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Advertisers Barter Gift Certificates For Newspaper Advertising

Two Illinois-based newspapers, The Dispatch (in Moline) and The Rock Island Argus located in the Mississippi River region known as the Quad Cities, launched in February 2007. It is a customer retention web site that developed into a major draw for advertisers. The secret of its success? Telling advertisers, �Your money�s no good here.�

The site uses a two-pronged approach that favors barter over cash, yet keeps the newspaper comfortably in the black.

First, an advertiser gives the web site three gift certificates each month that are redeemable for its products or services. The site then offers these vouchers for sale to anyone who visits the site�s �Value Vault,� at half the face value of each certificate or less...taking that sum as its fee.

Each month, the paper sells $2,000 to $7,000 worth of gift certificates, estimates John A. Newby, former circulation director for The Dispatch and now publisher of The Times in Ottawa (IL). �Advertisers love it, we get our money back and draw more readers to the site,� he revealed.

Elsewhere on the site, those same advertisers offer special coupons that can be downloaded and printed only by those who subscribe to The Dispatch or The Rock Island Argus. The advertisers also receive promotion in the print edition and elsewhere on the DQC site.

Newby and the site�s former manager and administrator, Zack Wenthe, spent an hour a day for about two months just brainstorming the details of how the site would work. They started by collecting pre-printed, paper-based gift certificates from merchants, but having to mail them to customers who bought them online quickly proved tedious.

In September, a completely digital system was designed which customers could then download and print. Each month, merchants receive a report that lists the number of page views their part of the site received, as well as the serial numbers of each gift certificate purchased.

The allure, according to Wenthe, is that the site�s approach appeals to internet-wary small business advertisers. �Your major players get it, they know how to track it,� he noted, �but local guys don�t want to assume a lot of risk.� The benefit of this ad program is that it�s performance based. �They�re only paying if we sell their gift certificates.�

DQC is a particularly effective tool for reaching the small-business advertiser, says Newspaper Next's Stephen T. Gray, who has watched the project evolve. �This removes one of the biggest obstacles to advertising�having to take cash out of the business to pay for it.�

And what about those gift certificates that don�t sell quite so well? The newspaper company uses them as new subscriber and EZ Pay premiums, Newby says. Previously, the papers were spending about $10 to $20 per subscriber for premiums. Now the certificates generate about $150,000-$200,000 in revenue and savings on subscriber inducements, added Newby.

�The struggle has been getting the traffic,� Newby admitted. Clearly dabbling in barter is something guaranteed to make a newspaper�s accounts department a little nervous. �But we have to be different. If we keep doing the same thing we�ve always done, we�re dead.�

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