National Ads Take Cliff-Dive

AWN and Ruxton struggle with drastically diminished revenue

The near-evaporation of national ad revenues has left alt-weeklies scrambling for local revenue, while the alternative newsweekly industry’s two major advertising networks struggle with drastically diminished revenue.

The Alternative Weekly Network (AWN), a cooperative ad network serving about 160 papers, has suffered a 78 percent decline in revenue in 2002 so far, compared to this time last year, says Executive Director Mark Hanzlik. That’s on top of a poor fourth quarter. AWN came out of 2001 35 percent down from expectations, Hanzlik says.

“It looks really bleak,” Hanzlik says. “We’re kind of on a shoestring now, but that’s how we started. The cooperative will stay together.”

The Ruxton Group, which serves 29 papers, saw a 60 percent revenue drop from November 2001 to January 2002.

“We were doing well until September,” says Michele Laven, president and COO of New Times Inc., which owns Ruxton.

Ruxton has minimized support staff but has kept a full sales staff. Ruxton employs sales people directly while at AWN, member-paper staff make the sales.

The loss of tobacco advertising particularly set AWN and Ruxton on their heels, and neither Hanzlik nor Laven have much hope of it returning. They both see alcohol and telecommunications as possible replacements for the lost tobacco revenue, as well as opening up segments not normally tapped by alt-weeklies, such as airlines and automotive.

“I think we have a really good story to tell airlines,” Laven says. “They’re not listening yet, but we’ll keep telling it.”

Hanzlik sees automotive as a key industry that can be opened up nationally, working at all levels from dealerships and agencies up to the manufacturers.

“We’ve never coordinated that whole effort,” he says.

(AAN this year will spend $70,000 for a marketing campaign to promote its member papers, concentrating on recruitment and automotive advertisers. The campaign includes a multi-media presentation, one-sheet handouts, a PowerPoint presentation and a round of advertising in media buying trade publications. In addition, AAN exhibited last month for the first time at the annual automotive dealers’ trade show.)

After ending 2001 at $13.7 million, AWN budgeted for a much-diminished 2002 and may have to adjust even those low estimates.

“Our sales plan was originally set at about $12 million for this year,” Hanzlik says. “We may have to rethink that at the end of the first quarter.”

As the networks learn to open new markets nationally, some papers are pulling in local advertisers with new incentives and offerings.

Sales for Columbus Alive in Columbus, Ohio, were up 8 percent in 2001 from the year before, but the bottom dropped out at the beginning of 2002.

“We kind of tanked in January,” says Publisher Sally Crane.

The paper dedicated a person to classifieds, which it had never done before, and started a new page aimed at the city’s Hispanic population, a segment they saw had exploded in the 2000 census.

The new page has brought in advertising from a growing number of Latino-owned businesses, as well as other businesses striving to reach that population.

Advertising Director Debbie McDonald estimates the Latino page will generate $18,000 for the year. That’s much-needed local revenue for staff that spent the end of 2001 scrambling to make up for lost national revenue.

“We know not to expect it,” McDonald says of national ad revenue. “And if we get it, we’re thrilled.”

Some of the new advertisers Columbus Alive has picked up with the Latino page are Nationwide Insurance, with headquarters in Columbus, the Girl Scouts and the local public-transit service, none of which are typical alt-weekly advertisers.

Chicago Reader is going after local advertisers with a financial incentive: beginning March 1, the paper will extend the 15 percent reduced agency ad rate (for advertisers submitting camera-ready copy) to all advertisers.

“We instituted this change partly to lower rates for advertisers hard-hit by the economy, and also to stop giving advertisers a financial incentive to give us camera-ready materials,” says Chicago Reader Publisher Jane Levine. “In the old system, they paid 15 percent less if they gave us camera-ready ads, which encouraged them to do so, whether or not they knew how to make a good ad. We think that if we produce the ads, we’re more likely to make effective ads that get response for the advertisers, which, of course, works well for everybody.”

While Levine can’t say yet what the impact of the rate restructuring will be, the preliminary response from advertisers has been good.

“Some of them, we hope, are going to increase their size.”

Though Levine sees the local economy as the main source of concern, Tom Yoder, treasurer for Chicago Reader Inc., which also owns Washington City Paper, says the Reader’s January revenue from national ads dropped 83 percent from the year before and a “scary” 92 percent from January 2000.

Yoder points out that these figures might not track national losses because the Reader’s national ad revenue was high in 2000 and dropped $665,000 for 2001, more than most alternative papers earn in a year from national ads.

Seth Wharton is a freelance writer based in New York City.