These are tough, fast-changing times for newspapers, and many of them are taking severe measures to get back on track. Sometimes, it means putting the innovative online guy in charge of print too, as Bay Area News Group has done with online advertising head David Prizer. But sometimes, it means consolidating power under the old print hands that believe they need to “own” the online efforts because that is where the action is.

Last week, The San Diego Union-Tribune, for instance, laid off its online leadership: GM Chris Jennewein, content head Ron James and business development head Jim Drummond. Mark Davis, the paper’s current head of strategy, will take over the Internet operations.

Some anonymous spin in The San Diego Weekly Reader, an alternative paper, suggested that Jennewein and his team probably had to go because of a “disastrous” experiment in the creation of an online radio station, and its decision to provide a bigger news footprint during the San Diego fires last year, removing advertising from the home pages. The implication, I guess, is that the paper should stay on the straight and narrow and maximize all revenue opportunities (or whatever the cliché.)

But will the print people clearly see the opportunities inherent in the online world of marketplaces and community? Can they leverage what they have into new businesses? It is a fair question.

I have consulted for SignOn on and off for eight years. From my limited interactions with the company, I could see that there had been tensions among the print and online staffs. But I don’t know the real reason for the online team’s removal.

From my observation of SignOn, I can tell you that the site has been a pioneer among newspapers in the creation of e-mail targeting for local businesses and sponsored verticals, especially for tourism, such as a Super Bowl guide when the Super Bowl came to town. SignOn also created a business directory that specifically focused on tourism. And it has extended the franchise to vertical directories in print, creating widely distributed elder-care and legal directories.

It also has been a pioneer in the use of multimedia, including photo libraries, podcasts and video. All this especially came to fruition during its exceptional coverage of the devastating San Diego fires, where the site was a community lifeline for hundreds of thousands of people who had been evacuated. I don’t remember any criticism about its decision not to run advertising on the home pages at that time.

What it was doing was building the loyalty of the local audience. Shouldn’t that be priceless in a town where the print circulation is in the low 20s?

The site has also conducted a number of inexpensive experiments, including the Wikis for local community and music scene information and mobile news headlines, which might be seen as a necessity in QualComm’s hometown. More recently, it created the AmplifySD Radio local music station and the SignOn Radio station, which expanded the paper’s footprint to the work day with weekly shows on such topics as local gardening, dining and online politics.

I will need to talk to someone who can tell me why it was such as bad idea. While there had been some equipment to purchase, the day-to-day operating costs certainly weren’t very much.

What Jennewein and company didn’t do was jump after every opportunity and reinvent the wheel with every new thing that came along. They prioritized and worked within a budget.

The print people will now apparently take over the reins of the operation, determined to focus on both print and online. Maybe they will do better. But obviously, this will only happen if they understand what Jennewein and company have long understood: that their job in not only to sustain existing revenues, but also to create new revenues that comes from the opportunities that are inherent in interactive media and by reaching a broader swath of the dynamic San Diego community.

Google’s ambitious effort to take its bidding system across media might be hitting a bump in radio. The company’s program started out fairly well when it bought dMarc (since renamed Google Audio Ads) for $102 million plus incentives in 2006. Since then, it must have been doing something right. It now claims affiliations with 1,600 FM and AM radio stations. DMarc only had 700 affiliates.

But Google Audio Ads has alienated some radio station owners by trying to force them to commit a percentage of a wide swath of inventory, said various station executives.

One owner complained that Google significantly cut his share of revenues “on the day that it made a deal with Clear Channel” for 5 percent of the radio station giant’s inventor. This included both premium inventory, such as drive time, and remnant inventory at off hours.

The Clear Channel deal made sense for Google at the time, since it provided enough desirable inventory to be taken seriously by quality advertisers. But it placed competing stations at a disadvantage.

By contrast, Bid4Spots has curried favor with its reverse auctions for unsold inventory held every Thursday, according to CEO Dave Newmark. The system is mostly utilized by national advertisers, which gain a broad reach at the local level.

To be sure, Bid4Spots doesn’t have the clout of a Google, and is less likely to be as persuasive in bringing as many new advertisers to radio, which isn’t an easy sell right now. Perhaps the stations need to be forced to give up some of their prime inventory. But results have been good, and the stations like it.

At this point, the auctions are grossing $100,000 to $200,000 every week. They have grossed an aggregated total of $8.5 million of auctions since the company’s founding in 2005.

Bid4Spots’ Newmark touts his reverse auction model as a win-win for radio stations. It is totally voluntary, there is no revenue share beyond normal agency commissions (15 percent), the spots generally come pre-produced, and the funds are pre-cleared.

