early months were rocky.

“It was highly challenging,” said Joe Gallo, the paper’s vice president and chief information officer. Gallo said Dispatch executives had to work closely with managers of Affinity, an Elgin, Ill.-based firm that maintains production offices in India and The Philippines, to iron out production glitches.

Affinity ultimately began using ad production tracking software from Mediaspectrum to underpin its service, a move that Gallo said yielded the savings and improvement The Dispatch expected.

The software is hosted on Dispatch servers in Columbus and is accessed by Affinity Express’ staffers overseas. The app, Gallo said, allows The Dispatch to manage the ads as they are processed.

Last year, Affinity processed more than 300,000 ads for The Dispatch, Gallo said.