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As Quarter Ends, NYTCo Expects Digital Ad Revs To Rise 14 Percent

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Costs will be up a slight 1 or 2 percent for the New York Times Co. (NYSE: NYT) in Q3 as it prepares to launch its metered paywall for the flagship newspaper’s website early next year, said CEO Janet Robinson, speaking at the Goldman Sachs Communacopia conference. The company also released details about expectations for its Q3 earnings, with digital ad revenues expected to rise 14 percent a significant turnaround from the 7.2 percent decline in web dollars the company was hit with in Q309.

There was some fairly good news on the print side, though classifieds still look weak. That lled Goldman to ask Robinson and Martin Nisenholtz SVP, digital operations, whether classified would move totally online in the next several years. No plans were revealed, but Nisenholtz did say, “It depends very much on the category,” but he doesn’t expect print to go away any time soon. “I think print has a powerful role to play in fomenting demand.”

In terms of what it depends on, it could come down to where the company has dominance. Real estate would seem to be a possible area where the NYTCo could take a chance. “We’ve had good success in New York, for example…. where we are one of the key aggregators of the New York real estate market,” Nisenholtz said. “That’s a very strong business and it has come back nicely after dipping during the recession. In the autos area, where we don’t have much presence in New York. But we have a relationship with in Boston and the Regional Media Group. Each of those categories has a different character with respect to our approach and the dynamic between print and online. I certainly don’t think the display part of the classifieds business is going to disappear from print. The area that is most problematic is recruitment. But even there, there is a place for that in the print area and I don’t think print is going away. Still, it would be foolish to say that things aren’t moving more and more to the digital side.”

Paywall price: Getting back to the discussion of the paywall, Robinson addressed the issues of cost and fears that it might cannibalize the digital ad dollars. One of the reasons the NYTCo has cited for the long wait on its metered paywall is that it’s doing it all in-house. So that takes time and some money, but on the whole, Robinson said it was a small price to pay. In the meantime, she said the company will look to find more ways of reducing distribution and production costs.

Cannibalizing digital?: On the issue of cannibalizing digital ads, first, she wanted to clear up speculation about the NYT abandoning the print product. When her Goldman interviewer noted that digital is now 16 percent of the total revenues, Robinson resisted offering a target of where she’d like that to be and said that she’s mainly interested in finding the right balance between print and digital.

“it’s very clear that our print business is very profitable and we will be printing the New York Times for many years to come,” Robinson said. “We’re going to be expanding both the print product and our footprint in digital in the years to come. From the standpoint of cannibalization, there are people who really love the New York Times in a variety of formats. There’s an opportunity to package both print and digital. Many of the subscription opportunities will encourage [and reflect that].”

At the moment, Robinson that the company is completing work on getting the bundled digital and print subscription packages nailed down. She expects to announce that before the end of the year. As that’s completed, the company will turn its attention to the marketing program for the paywall.

No reason to work with iAds: Speaking of digital and subscriptions, Nisenholtz was asked to weigh in on rumors that Apple (NSDQ: AAPL) was going to open up its iPad to newspaper subscriptions, something all publishers on the device have been clamoring for. “Let me start with a principle: we’ve always been consumer driven and we don’t line up with any one manufacturer or service provider,” he said. “We follow the consumer into whatever device they’re interested in. With respect to the iPad, it’s unbelievable that it’s been out since April. It feels like forever. Our Editor’s Choice iPad app has attracted unbelievable demand from advertisers. We have no reason to be working with iAds on that particular product. We do work with iAds on the iPhone side, where there’s a bit more inventory.”

As the company has noted before, it’s coming out with paid app at the end of the year, which will dovetail with the paywall. But Apple’s app opportunities represents just one part of the NYTCo’s plan, especially as other tablet devices are released this fall. “We expect to see a lot more slates from the market,” Nisenholtz said. “I think someone said that there could be 40 slates coming to market by Christmas. Obviously, a lot of those slates will be running [Google’s] Android and Microsoft’s OS. We’ll see what works. We expect the category to do well.” More from the NYTCo’s Q3 outlook release here.