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of greater depth. (It should be noted, however, that the PointCast model
of personalised news delivery has not been a runaway success. Many
people like the package and the variety and surprise that it brings.)
Other major means for creation of value within the newspaper and
magazine industry will be the development of new information services.
Early examples are the searchable archives, personalised news services and
stock price watch lists and graphing services.
Opportunities for and threats to revenue
The revenue stream for online news services is not yet established. In
the US, online banner advertising reached US$1.9 billion ($A2.9 billion)
last year, according to Forrester Research and it is tipped to reach
US$3 billion this year . This is still a small portion of an annual
advertising spend in the US in excess of $1.5 trillion. In Australia, banner
advertising was just $12 million last year. 16
The problem is that the banner is an information-poor space of less than
two centimetres depth at the top of a Internet screen page. According to
Jupiter Communications, the number of Internet site visitors who click
on banner ads has declined from two per cent to 0.5 per cent over the
past 12 months.
Instead, according to Forrester, online advertisers in the US are intending
to increase the share of their promotional budgets on traditional media
from 44 per cent in 1998 to 52 per cent over the next two years. The
traditional media advertising is used to attract readers to their own
e-commerce websites. (Sydney Morning Herald, 19 July 1999)
The pressure on display advertising is less likely to come from banner
advertising online than it is from direct marketing. Direct marketing
crosses categories from traditional and relatively undiscriminating
nationwide catalogue and magazine coupons, to highly targeted, database
driven approaches, ranging from direct mail, to telemarketing. In
Australia, direct marketing has surpassed mass media advertising rising
25 per cent to $9 billion last year , against a seven per cent rise in mass
media advertising of $8 billion. Telemarketing and call centre bureaux
rose by 203.4 per cent last year to $6.4 billion.
It is therefore possible that newspaper and magazine display advertising
will continue to show modest growth. There will be pressure on
newspapers to upgrade their colour printing to support present display
advertising better.
The bulk of the classified advertising revenue stream is likely to migrate
online. The ability to use a search function gives the Internet an
overwhelming advantage over print. This advantage is being supplemented
by the model developed by eBay to operate classified advertising on an
auction basis. EBay has formed a joint venture with PBL, while Fairfax
has also entered a joint venture with an online auction house.
The appeal of the online medium for classified advertising crosses sectors:
from property, where the house can have its own web page, to
employment, where CVs can be lodged directly, as well as cars, and
miscellania.
PBL and Fairfax are well placed to divide this market. The most
important thing is to have a mass audience so that advertisers have
16 www.consult.com.au
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