The Praized Blog

Before I talk about the New York Times results, a quick note. As we plunge deeper into a recession, online and offline media companies are impacted but it’s difficult to tell what will be the overall impact of this economic slowdown.  Since last week, I’ve started discussing quarterly conference calls from media companies in this blog as I feel this is where we can extract the most valuable information in the short term (and I’m a bit tired of Techcrunch covering every little new Twitter application out there… ) Hope you like this direction!

Now, back to the NYT Q4 results unveiled yesterday (transcript at Seeking Alpha).  Here are some interesting insights from Janet Robinson, President and CEO and Martin Nisenholtz, Senior Vice President, Digital Operations

On advertising revenues:

The NYT saw “a weakening of revenues as the economy declined and advertisers pulled back on placements.” (…) “Total revenues for the company declined 10.8%, with ad revenues down 17.6%”

“Classified advertising declined in all three major categories; real estates, recruitment and automotive.” (…) “Half of the declines are attributable to one category across the company and that’s help-wanted, so it’s a very targeted decline.”

On circulation revenues:

The continued strength of our brand was evident in the willingness of our readers to pay higher prices for our newspapers, which in turn is reflected in the growth of our circulation revenues.” Circulation revenues were up 3.7%

On digital revenues:

“Digital revenues decreased in the quarter, as online marketers reduced display ads in response to deteriorating business conditions.” (…) “For the year, our online ad revenues at the News Media Group grew 8.7% with NYTimes.com significantly outpacing the industry in the growth of its display advertising.” (..) “At the About Group, total revenues decreased 2.9% to $29.8 million, as display advertising softened. Cost-per-click advertising rose in the mid single-digits.” (…) “In total, internet businesses accounted for 12% of the company’s revenues in the fourth quarter versus 11% in the 2007 fourth quarter.”

On display ads:

“The notion that we’re seeing or we have seen an increasing amount of inventory on the marketplace and we’ve seen that pouring on for the last year or so through the social networks and through other what I would call, non-traditional content companies. And then the second thing that has happened this year has been the real onslaught of the advertising network business. There are over 300 ad networks in the space now. And so, the combination of those two things has put some pressure on rate.”

On the future:

“To-date in January, the greatest decline in print advertising has accelerated from what we saw in December, while that of digital is similar to last month.”

What it means: classifieds and display ads revenues seem to be very soft in this economy.  Cost-per-click seems to be holding (we saw the same insight from the Yahoo Q4 call). Online might be holding its own better than print. The increase in circulation revenues makes me think relevant content from trusted brands is still key.

Like I did with the Google Q4 call, I just reviewed the transcript from Yahoo!’s Q4 results conference call on Seeking Alpha.  A couple of interesting insights:

Blake Jorgensen, Yahoo!’s CFO discussed directional impressions regarding the advertising market.  He mentioned the following on advertising budgets:

“While some advertisers are cutting budgets, we believe we’ve been the beneficiary of major advertisers and agencies consolidating their ad buys with fewer players as they seek to improve returns on their ad spending.” He added later in the call: “I think most of the members of our team here believe that the premium class one advertising is seeing pressure primarily due to what you would typically see in a recessionary economy, where branded advertising is often the first thing that goes.”

On search queries, he said:

“We are tending to see PPC growth, but click yields and fewer commercial queries starting to impact overall revenue for search in general, and clearly search, both here in the US, as well as internationally.”

On a different note, it was disclosed that Kelkoo, the European shopping engine Yahoo! sold back in 2008, contributed $80 million of revenue last year.

What it means: some interesting directional information on search and display ad revenues: advertiser budget consolidation, branded advertising softness even in premium ad space and fewer commercial search queries means no segment of online advertising can avoid the impact of the economic slowdown. The big question still remains.  Is Yellow Pages revenue better at countering recessions (i.e. ad revenues decrease less than the rest of the ad industry) vs. search engine revenue?

Just read through the details of the Google Inc Q4 2008 results conference call on Seeking Alpha. I extracted a couple of interesting comments.

On mobile:

Eric Schmidt, CEO: “In the area of Android and mobile, we’re going to open up mobile devices to developers to stimulate innovation. As an example, 800 free apps are already onto the Android marketplace and making the mobile Web much more user friendly, with billions of page impressions already available through the G1 phone.”

