Online Telegraph battles to turn success into cash

The Electronic Telegraph is one of the world’s leading online newspapers. However, it still faces the problem of how to transform this into revenue. New Media is edited by Michael Kavanagh, who can be contacted on Michael_Kavanagh@compuserve.c

When Conrad Black gave the go ahead to launch the Electronic Telegraph (ET) as the first online version of a major UK national newspaper in 1994, it was regarded as an astute marketing move.

For too long, The Daily Telegraph, despite its healthy but ageing readership figures, had been seen as a paper for old fogeys written by young fogeys.

ET was the perfect way to raise the paper’s flagging brand appeal among the young and relatively affluent readers who dominate Britain’s Internet audience, but were ignoring the Telegraph.

Danny Meadows-Klue, product manager at Electronic Telegraph, agrees brand repositioning did play a key role in the decision to push ahead with the project.

But he says that while brand repositioning of the Telegraph’s daily and Sunday titles remains an important justification for the site, ET is now determined to lead rival online papers and win revenue streams in its own right.

“Brand repositioning is still something we hold dear – but display advertising, sponsorship and classified are starting to take over in what’s driving it forward,” he says.

It is hard to describe Meadows-Klue, aged 26, as a fogey. He cites body surfing in the tropics as his favourite pastime, and Bali as his favourite destination.

He arrived at ET at the beginning of 1996, following a two-year spell on a publishing management training programme at United Newspapers.

ET now claims 35,000 readers a day, averaging between ten and 12 page views per visit, and generating over 6.5 million pages a month. Few would dispute that ET has emerged as one of the hottest Web properties in the UK, and one of the leading online newspapers in the world.

But the Telegraph Group must begin to exploit the growing editorial success of ET.

Classified ads are automatically put online free, as “added value” for customers. Classified advertisers can also pay more to have their ads placed more prominently in online listings. In addition ET offers to build and host Websites for commercial organisations new to the Web.

ET is also looking to develop revenues from acting as a gateway to an electronic mall, and experimenting in generating gaming revenue from linking into the Telegraph’s Fantasy Football competition.

But sponsorship and banner ad revenues are the main income streams and are now starting to make a real impact on the editorial costs of the ET operation.

ET will remain a free service for the foreseeable future, and Meadows-Klue dismisses the suggestion that ET and other online daily papers threaten to undermine or “cannibalise” the market in national dailies – by tempting online readers to drop the print versions.

But without a cover price to fall back on, ET needs to make progress in developing advertising revenue.

It’s a situation common across most of the UK’s biggest Websites. Meadows-Klue believes media buyers are still largely ignorant of the targeting potential and efficiencies which the online medium can offer UK advertisers. They continue to prefer block-booking banners across the busier UK sites.

“Technology gives the ability to deliver ads to very particular targets, but most advertisers are not exploiting that,” he says.

“For example, we know our health news is viewed by a lot of doctors and people in the medical profession. We can deliver on the basis of what we know about the individual reader.”

Meadows-Klue declines to go into too much detail on exactly how, and how much, data is collected on individual ET users.

But he insists there is nothing sinister about exploring ways of exploiting data on readers.

“The contract with the online reader is different,” he says. “In print, you pay. We don’t ask users of ET for money, but we do ask for some information when they register for the site. It’s a fair trade for them to supply a bit of demographic information about themselves to read ET online, and we think the readers are comfortable with that.”

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