Most importantly, the rates are sealed so that the stations are not competing against their own rate cards or revealing competitive information to other radio stations. If the stations can sell the spot at a higher rate, they can simply withdraw the auction. “This motivates them to drop their rates,” says Newmark. “When prices are this low, they must be sealed.”

The Bid4Spots system is especially appealing when compared with Google’s requirements for desirable inventory that could otherwise be sold at higher prices. If stations wanted to go that way, they wouldn’t go to the trouble of an unorthodox marketplace, says Newmark. That’s why previous “forward auction” models such as AdAuction.com failed (back in 2004).

The rise of Web-oriented behavioral targeting and the tough economics and unwieldiness of user diaries and phone calls have pushed radio rating giant Arbitron to focus less on radio station ranking and more on providing qualitative data about specific local businesses. The shift might have ramifications across all media, especially in smaller markets.

Leveraging its ownership of Scarborough Research, Arbitron’s new effort will focus on sending out extensive media usage booklets to consumers on a shared cost basis. Studies can have smaller bases, and will be done once, rather than four times, a year. Costs will be shared among local media participants.

Arbitron’s position is that people’s habit’s “don’t change that much” quarter by quarter.

The consequences are that stations won’t be able to use Arbitron data to assert their ranking in the marketplace. Bankers need that data to value radio stations. But advertisers don’t really. In fact, the qualitative data about local media and advertisers may be more effective in station pitches. With the new approach, radio sales pitchers can note,: ‘I have some market data in Charlottesville about your customers,’ including gender, married and Internet access modes.” It is a more specific guide to buying media and targeting consumers than putting out balloons on Saturdays.

The studies will also have more impact than behavioral targeting, which can be overly generic and not provide information about retailers.

When a local team headed by ad agency and PR veteran Brian Tierney bought The Philadelphia Inquirer and related holdings 18 months ago, it was seen as a possible model for how “new thinking” could transform the newspaper industry.

Since then, Tierney and his team have had a tumultuous time, with major union problems, declining circulation and advertising shortfalls. But appearing at the Newspaper Association of America’s Marketing Conference in Orlando this week, Tierney laid out how he is righting the ship, bolstered in part by solid results from Philly.com, the online site headed by MediaNews Group veteran Eric Grilly.

Freed from corporate-wide deals made by Knight Ridder, Philly.com, which is “anything and everything Philly,” has been able to go its own way, signing with Monster.com for recruitment and building out community services. The site has doubled its page views and boosted unique visitors by 7 percent, says Tierney.

The goal is to attract new audiences online, and be realistic about print readership, which isn’t about young people. “We’re targeting women 35+,” says Tierney. “We’re being very, very tactical” with beach promotions, etc.

One of the biggest challenges faced by the company is that ads are bought by “32-year-old” account reps. “We know we’re a little bit uncool,” says Tierney. To counter such perceptions, Tierney is investing heavily in a media lab concept. “Agencies want to do TV,” he says. With broadband, Philly.com will counter that by creating TV shows, along with magazine-style stories and radio content.

For instance, the site has Philly Uncorked, a “wacky wine show” produced by the Philadelphia Wine School and sponsored by The Pennsylvania Liquor Control Board. Looking forward, Tierney sees real opportunities in e-commerce via Zeppy, an Amazon-like site that hopes to provide more of a local look and feel.

But first he needs his team to appreciate the economic challenges that lie ahead. “There will be economic literacy courses for everyone,” he says.

CBS Radio will begin selling inventory for audio and video ads across all its stations in a three-year deal it has signed with New York City-based TargetSpot, an 18-person specialized agency run by Kanoodle vet Doug Perlson. Union Square Ventures’ Fred Wilson is among the investors who have put more than $2 million in the company, which debuted in March.

The company has 75 stations online today and expects to have 500 stations up in short order. Besides CBS, other affiliates include Entercom, Beasley, Nassau Broadcasting and FNX Radio.

Perlson says TargetSpot typically handles production for advertisers, and also enables networks to be built on the fly on a hyper-local basis, working with such groups as the New York State Restaurant Association. “Restaurants can focus on a couple of ZIP codes,” he says. Other categories vary, and can include events. “Bands can focus on specific venues,” he notes.

While radio ads on the Web are very underdeveloped, Perlson says the opportunity is great with “80 million streaming users of terrestrial stations. They can reach new types of advertisers.” He also sees opportunities with video. “Radio stations are more of a local hub,” he says. “They are more than audio content.” Many station sites, for instance, already host videocams and newsclips.

CBS Radio will begin selling inventory for audio and video ads across all its stations in a three-year deal it has signed with New York City-based TargetSpot, an 18-person specialized agency run by Kanoodle vet Doug Perlson. Union Square Ventures’ Fred Wilson is among the investors who have put more than $2 million in the company, which debuted in March.