Jonathan Rosenberg, SVP, Product Management: “It’s also clear more people are searching from mobile phones and they’re doing that more often. Our general objective there, with mobile, is simply to make search from a mobile phone as easy and as fast that as it is from a computer. In some cases, like with the voice search feature that we launched this quarter for iPhones, we’re making it even easier. You basically just pick up your phone and talk. I mean it couldn’t be much easier than that. (…) With all of our improvements, mobile search traffic went up substantially this year and not surprisingly it peaked at the end of December.”

On SME ad spending:

Jonathan Rosenberg: “What we see is that small and medium advertisers tend to cut their ad budgets back less than the larger direct advertisers. We think what happens there, is that the larger advertisers are much more prone to doing more across the board media spend cut”

On blended search:

Jonathan Rosenberg: “We’ve also mentioned universal search on many calls this year, and for perspective over 2008, we tripled the number of queries that trigger different types of results across images, videos, news, blogs, websites, and of course, books.”

What it means: Google continues to bet on mobile as they see more usage with new smart phones. They are hopeful Android will be successful but, until the mobile OS has a larger installed base, it’s still an early adopter product and ecosystem. On SME ad budgets, Google is confirming what everyone in the directory business knows, that directional advertising is much less susceptible to budget cuts in a recession. Finally, Google is experimenting with more types of blended search to deliver a better search experience to the users. Their long-term vision is trying to “guess” your search intent to deliver you the best results possible. I’m surprised Rosenberg didn’t mention “local” in his universal search examples…

I was re-thinking about my recent blog post about the importance of Hulu for the TV industry.  A strong “national” brand unifying various media players under the same umbrella while allowing individual players to have their own unique “brands”. For example, you can find The Colbert Report on Hulu but you can also find it on the Comedy Central site.  You can find it on CBS’ TV.com also (powered by Hulu) and on DailyMotion (via an agreement with Comedy Central). You can possibly find illegal versions on other video sites and illegal copies on torrent sites as well. In Canada, you’ll find Colbert on the CTV site.

So, having a “national” hub that aggregates content from, what common sense would call, ”competing” players doesn’t prevent other “national” and ”regional” brands to co-exist with the same content and it allows TV networks to compete on an equal footing with “national” video portals like YouTube. That works as long as industry players have a stake and a say in the evolution of the “national” hub, and that’s the case with Hulu.

Seemingly unrelated, Google just announced that they were pulling the plug on their Print Ads initiative (where Google was reselling newspaper advertising to their network of advertisers). Many people were watching and hoping this might help support print newspaper ad revenues. It was clearly not going anywhere.  Google said in their announcement ”We believe fair and accurate journalism and timely news are critical ingredients to a healthy democracy. We remain dedicated to working with publishers to develop new ways for them to earn money, distribute and aggregate content and attract new readers online.” Yahoo! also has agreements with newspapers to help them monetize their online traffic via a unified ad platform called APT. This seems to be going well but again, newspapers don’t necessarily control their destiny in that agreement.

Now, this got me thinking about the newspaper industry ecosystem in general. Players in this space usually compete with other “regional” players offline (New York Times, New York Post, etc.) but are also competing against “national” brands online, usually aggregators (for example, Google News). I just realized that…

TV industry challenges = Newspaper industry challenges!

I believe it might be time to build a new national brand and platform in the newspaper industry. A “Hulu for news” that integrates national and local news from all major newspaper outlets in the US, citizen journalism content and social media tools. A startup that’s staffed with the most web-savvy new media people, that understand where traditional media comes from and where it’s going but that are not locked in old paradigms. Other interesting technologies for that venture would be the Topix.com platform and content and the Oodle national classifieds platform. This initiative would allow syndicating of news and ad content through widgets and APIs. Content could be displayed on “local” newspaper sites and re-syndicated to smaller sites. I’ve read somewhere about similar past initiatives that failed (can’t find the source now) as offline competition was creating too much of a hurdle for anyone to align. But I think the industry might be at that critical juncture point where they absolutely need to agree to cooperate online while competing offline. Who will take the leadership of this initiative?

