Friday, May 06, 2005

Newspapers and online auctions

As circulations continue to plummet and classifieds move online newspapers are hard up to develop business strategies that can ensure continuing investment in quality journalism.

But a Canadian company has come up with an idea that could help. CityXpress works with newspapers in the United States, Canada and Europe to stage online marketplace initiatives through its hosted software and on-site sales and customer support services.

According to Poynter the model works like this:
Local advertisers provide goods or services in trade for newspaper advertising. If a product sells in the auction - that is, meets a reserve price set in advance by the newspaper - the advertiser earns an ad credit equal to the product's retail value. The newspaper keeps the cash received from the bidder as payment for the ad credit. Event auctions are conducted online and supported by a print advertising campaign, and in some cases via a dedicated print supplement. Readers bid on auction items online or by telephone; the highest bidder whose bid meets or exceeds the reserve price wins the item or service.

The first European paper to run an auction was the Berner Zeiting, which brought in €230,000, and the combined result of four auctions that have been run to an audience of 800,000 subscribers resulted in €1.4 million in revenues.

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