The company has 75 stations online today and expects to have 500 stations up in short order. Besides CBS, other affiliates include Entercom, Beasley, Nassau Broadcasting and FNX Radio.

Perlson says TargetSpot typically handles production for advertisers, and also enables networks to be built on the fly on a hyper-local basis, working with such groups as the New York State Restaurant Association. “Restaurants can focus on a couple of ZIP codes,” he says. Other categories vary, and can include events. “Bands can focus on specific venues,” he notes.

While radio ads on the Web are very underdeveloped, Perlson says the opportunity is great with “80 million streaming users of terrestrial stations. They can reach new types of advertisers.” He also sees opportunities with video. “Radio stations are more of a local hub,” he says. “They are more than audio content.” Many station sites, for instance, already host videocams and newsclips.

Executive Interview: The Leading Edge: Auto Advertising in Transition had very much the same ring to it as yesterday’s session on real estate in transition. At The Kelsey Group’s ILM:07 event, the final panel each day was on two of the most rapidly changing classified advertising verticals. Since home and automobile buying are typically the two biggest transactions a consumer makes, it is no surprise that buyers (and the huge number of people interested in houses and cars) are using the Internet to get as much information as they can.

David Schwartz, local category director at Yahoo!, shared with the audience quantitative research Yahoo! had conducted about how consumers decide which automobile to buy and what dealers are doing to attract buyers. Not surprisingly, Internet activities such as using search engines and Web sites have grown dramatically, although they are still second to people who select a dealership because they know it/drive by it or based on friends’ recommendations.

What is most interesting is that the “newest influence in a consumer’s decision about where to shop is the dealer’s reputation,” which is amplified by user reviews. In fact, online reviews are now the third most important reason about where people shop after price and a professional staff, but before location and loyalty. Like most every other industry, dealers are still not putting sufficient resources against the online opportunity.

Jim Riesenbach, president and CEO of Autobytel, said ”the Internet has revolutionized car buying for consumers in the last 10 years.” The change is a function of the amount of information that is available and where consumers get that information. Like real estate, newspapers, radio and TV, ad dollars are moving online. Riesenbach predicts an increase of 20 percent in online ad dollars in each of the next few years. In the automobile industry, Riesenbach says dealers make a profit of $300 selling a used car, but lose $20 on every new car.

Successful dealers are incorporating the Internet into the culture of their operations. Both Schwartz and Riesenbach believe that dealers will soon be generating new revenue from Internet marketing that emphasizes service, parts and accessories.

Last week Bebo, the global social network, announced its new OpenMedia platform partnerships. The network has partnered with major media brands to deliver premium content to its 40 million users.

Partnerships include CBS, MTV Networks, ESPN, the BBC, Channel Four, ITN, Yahoo! and BSkyB, as well as emerging media companies like Music Nation, Next New Networks, Crackle, Ustream, Last.fm and JibJab.

The launch of OpenMedia allows users to create libraries of their favorite content. Users can then rate, post and forward it to friends.

As audiences have started to demand higher quality programming online, this move will satisfy the crowds while providing partners with an opportunity to reclaim their fragmented audiences.

With regard to advertising, many brands look to align themselves with premium content especially when trying to reach the elusive teen (Bebo attracts the 13- to 24-year-old target audience). This move will make it easier for major national brands to make the leap toward advertising on the social network.

Interestingly, the partners will not be charged for access to the platform and are able to distribute their content using their own video players, which can carry their own advertising and allow them to retain 100 percent of the related ad revenues.

Summary

EBay announced today that it will begin working with radio ad start-up Bid4Spots. The deal will bring Bid4Spots’ auction-based radio ad sales capability to eBay’s Media Marketplace. This represents a growing direction for eBay to broker ads to cable television and radio and brings the online giant in head-to-head competition with Google’s parallel efforts to broker ads in these media. At stake is the $20 billion U.S. radio advertising business.

Analysis

Bid4Spots’ flagship is a reverse auction technology that provides a self-service dashboard for advertisers to choose a price ceiling for existing audio ads, as well as target demographics geographies, and radio stations (much like Spot Runner’s self-serve dashboard for buying cable television spots).

The reverse auction part comes in when radio stations bid down on those preset price ceilings (see demo here). Bid4Spots has mostly marketed this as an efficient way to sell remnant inventory, analogous to what Yahoo!-owned Right Media has done with considerable success in online display ad markets.

This auction-based system has clear opportunities for eBay, is in line with the company’s existing paradigm and fits the expectations and proclivities of its existing advertisers (eBay sellers). This will expand eBay’s suite of products to the small-business market to which it largely caters.