Update: Jemima Kiss from the Guardian says “if newspapers start thinking like startups, they might just have a chance.” I agree.

Om Malik surprised me today by suggesting Yahoo should buy Hulu, the joint venture video portal of NBC Universal and News Corp.  The company was founded in 2007 to create a destination site to present content from TV networks and was a response to the meteoric rise of YouTube.

Malik comes to that conclusion while thinking about the need for a solid number 2 exec at Yahoo! now that they’ve named Carol Bartz as their new CEO. He thinks Jason Kilar, Hulu’s young CEO, is a natural for that role and he suggests Yahoo! buys them.

He says: “With his service growing by leaps and bounds, and advertisers lining up to get on board, Kilar’s only problem is that he doesn’t have enough traffic –- like, say, YouTube. That will change over a period of time; and as we all know, time is an elastic concept. Perhaps this is where Yahoo can help. Or rather, where the two can help each other. Clearly search and search advertising isn’t quite working out for Yahoo; what Yahoo knows best is media and content. Which is why buying Hulu would be a strategically relevant acquisition for the company — it would play to Yahoo’s media strengths.”

He adds to explain why NBC and News Corp. would sell: “You’re probably thinking, why would Fox and GE sell their pet project to Yahoo? Well, why not? After all, they took a $100 million investment from Providence Equity Partners, which means they have an interest in making some sort of a return on this company.”

Wrong. Wrong. Wrong. Hulu is one of the core elements of NBCu and News Corp online video strategy.  They were ridiculed when it was first announced (Techcrunch called it Clown Co., they’ve changed their minds since then) but they proved everybody wrong.  Most people thought a joint venture between traditional media companies would fail, that the user experience would be bad, that no one would use it. According to this article, in September 2008, they streamed 142 million videos, a 42% month over month increase. It’s growing fast and on the verge of becoming a major player online. Selling Hulu to Yahoo! would be like AT&T selling YellowPages.com to Google. Won’t happen, nope. Don’t even think about it. As for return on investment, expect an IPO in a couple of years, not a sale.

And Hulu!  We want access in Canada!

BIA/Kelsey organization just released the list of the keynote speakers for their next conference.

From the release, “The agenda features more than 40 influential executives from across the industry, including keynoters Jeff Berman, president of sales and marketing, MySpace; Jay Herratti, chief executive officer, Citysearch; and Chris LaSala, director of local markets, Google, as well as featured speakers Chip Perry, president and CEO, AutoTrader.com, and Chris Spanos, general manager, AOL local and search verticals.”

It will be interesting to hear from Google’s Chris LaSala to see if the recession is impacting their local ad sales or if they’re benefiting from their ROI-driven Adwords product. Also curious to hear from Jeff Berman (MySpace) to discover his thoughts on the “localization” of social networks. I also wonder if AutoTrader.com is hurting from the double whammy of the economic slowdown and the US car manufacturers meltdown or if people are doing more shopping online to get the best prices possible.

The next Kelsey Group conference “Marketplaces 2009” is in Los Angeles, March 16-18, 2009, at the Hyatt Regency Century Plaza. I will be there if you’d like to meet.

Was reading this summary of last week’s Consumer Electronics Show (organized by the Consumer Electronics Association) in the New York Times. Saul Hansell underlines the fact that every new device shown at CES “is becoming a computer connected to the Internet. ” Howard Stringer, CEO of Sony, even predicted that “In two years, 90 percent of all Sony products will connect to the Internet”.

Hansell offers a major insight: “If the most exciting thing about your phone or truck or TV is the Web sites you go to and the software applications you download, then the device itself is less important.” He continues: ” Increasingly what will differentiate one TV from another is the software it runs and the Internet services it connects to.”

Olli-Pekka Kallasvuo, chief executive of Nokia, quoted in the same article said: “For a long time, our business was defined as cellphones. Hardware is not enough. We need to have a wider array of services and content. This is a major change for us.”

Jong Woo Park, the president of Samsung’s digital media business, said: “In the next five years, we are not only going to provide hardware, but content through our devices, in an easy, more convenient way. TV is no longer just TV. TV is interactive TV these days. You will use the same TV and the same remote control, but have completely different functionality.”

