In CJR’s March/April issue, David S. Bennahum, who runs the Center for Independent Media, made the case that targeted Web advertising, which will eventually enable marketers to pinpoint their advertisements to individual readers, will soon become a major piece of the answer to news outlets’ online revenue woes. But how much of a saving grace will it be? Jane Kim spoke with Rishad Tobaccowala, CEO of Denuo, a digital-media-futures company that consults for The New York Times, among others.

No one seems to know definitively if targeted Web advertising will help newspapers enough. Will it?

Targeted Web advertising is essential for newspapers, because marketers are interested in buying audiences rather than space. Behavioral targeting should allow publishers to increase their revenue per impression by a factor of two to five times. But it alone isn’t likely to turn publishers from not being profitable to being profitable.

Will it ever be able to support a large news operation the way print ads have?

Large news operations will need to have multiple revenue streams—in addition to selling targeted ads, finding ways to monetize talent, content, and their local nature through events, merchandise (i.e. Obama paraphernalia for sale in The New York Times), licensing of content, and a possible charge for premium archival material.

How deeply will newspapers be able to target their ads?

Targeted advertising will take into account contextual relevance (ads will reflect the content they run in), behavioral data (what the person did prior to reading), and intent (Did they come to the site from a search engine? What were they searching for?). For example, The Wall Street Journal can offer advertisers the ability to target someone reading a news article with a BlackBerry ad, because that PDA has been associated with having read three articles by Walter Mossberg on personal technology and three articles on business travel. Now, Web sites often sell out in popular areas like travel and finance, but have inventory in less popular areas where advertisers can reach exactly the same person with the same interests. If publishers can prove it’s the same person, the advertiser will spend.

What kind of infrastructure does this require, and how quickly must it be built?

The large news organizations have sophisticated technology that they license from companies like Audience-Science, which help them reach various audiences that have re-aggregated online. What they need in addition is the ability to allow advertisers to buy inventory easily across sites through an audience-on-demand platform, helping them reach targeted audiences with a single transaction. This needs to happen right away—other companies, vendors, and agencies are already working to achieve this.

 

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Jane Kim is a writer in New York.