In addition, the paper has isolated its First Class Server from the rest of the paper's Internet activities through a firewall. The paper decided upon the need for a specialized, isolated digital display ad server after a "travel agency in Aruba" sent a four-megabyte ad file to Cusack's personal e-mail.

"Every time that person hit the button, down goes the paper's entire mail server," said Cusack.

"Everybody needs to have the ability to take a problem file and redirect it to another RIP -- either another manufacturer's RIP or another operating system," said Cusack. "If you get an ad that 'Couriers' on you, just send it to a different RIP."

"Let sales people sell," he said. "Get a relationship established between the (advertising) agency, its production people and yourselves. Communicate directly with the production folks."

This will help solve a major problem by reducing the time the paper spends adjusting and color-correcting ads that come in. "There aren't many agencies out there who know how to correctly set up a color ad for a newspaper," he said.

The Star-Ledger outsources the makeup of display advertising, something Cusack mentioned only in passing -- but another session was devoted entirely to the topic.

Peggy Blevins, director of advertising for the Los Angeles Daily News, explained how her paper and its Denver-based MediaNews Group siblings have outsourced the makeup of display advertising since 1994. (The Daily News is part of a MediaNews cluster that includes the Long Beach Press-Telegram, San Gabriel Valley Tribune, Pasadena Star-News and Whittier Daily News.)

Though the papers are on their second outsourcing firm, Blevins' comments indicated they are happy with the current supplier, the AdOut division of J.J. Grace Inc. of Van Nuys, Calif. AdOut has recently taken over all display ad makeup for MediaNews as well as the Los Angeles Times and Copley's Daily Breeze in Torrance.

The move to outsource display ad makeup was undertaken when management discovered no one knew how much it cost to build a display ad, Blevins said. "Do you care what it costs to get an ad in the paper? If so, do you want to manage a part of the business that's technology-based? Are you willing to accept responsibility for that?"

Once the Daily News recognized not only that it wanted to put a "cost per SAU" on the making up of display ads but that it also didn't want to manage a capital-intensive and technology-intensive piece of the business, outsourcing became a natural route to take.

What were, as Blevins called them, the "a-HAs?" In fact, she said, "there was very little the outsourcing company couldn't do," including run things more efficiently. For example, when the Daily News made up its own ads, sending three to five iterations of proofs to a customer was the norm; with outsourcing, that dropped to one or two proofs, "with one being the most prevalent."

Turnaround is faster, she said, and now there is only a small ad services department, whose primary role is to "make certain all the ads are there before they leave."

AdOut provides the paper with seven pickups and deliveries every weekday, Blevins said. Any ad AdOut receives by 7 p.m. will be made up overnight and a proof returned the next day (unless the ad is being made up more than two weeks in advance).

Revisions are handled overnight, and the archive of pickup ads stretches back to May 1996, Blevins said.

Though Blevins said the Daily News was contractually forbidden from revealing the price it pays AdOut for the display ad makeup services, she did say her paper pays a specific cost per column inch -- regardless of the complexity of the ad -- and money changes hands only after an ad has been printed.

"If it doesn't get published," Blevins said, "we don't pay."

Combo sales and auctions
Maybe print-based models just don't work in the world of on-line advertising.

So suggested Larry Schwartz, president and chief executive of Auction Universe, the Yalesville, Conn.-based division of Classified Ventures LLC of Chicago. "Auctions," he suggested, "make classifieds alive and it makes them interactive."

In an initial relationship with a newspaper -- the nearby Hartford Courant -- Schwartz said 40 percent of the participants in a localized version of Auction Universe weren't subscribers to the paper.

"There's a huge underground economy going on out there on weekends -- people are buying crap and selling crap," Schwartz said. Items normally sold at flea markets, yard sales and estate sales easily come on-line with an auction site, he noted.

Auction Universe customizes an area for its local newspaper affiliate, ensuring that users won't realize they're in Auction Universe. "It's important to have the local brand," Schwartz said, "especially when people are selling stuff."

The lure of catching a bargain is enough for buyers to provide Auction Universe -- and the newspaper -- with rich information. "I can't believe what these people will tell us," he said. "They want to gamble and they'll give us great demographic information."

