Outsourcing Fuses Tradition With Technology
As the 20th century closed, the winds of change blew at gale force in marketing and media, harkening the arrival of the Internet. A revolutionary communicative medium was permeating America and the world. The avenues of business were not unlike the midway of a carnival concerning the new marketing channel with barkers shouting strange terms: e Commerce, IT, New Media, Dot Com.
For the Albuquerque Journal's classifieds, going online in 1999 "was not a matter of if but rather how." says Donn Friedman, Editor, Technology and Production. "It involved new technology that we were unfamiliar with. Our information department did not have time to do it and our business department said we had to do it."
The element of time was a big factor in counteracting the threat new media posed to traditional classified advertising. "We had to take defensive measures against the AOLs of the world to protect our place in the local market. This is a way to continue to entice people to buy ads in print as a sale retention tool with an upsell advantage, value added. Folks would say they could do it in AOL and get it for free. We needed say that if you advertise with us, you can get it online as well and you know it works in print."
With a daily circulation of 120,000 and 160,000 on Sunday, the cost of such an undertaking could be considerable. "We looked at other papers that had done it themselves. It is very expensive to do. We are not a technology company and don't want to be in that business."
Why Reinvent The Wheel
Outsourcing was the solution to savings in two valuable commodities: time and money. Friedman points out "this technology could be developed for many different newspapers. The cost for development was the same for one newspaper as it was for 100."
The Journal spoke with several firms about the project and chose to outsource to AdOne of New York. Founded in 1995, AdOne had a solid track record in new media offering the needed technological expertise and resources to deliver the classifieds on line with speed and cost efficiency.
AdOne CEO Brendan Burns explains how quickly this can be accomplished. "On a conservative basis, we typically do it in thirty days. We can do it much faster than that depending on how certain the client is on what they want."
The cost savings over doing it in-house are substantial. "For a medium sized paper, we weighed the cost of staff to build and host the site, bandwidth, and database storage. That would have cost them $214,000 annually while our fees are $36,000."
The fixed fee had great appeal to the Journal, according to Friedman. "The monthly fee was fixed so we were able to budget that off for the future. Other vendors were charging by the ad and there is no way to recoup that."
Having an outsourcing supplier with the technology in place that had been developed over years, removed the uncertainty and voodoo from a new project, as Burns points out. "We have proprietary software that we have been developing for six years. They simply send us their data and updates and we load them on our staging server. Each ad and component of the ad is a distinct piece of information. This enables us to perform very sophisticated searching. The updates are online in an hour to two hours." Friedman appreciates this capability coming as part of the package. "The big thing was there were no IT costs on our end. All of the programming could be done on their end, and all we had to do was just give them a feed on our classifieds every day."
The outsourcer also offers many value added advantages to newspapers at no extra cost to increase their reach. Beyond the classifieds being accessed through the newspaper's web site, ads can be accessed through the separate national consumer site of AdOne, Abracat. Abracat features full search capabilities on a database of more than 13 million listings updated daily by over 700 leading newspapers in hundreds of categories. 20% of a newspapers' ad hits are accessed through Abracat.
Burns explains the concept. "Abracat is a consumer focused web site that is a distribution channel for the local publisher. It is an aggregate of all of the sites where they can generate a new revenue stream in upselling. The newspaper can offer to have it run on Abracat outside of the local area. The additional reach is not something that they can do on their own. It becomes a pure profit enhancer for them. We also have arrangements with partners where there is a revenue split with the newspaper."
Friedman recognizes this advantage. "Where we note the advantage is in employment for out of area people and in the sale of collectables. The power of the network across the nation not only allows us to take advantage of our local market but also get a piece of that larger national pie at no additional cost."
The wisdom of catching the wave of new media in classified ads has been proven for the Journal. While the print advertising has remained flat, the Journal's classified Web site has been anything but, as Friedman concludes. "We have about 500,000 monthly page views and about 380,000 queries. Online is a very directed reading where people are searching for a specific topic, and they can do this with the search engines. When you get a new paradigm in media, it is always added to the usage. By outsourcing we were able to create a new revenue stream and test the market without large, upfront development costs and capital investment."
Lessons from the Outsourcing Primer:
- Companies can enter a new business arena faster by outsourcing.
- Outsourcing provides additional value for current core offerings.
- Outsourcing can help companies achieve global reach.