McClatchy ad revenue trend upward; small paid content try

Posted by on Jan 27, 2010 in Strategy

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The general trend of recent media earnings releases, that less bad is the new good, was prominent on the McClatchy Company Q4 2009 earnings call as well. While advertising revenues were still down, the decline was reported as less sharp, especially in the classified arena. Ad revenue, though down 28 percent year over year is trending upward, according to president and CEO Gary Pruitt, who noted drop percentages that increased in 2009’s third quarter to a low 14 percent decline for December. Online ad revenue grew nearly 15 percent for Q4.

“There was some evidence of recovery in classifieds, print and Web,” said Pruitt. He noted that the quarter’s classified decline of 25 percent was an improvement of more than 15 percent over the first nine months of 2009. Employment was down 43.6 percent, automotive down 20.4 percent and real estate declined 25.6 percent. But all these numbers represented improvements over prior 2009 quarters of more than 10 percent in each category.

Retail advertising was down more than 20 percent, though the online retail ads were up nearly 50 percent.

Digital was the advertising hero, with a 50 percent growth in ad volume. About one third of classified ads are now digital. Online advertising accounts for more than half of employment ad revenue, one third of auto ad revenue and one quarter of the revenue from real estate listings. Digital advertising as a whole accounts for 16 percent of all McClatchy ad dollars, up from 11 percent in 2008.

“We are seeing a pickup in classifieds in all three major categories, but to the least extent in real estate,” said Pruitt. Employment had been down the most, so the best improving trend was in automotive.” The improvement is in volume and not price, for both print and Web, he clarified.

ROP lineage was down in Q4 by 16.7 percent, with retail’s drop at 20.3 percent. A big chunk of this was due to a preprint drop of 14.4 percent.

Pruitt was happy to have had the online assistance of Yahoo’s Newspaper Consortium, a collaboration he credited with keeping online rates in place. “Yahoo behavioral targeting has allowed us to maintain or increase our CPM as advertisers can better target their customers,” he said. “Of our online business, 44 percent in 2009 was online-only [as opposed to print/Web advertising packages.] We think that shows an independent business and revenue stream in no way tied to print.”

When asked about McClatchy’s attitude towards paid online content, Pruitt said the company was not “idealogical” about it.

“We’re willing to experiment and try various models,” he said. “We tend to believe that the overwhelming model on the Web is free content ad supported and that has been very supportive for us. We’re going to experiment with a paid model on one of our Web sites. As users go further into the site they will eventually hit a pay wall.” He didn’t disclose which site and also indicated that some political and other local news had been paid on some sites for years.

While repeating his conviction that free content would probably be the final McClatchy decision, he said that the company will be watching the various models that other media companies try. “If someone cracks the code, we’ll model it,” he said.

Here’s the entire earnings release.


Written by Sharon Hill

Sharon Hill has been a senior writer / analyst with the AIM Group since 2004, except for a two-year time-out to serve as sales and marketing manager for Suburban Newspapers of America. She worked at newspapers in California, the Carolinas and Indiana as a classified advertising sales supervisor and manager, and in newspaper circulation in Alaska. At the SNA, she was responsible for bringing in new members; lining up exhibitors, and helping develop programs for the classified conference and the classified alliance. She is also co-author of “Implementing and Managing Telework: A Guide for those who make it Happen” (Praeger Press) and a prolific blogger and social media user. She is based in Phoenix.