Corrections or additions?
E-Commerce Retrospective
This story by Barbara Fox was published in U.S. 1 Newspaper on March 17, 1999.
All rights reserved.
Only three years ago, when newspapers were new to
the online world, some of their advertising rates were sky high. It
was like the Gold Rush, when eager miners were flocking to California
and paying hundreds of dollars for a shovel.
Those advertising rates have dropped by half. “Our CPM (cost per
thousand) averages in the $25 to $30 range,” says Peter Levitan,
CEO of one of the state’s leading websites. “In 1996, it might
have been in the $50 range,” he admits. “In 1996 people were
picking numbers out of the sky.”
Levitan founded New Jersey Online, part of the Newhouse empire, which
also includes the Star Ledger, the Times of Trenton, the Jersey Journal,
the New Yorker, Parade, and other Conde Nast magazines. Surveys show
that New Jersey Online is the third largest website in the New York
area, second only to AOL’s Digital City and the New York Times.
“E-Commerce: Is New Jersey Ready for It?” is the topic for Levitan
in a speech sponsored by Technology New Jersey at the DeVry Institute,
630 Route 1 North in North Brunswick, on Tuesday, March 23, at 8 p.m.
Cost: $30. Call 609-452-1010.
How to price Internet advertising is still an open question, says
Levitan, and so New Jersey Online offers price points of from $40
to $12,000 per month. For $40 you get a mini site in the yellow pages
area.
The son of a Manhattan-based apartment builder, Levitan earned his
bachelor’s degree from the San Francisco Art Institute, Class of 1973,
stayed to get his master’s, worked for five years as a commercial
photographer, and then went into agency work at Saatchi & Saatchi,
where he was an account manager for such clients as Johnson & Johnson,
General Mills, and Northwest Airlines. “I left Saatchi to start
an interactive test market in Maine, and a friend of mine, who was
president of the New Yorker, said that Newhouse was doing in New Jersey
what I was doing in Maine,” says Levitan. He launched New Jersey
Online in the spring of 1995 (https://www.nj.com).
The $64 question: Is any publication, anywhere, making money on a
website? Until nine months ago, no, says Levitan, but now the answer
is yes. “It went through a complete shift. Local sites are doing
well in terms of local advertising. Ultimately, it is a recognition
that a lot of people are using the Internet every day.” He quotes
a Star Ledger Eagleton poll taken last fall that showed 36 percent
of New Jersey residents went online in a given week. Nationally,
44 percent of youth ages 12 to 19 use the Web.
Levitan speaks of “just absolutely incredible numbers” generated
by holiday sales. In the 1998 holiday season consumers doubled the
amount of money they spent ($2.3 billion according to a Jupiter survey)
and 60 percent of the shoppers were new to the Web. “It’s a crystallization
of the idea that this is not the future any more, it’s today,”
says Levitan. His opinions:
What retailers do need: Some kind of Internet presence.”If I were Susy’s dress shop in Princeton, and I realized shopperswere watching less TV and consuming less print media, I would addthe Internet to my marketing objectives.What retailers don’t need: An extensive virtual store.”I can make the case that a brilliant banner alone can work,”says Levitan. He cites an America Online study showing that ad bannersare as effective as television commercials in terms of day-after recall.”We have some advertisers who have been extremely successful witha two-page website. We preach simplicity.”The late entry of ad agencies in cyberspace has been caused,he says, by too much attention to the bottom line. “They didn’thave the incentive to take people off the profitable side of the business,for instance, making TV commercials, to use them on the less profitableside, the Web side,” says Levitan. “Some of their lunch hasbeen eaten by the dedicated agencies. Some of the agencies in thestate need to figure this out fast.”Because some of these agencies are not making proactive moves to taketheir clients to cyberspace, clients are doing it on their own. Fora major daily, at least 85 percent of the advertisers supply “cameraready” copy from an ad agency, says Levitan. In contrast, fewerthan 70 percent present “web ready” ads to New Jersey Online.The biggest mistake ad agencies make: not making the investmentin the right people. “That is a very big investment. Agenciesare paying a lot of money to a very small population of people whodo understand how to buy and create digital media,” he says, quotinga salary figure of $75,000 for someone with two years experience whoknows how to create Web ads and buy Web space, and that someone isprobably 28 years old. “There is a great demand for very few peoplewith that skill set.”The worst ads: those without a call to action, the plainlogo that assumes someone will click on that logo to learn more. Evenif you only add the words “Click here” that improves the clickthrough rate, and “active banners,” those with motion, alsoreceive higher click-through rates.The value of speed versus glitz: “I can’t say thatspeed is critical,” says Levitan, “because we have to do certainthings graphically, but we do have page size parameters.” On hissite, news pages will load faster than feature areas targeting toleisure surfers and college students, such as the area on Bruce Springsteen.And the site always has a live cam somewhere. Look for beach scenesnext summer.None of this wisdom was as obvious three years ago. And three yearsago the value of databases was also not generally known. “In ’96I didn’t know the value of the database applications,” Levitanadmits.Seven reporters (one-fourth of the company’s staff) are responsiblefor updating the now popular databases for such areas as movies, yellowpages, maps with directions, events, and school reports. What withthe databases and special breaking news stories these reporters generate20 percent of the information put on the Web. The rest comes fromthe newspapers and the chat rooms.Levitan notes that chat rooms are not profit centers: “They aremore sponsorship oriented. The fact is, if you are chatting, you arenot inclined to want to leave to go visit Susy’s Dress Shop.””In 1999 we are going to position ourselves as the single bestplace for people to save money in the state,” says Levitan, “withcoupons and efficient delivery of deals to the consumer.” Needa lawnmower? Go to his site and type in the words “lawnmower”to see if someone has a lawnmower deal. Print out the dollars-offcoupon and take it to the store. Or tell the website to E-mail youwhen there is a lawnmower sale. “Our goal is to help bricks andmortar retailers to grow their business,” says Levitan, “todrive people to their front door.”Levitan’s coupon-printing strategy will be in place by early summer.Yes, he admits, there are national coupon sites. “The problemis they are national. The reality is, these kinds of decisions arelocal. You want to shop within 20 minutes of your house.”The $64 million question is whether the Newhouse newspapers are findingtheir ad revenues siphoned off by cyber ads. Levitan hedges on thisquestion, noting that the company does not release internal profitfigures, but he answers it as president of a national new media federationwith 1,000 online newspapers in its membership.”We have not seen across America an erosion of advertising dollarsbecause of advertising spent on the Internet,” says Levitan. “Willthat change? As more people spend money on the internet, the moneyhas to come from somewhere. That’s why smart newspapers have robustonline businesses.”Another medium that desperately needs a robust Internet presence istelevision, says Levitan, and he uses Princeton as a harbinger ofwhat will come. Television viewership in Princeton is way below thenational average, and Internet usership is far above average. Levitanthinks this trend will spread: “People have a certain amount ofscreen time.”– Barbara FoxNext StoryCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