What it means: as they all realize they need something to differentiate themselves, electronic device manufacturers will be hungry for content and software functionalities in the next three to five years. Content providers will need to watch out for this new trend and try to measure the installed base of a wider variety of electronic devices. But context will be key (screen size, navigation device, etc.). By the way, a television could be a wonderful local search device if executed correctly! It’s also an amazing social network!

I’m usually not a big fan of Seth Godin’s visions and ideas but in a blog post published yesterday, he stumbles upon a BIG idea. “Time to start a newspaper” he writes in the title of his post. You can stop reading there, the rest of the post is less interesting (he talks about idle real estate agents (?!?) having time to start a paper and he suggests a way to execute the idea), but the title contains a brilliant insight.

Yes, it is the right time to start a newspaper.

Yes. Even if we read dramatic newspaper industry news every week (like Hearst Corp putting the Seattle Post-Intelligencer up for sale “saying that if it can’t find a buyer in the next 60 days, the paper will close or continue to exist only on the Internet.”)

Think about it. Why are newspapers struggling? Is it because the need for local information is going away? Au contraire, I would say the need for local information is higher today. Look at initiatives like Huffington Post (who recently launched a Chicago version of their site) or Outside.in (who aggregates local blog posts) or Silobreaker (an aggregator of online information I covered here) or even unsung individual placebloggers throughout the world! Many people have started to re-think the newspaper industry.

Now, if you work in the newspaper industry today, you might think the sky is falling but once-in-a-lifetime moments like the one we’re going through are usually the best times to change the system. As I wrote last August, “I’m not convinced that most traditional media organizations will just rollover and die. I still see tremendous (but underutilized) assets in most traditional media firms.” I still believe it but your call to action is:

Yes, it is the right time to re-invent the newspaper.

If you could re-invent the newspaper today, what would you do differently?

Yellow Pages Group, Canada’s biggest directory publisher, will introduce an opt-out mechanism for their print business directory in 2009. Quoted in this morning’s Metro newspaper, Annie Marsolais, Director of Communications at Yellow Pages Group, said they would launch the initiative “since some people have expressed the desire to stop receiving our directory” (translated from French). Details will be made available in the next few months. Opt-out mechanisms allow consumers to remove their address from print directory distributions.

Michael Olde­we­ning, Director of Marketing at Canpages Inc., the second largest directory publishers in Canada, was also interviewed for the same article. He mentioned that people who didn’t want to receive their directory could always call them “but they did not receive many calls to that effect”

Finally, Jean-Pierre Gosselin, General Manager – Marketing at Quebecor MediaPages, a recent player in the directory space backed by the powerful Quebecor Media empire, explained that “they were thinking of a strategy to bring back unwanted directories in the multiple Quebecor Media offices and stores”.

Update: Yellow Pages Group’s opt-out mechanism is now available.

Very cool.  I’ve just been named a semi-finalist in Canada’s Most Influential Social Medial Individuals award.  31 other very talented individuals are nominated along with me. I’m happy to be in the company of amazing people like Cory Doctorow, Michael Geist, Paul Kedrosky, Amber Mac, David Crow and Mathew Ingram.  Some of my good friends are there too: Mitch Joel, Adele McAlear, Michelle Blanc, Mark Evans without forgetting my Praized Media partner Sylvain Carle.

Thanks to everyone who voted for me!

Here’s the complete list (taken from Miss604’s blog post):  Ben Watson, MC Turgeon, Kate Trgovac, Sébastien Provencher, Jacqui Murphy, CT Moore, Miss604 (Rebecca Bollwitt), Adele McAlear, Amber Mac, Michelle Blanc, Kris Krug, Sandy Kemsley, Paul Kedrosky, Mitch Joel, Mathew Ingram, Shannae Ingleton, Rae Hoffman, Jon Hamilton, Ilya Grigorik, Michael Geist, Brett Gaylor, Dave Fleet, Mark Evans, Mark Dykeman, April Dunford, Cory Doctorow, Joey de Villa, Ali de Bold, David Crow, Sylvain Carle, Leesa Barnes, Darren Barefoot