Auction Universe charges 25 cents for a listing, plus a 2.5 percent commission if there's a sale. An additional 25-cent charge yields a listing in boldface or italics.

Though there is a lot of media attention given to fraud on auction sites, said Schwartz, there is only one percent real fraud, where "they'd advertise the product and what was shipped wasn't what was advertised."

Schwartz was upbeat about newspapers having auction affiliations: "Every single [web] portal thinks this is the part newspapers have forgotten about."

Concerns with the large portal web sites -- those like Yahoo, Excite, Lycos and the like -- was evidenced by another on-line expert, Joel Brown, the director of advertising at Boston.com, the web site of the Boston Globe.

"Most" on-line advertisers were spending their money with the portal sites, Brown said. "Newspapers get a much different viewer to our sites. Unfortunately, the advertisers don't understand that -- yet."

Brown outlined the philosophy behind Boston.com, explaining that it is not just a "reprint on the Internet" of the Globe.

First, the paper has a number of cross-promotional partners who are based on Boston.com, including local television stations, museums and the local city magazine. None of these organizations shares in any of the revenues.

In addition to selling banner ad space on the site, Brown said the paper tries to help local retailers.

"We wanted to create inexpensive web sites for businesses that can't afford to spend thousands and thousands of dollars on a web site," he said.

Boston.com sells ad insertions in conjunction with the print publication, he said, adding that much of the reluctance of print salespeople to talk to clients about advertising on-line has been dissipated by ensuring that the print sales force "gets full credit for any on-line sales."

The paper's best combination sale, Brown said, was with Au Bon Pain Co. Inc. The Boston-based franchiser of bakery-cafes was receptive to a joint presentation made by the sales groups for print advertising, web advertising and circulation.

Today, the local Au Bon Pain stores advertise in the paper, have a web site on Boston.com and sell single copies of the Globe. Said Brown: "Everything has the potential to be a combo sale for us."

Team player
The Arizona Republic is probably one of the most innovative newspapers in America, so it should be no surprise that it has adopted an organization of sales teams in its advertising department.

Nor should it be a surprise that the paper believes the team concept has been successful. What might be surprising, though, was the resistance the paper's director of advertising met while trying to implement the idea.

"I ruined the business as they knew it," said David Alley.

Nonetheless, in 1998 -- two years after making the move -- revenues at the Republic increased six percent, the fourth consecutive year of revenue increases (which means that the paper did well even when it was making the team-approach transition).

In addition, credits, makegoods and wrong billing comprised 1.5 percent of total revenue last May -- down 42 percent from the previous year. Further, Alley said, credits and makegoods for poor ad quality in 1998 were down 55 percent from 1997 -- and that number represents .008 percent of sales revenue.

Alley has constructed 35 cross-functional, self-managing teams and six telephone call center teams. A typical team, Alley said, has two sales representatives, an artist and a customer assistant. Aside from motivational issues, the biggest problems Alley cited in the move to teams were in getting the artists comfortable with the notion of being paid commissions, and helping the sales reps and the artists learn that the customer assistant wasn't their secretary.

The motivational issues, Alley said, come after time and effort.

"Here's what happens with a team," he said. "Forming -- they just want to get along; storming -- a lot of conflict with people fed up with team behavior; norming -- fixing frequent problems and they relax a little bit, and dorming -- they're sure they've got it. It's like an 18-year-old leaving home for the first time -- they're dangerous. They're literally teenagers; they'll turn on you."

But, eventually, Alley said, members of the group begin to replace their own egos with the team ego. Many times, elaborate tasks are accomplished because the workers didn't know something couldn't be done.

Another concern was moving middle managers into becoming team leaders. "A team leader doesn't physically sit on the team -- they usually handle four teams," said Alley.

He emphasized that it was hard for the middle managers to shift focus from the "day-to-day stuff" and look at the bigger picture -- issues such as training, databases and, "How do we position ourselves?"

-- dmc

AdOut Inc., (818) 780-5400, e-mail: Jeff@adout.com;
Auction Universe Inc., (203) 453-5115;
Harris Publishing Systems Corp., (407) 242-5330, e-mail: jfitch@harris.com;
SoftArc Inc., (905) 415-7000.

From THE COLE PAPERS, February 1999, Copyright © 1999, All Rights Reserved.