It seems every time I pick up my local newspaper it’s cut back on editorial pages and instead added lots more advertising. Many publishers around the country have applied a similar tactic to their online publications–increase the number of advertising spots–but new research suggests that approach my now be backfiring.

…after 17 quarters of ballooning growth, online revenue at newspaper sites is falling. In the second quarter, it was down 2.4 percent compared with last year, to $777 million, according to the Newspaper Association of America. It was the only year-over-year drop since the group began measuring online revenue in 2003.

While newspapers have increased their online audiences, they’ve also increased the amount of online content, which in turn has led to a glut of display advertising spots. In effect, there are now more ad units than advertisers, forcing many publishers to turn to ad networks to sell off their remnant advertising–often at a deep discount.

It’s a vicious downward spiral. Create more content, create more ads, but fail to find enough advertisers to fill those spots. This, in turn, brings down the average CPM rate.

With networks, “unwittingly, I think, the publishers commoditize their own inventory,” said Paul Iaffaldano, the general manager of the TWC Media Solutions Group, which sells ads for the Weather Channel and Weather.com.

It’s not all doom and gloom. Some publishers have realized that less can really mean more. They’re reducing the number of advertising spots and creating demand for their content.

“We’re going to reduce the number of ad sizes we use and the number of units,” said Christian Hendricks, the vice president for interactive media at McClatchy. “It is a case where yeah, you could probably sell another advertiser by creating another ad space,” but that could hurt the revenue over all, he said. Online revenue at McClatchy rose 12.5 percent in the second quarter; a year earlier, revenue dropped 2.2 percent.

McClatchy also tries to avoid ad networks. “We don’t want to get in the habit of filling every little space we have with remnant,” Mr. Hendricks said.

The question is, will enough publishers realize they need to pull back on the number of ad units they sell, before the online newspaper space collapses under the weight of its own saturation?

Pilgrim’s Partners: Is a blogger attacking your company without you knowing? Monitor your online reputation with Andy Beal’s Trackur–try it for free!

Excerpt from:
Newspapers Commoditizing Web Ad Inventory; Reducing Revenue in the Process

Happy Columbo Day! Yes, today is the day that all Americans take a break from work to celebrate the scrawny guy in the rain coat who always asked “just one more thing.”

Oh wait, I may be slightly confused.

Anyway, on to today’s Picks!

• More than 1.5 million T-Mobile/Google Android phones have been pre-ordered. Imagine how many would have been ordered if it wasn’t so darn cheesy looking.
• While US courts have ruled that Google Image thumbnails do not infringe copyrights, the German courts have a different point of view.
• Google is keeping its enemies close by agreeing to work with Click Forensics. (via)
• If you miss Twitter’s instant messaging capabilities, you may not want to hold your breath.
• Want to use your blog to help change the world? Blog Action Day is on October 15th.

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You know me; always on the lookout for examples of why it’s so vital to maintain a positive business reputation.

So, I’m probably the only person that gets excited by the complete and utter collapse of a company that was generating $2.2 billion in annual revenue!

The Bill Heard Organization was the country’s 11th largest Chevrolet dealer group and in 2005 was named one of its “Dealers of the Year” by GM. Despite that, Bill Heard let its reputation deteriorate to the point that ultimately shut down its business.

As Ward’s explains (emphasis added)…

Perhaps it was rogue employees or a culture within the group that allowed or even encouraged questionable behavior. Whatever the case, the Heard group was unable to shake the perception that it conducted business unethically.

More than 500 complaints against the company were filed in recent years with the Better Business Bureau chapters in the seven states where it conducted business. Additionally, the Internet became a forum for angry customers who posted numerous complaints about Bill Heard on websites that allow customers to review businesses.

Add rising gas prices, $280k in state fines, and having its credit line yanked, and you can see how a bad reputation can be the catalyst for the business’ collapse.

Of course, as Abraham Lincoln once said, your reputation is merely the shadow cast by your character–if Bill Heard had treated its customers well, it wouldn’t be in this miss to start with.

But, what can YOU learn from the collapse of Bill Heard?

1. Monitor your competitor’s reputation as closely as you monitor you own.
2. Be aware of the complaints being levied against your competitors–are you one blog post away from the same criticism?
3. Watch for your competitor’s weaknesses and make them your strengths. As a competitor to Bill Heard, I’d focus on our pledge to treat customers with respect and honesty.
4. When your competitor ultimately implodes, reach out to its customers. In this case, I’d offer a special $10 oil change to all of Bill Heard’s customers or an extra $500 trade-in payment for anyone that trades a car bought at Bill Heard.

Monitoring your own reputation is a given–right?–but you should also keep a close eye on your competition. When they suffer a reputation misstep, don’t miss the opportunity to use that to your advantage.

(Hat-tip to Laszlo)

More:

Google is launching plenty of new features this week, and now they have even more.

As spotted by CNET, Google Maps are now sporting text ads below the map results. Check out this result for [copies near san francisco, ca]:

Like the snippets above emails in Gmail, these are one-line link and description ads appear on a green background with additional ads available via < and > buttons (because who doesn’t want to look at more ads?).

CNET reports that

The results vary according to what the user sees on the map; for example, searching for “notary Kansas City” shows no ad, but centering the map on Kansas City then searching for “notary” does. Likewise, “shoe store San Francisco” shows results but “shoe store” while looking at San Francisco doesn’t.

I’m guessing this has more to do with the keywords targeted by advertisers—using city names in keywords vs. geographic targeting on more generic keywords to find local business customers. What do you think?

And as if to try to best Google [mail] Goggles, another hilarity-inducing feature has been added to a Google property: audio preview on YouTube comments. As Matt Cutts notes, a recent xkcd comic inspired this invention:

Oh, if only it were that easy. . . .

What’s your favorite Google feature added this week?

Read more:
Google Premieres Text Ads in Maps; Audio Comment Preview in YouTube

I’m thrilled to be asked to return as a speaker at Pubcon Las Vegas and I want all of you to join me!

Pubcon is one of my “must attend” marketing conferences of the year and it never fails to disappoint. Just in case you’ve not yet reserved your spot, I have a very special 20% discount (worth at least $180) to pass on to all of you.

Use “be-48020″ when registering and you’ll get an instant 20% discount.

I’ll have more Pubcon updates to share soon, but I hope you won’t miss out on attending one of the top events of the year!

See you in Vegas!

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