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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
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 (http://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:
"If I were Susy’s dress shop in Princeton, and I realized shoppers
were watching less TV and consuming less print media, I would add
the Internet to my marketing objectives.
"I can make the case that a brilliant banner alone can work,"
says Levitan. He cites an America Online study showing that ad banners
are as effective as television commercials in terms of day-after recall.
"We have some advertisers who have been extremely successful with
a two-page website. We preach simplicity."
he says, by too much attention to the bottom line. "They didn’t
have the incentive to take people off the profitable side of the business,
for instance, making TV commercials, to use them on the less profitable
side, the Web side," says Levitan. "Some of their lunch has
been eaten by the dedicated agencies. Some of the agencies in the
state need to figure this out fast."
Because some of these agencies are not making proactive moves to take
their clients to cyberspace, clients are doing it on their own. For
a major daily, at least 85 percent of the advertisers supply "camera
ready" copy from an ad agency, says Levitan. In contrast, fewer
than 70 percent present "web ready" ads to New Jersey Online.
in the right people. "That is a very big investment. Agencies
are paying a lot of money to a very small population of people who
do understand how to buy and create digital media," he says, quoting
a salary figure of $75,000 for someone with two years experience who
knows how to create Web ads and buy Web space, and that someone is
probably 28 years old. "There is a great demand for very few people
with that skill set."
logo that assumes someone will click on that logo to learn more. Even
if you only add the words "Click here" that improves the click
through rate, and "active banners," those with motion, also
receive higher click-through rates.
speed is critical," says Levitan, "because we have to do certain
things graphically, but we do have page size parameters." On his
site, news pages will load faster than feature areas targeting to
leisure surfers and college students, such as the area on Bruce Springsteen.
And the site always has a live cam somewhere. Look for beach scenes
None of this wisdom was as obvious three years ago. And three years
ago the value of databases was also not generally known. "In ’96
I didn’t know the value of the database applications," Levitan
Seven reporters (one-fourth of the company’s staff) are responsible
for updating the now popular databases for such areas as movies, yellow
pages, maps with directions, events, and school reports. What with
the databases and special breaking news stories these reporters generate
20 percent of the information put on the Web. The rest comes from
the newspapers and the chat rooms.
Levitan notes that chat rooms are not profit centers: "They are
more sponsorship oriented. The fact is, if you are chatting, you are
not inclined to want to leave to go visit Susy’s Dress Shop."
"In 1999 we are going to position ourselves as the single best
place for people to save money in the state," says Levitan, "with
coupons and efficient delivery of deals to the consumer." Need
a lawnmower? Go to his site and type in the words "lawnmower"
to see if someone has a lawnmower deal. Print out the dollars-off
coupon and take it to the store. Or tell the website to E-mail you
when there is a lawnmower sale. "Our goal is to help bricks and
mortar retailers to grow their business," says Levitan, "to
drive 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 problem
is they are national. The reality is, these kinds of decisions are
local. You want to shop within 20 minutes of your house."
The $64 million question is whether the Newhouse newspapers are finding
their ad revenues siphoned off by cyber ads. Levitan hedges on this
question, noting that the company does not release internal profit
figures, but he answers it as president of a national new media federation
with 1,000 online newspapers in its membership.
"We have not seen across America an erosion of advertising dollars
because of advertising spent on the Internet," says Levitan. "Will
that change? As more people spend money on the internet, the money
has to come from somewhere. That’s why smart newspapers have robust
Another medium that desperately needs a robust Internet presence is
television, says Levitan, and he uses Princeton as a harbinger of
what will come. Television viewership in Princeton is way below the
national average, and Internet usership is far above average. Levitan
thinks this trend will spread: "People have a certain amount of
— Barbara Fox
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