For Bid4Spots, eBay could conversely provide a single point of entry into many small-business advertisers, possibly interested in radio ads. This is potentially a sizable advantage given the fragmented nature of the small-business market segment, and the challenge in selling into it with a self-service product (a challenge that is central to most local online advertising).

Add to this the inertia in the SME marketplace, where many businesses have been trained to think that radio advertising is cost prohibitive for them (traditionally it has been). A partnership with eBay should help Bid4Spots alleviate some of these challenges and raise its profile, as well as the general message that radio advertising can be a viable and attractive medium for lots of small businesses.

“Our challenge to making this possible for small businesses nationwide was just made quite a bit smaller with today’s announcement,” says Bid4Spots CEO Dave Newmark.

EBay’s ability to bring radio stations to the table should also be valuable and will likewise increase the level of participation and thus value and attractiveness of the auctions themselves. Through the deal, eBay will let more than 2,300 radio stations auction off airtime through its new online Media Marketplace, in which it will share revenues with Bid4Spots.

“They have built a Media Marketplace that currently serves only one media – national cable TV,” says Newmark. “I cannot speak for them, but my sense is that they felt that radio was a logical step, especially since many of the businesses with whom they do business also do business outside of eBay and would appreciate a media vehicle like radio.”

The Online Sales Channel: A New Radio Opportunity

With media fragmentation and emerging online ad media, it has become a buyers market for radio ads, which is why many radio station groups including Clear Channel (see Google partnership) have embraced the online sales channel.

Mostly, these deals have been to offload remnant inventory, and station groups will likely be careful not to let such products undercut or devalue their own premium ad sales efforts. Newmark, however, doesn’t see much of a conflict here but rather perceives an opportunity for additive revenues for radio stations.

“We like the ‘vertical’ of being in the last-minute segment across various types of radio,” he says, “helping stations monetize that portion of their inventory that was heretofore not monetized, mostly for fear of training their advertisers to wait for fire sale rates.”

Summary

CBS announced today that it has acquired London-based social networking site Last.fm for $280 million. The site claims about 15 million monthly users (4 million in the U.S.) and hangs its hat on music video distribution – thought to be a good fit with the traditional broadcast giant. The site also has video distribution in development, in line with the YouTube-esque marriage of social networking and viral video distribution. The price tag for Last.fm is well below Google’s $1.65 billion acquisition of YouTube and competitor News Corp’s $580 million acquisition of social network market leader MySpace. In many ways this is in fact a move for CBS to build off its radio, music and television assets to etch out an online presence similar to the way that News Corp has done it with Fox Interactive Media and its darling MySpace.

Analysis

It’s interesting to see television networks go about online establishment and growth in a way that is similar to the growth strategy they know best; television. In this way they are assembling assets like building TV schedules and looking at how to best aggregate audiences around specific interests, using demographic targeting. MySpace has done this with premium rates for display and video advertising, as well as integration of Google ads throughout the site.

CBS will employ a similar strategy with ad units demographically targeted to Last.fm’s musically oriented set of users. MySpace started out with a similar profile but has since grown into many other things, while it remains a place for bands to promote themselves with songs and videos.

In short, Last.FM works by allowing allows users to connect with other listeners with similar music tastes, to custom-build their own radio stations and to watch music video-clips. This happens through streaming radio based on the playlists of songs users have been listening to on their own computers, as well as what’s on playlists of peers. It is leading a new breed of online companies – also including Pandora and Finetune – known as music discovery engines.

For CBS this brings new reach and online targeting capability and represents a change in direction for one of the countries largest radio networks. This direction was also recently indicated by the company’s majority investment in, and partnership with, TargetSpot (the Spot Runner of radio) which we wrote about here; and the deal to bring video content from its television stations to Yahoo! News.

CBS is also trying to expand an advertising portfolio that includes terrestrial and online radio, broadcast and cable TV, and outdoor advertising. But instead of focusing solely on creating programming, the company is turning a corner to reach broadcast audiences through a variety of mediums. Online is the latest and mobile could be next.

The Last.FM acquisition for one could bring CBS the foundation for a pay per action model around songs. The product comes with a recommendation engine that provides links to buy music, based on what users and their friends are listening to. This could have nice synergies with its existing music properties, and for music it doesn’t have licenses to play, it offers 30-second samples. Bottom line, it extends CBS’s reach, and brings many possibilities for new ad formats and distribution to new online audiences.

“Their demographics also play perfectly to CBS’ goal to attract younger viewers and listeners, said CBS Chief Executive Leslie Moonves in a statement. “Last.fm adds a terrific interactive extension to all of our properties and also is a huge step in CBS Corporation’s overall strategy of expanding our reach online to transition from a content company into an audience company.”