Q&A: Martin Nisenholtz, CEO, New York Times Digital
At the Times, Nisenholtz presides over an online publishing powerhouse and innovator--the New York Times Co. reported that its digital unit achieved $25 million in revenues for fourth-quarter 2003, up from $19.7 million for the same period the previous year. MediaDailyNews' Tobi Elkin sat down with Nisenholtz recently to hear his views on where interactive media and advertising is headed for the first of a two-part series.
MediaDailyNews: What is the state of the industry?
Martin Nisenholtz: I think the state of the industry is strong, and it's a little bit scary in a way, because the cycles that we've been through over the past six or seven years have been so dramatic. I think everybody understands that the cycle that ran from mid-'98 until mid-2000 was way overplayed. And then the cycle that began in early 2001 and which catalyzed the founding of the [Online Publishers Association] in June was similarly overplayed.
In other words, we went from a situation of total irrational exuberance to despair within a period of six months--and during that period, from a consumer perspective, we continue to see increasing consumer engagement. At least in terms of the Times Web sites, and from an industry perspective, robust growth overall. And yet the opinion of the folks who were planning and buying the advertising went from holy grail to unworkable literally overnight.
MDN: What's changed in the last year or so?
Nisenholtz: I think, in part, because of some of the efforts by the trade associations and because of the efforts of all of our sales forces. Or there just simply is a lot more awareness about the Internet and how it's used in major media companies on the buy side and client companies. The marketplace has said we understand that this is real and that people are actually using these things in their lives. The ethnography research that the OPA came out with early in the year was really indicative at a household level of how people are integrating computing and the Internet into their lives. Once marketers and agencies begin to see that, and once the folks who work in those environments do it themselves ... and I've always felt that's really a key. That when people who are spending the money are using the medium, it becomes much, much more tangible.
In addition, you've had a dramatic increase in accountability, so marketers are beginning to see that the Internet has begun to--and will fulfill--its promise of becoming a very accountable medium, and therefore is deserving of some media spend.
We want to make sure as we go forward that the industry is delivering on its promises, and I think there's still plenty of running room. I think that the marketing community is still underspending by a very significant margin, given the numbers of users out there and given the engagement these users have with our medium. I don't think we're anything close to being back where we were during the bubble. I think we're in a sense just beginning to fulfill the promise that this medium has.
You asked me about the state of the medium. I think to punctuate this, what seems to me to be [the] most important thing is that the perception of the medium and its effects are realized by the folks who hold the purse strings. Look, there is tremendous inertia surrounding existing ways of doing business. That has always been true, and it will always be true. Business models that support existing ways of doing business are highly defensible in most cases, but now I think what we're beginning to see are significant numbers of people saying 'look at the way younger people in particular are taking up broadband and using it in their lives.' We really need to understand that much more carefully or else as marketers, we're cutting off a major channel to the consumer.
MDN: Are marketers taking this group seriously?
Nisenholtz: If marketers aren't planning principally against that base and focused on finding out about that base, I think they're making a mistake. That's what's real today. Is interactive television real? Yes, it's real, but it's marginal. Are wireless services real? Yes, they're real, but they're still very nascent in terms of their ability to deliver advertising messages. Marketers should look at everything. But there is a tendency sometimes in our medium for marketers to look at the next big thing. The current thing is the World Wide Web on a PC. There are tens of millions of people using the Web on a PC. That's what's real and that's where most of the attention should be spent. Just my view.
MDN: What's the disconnect within agencies about interactive media? Some are more progressive than others. What is the agency conundrum?
Nisenholtz: I don't know that there is an agency conundrum that we can talk about as a general conundrum. I'm a realist, I've been around for a long time. I really do believe that based on the numbers and based on what I read, there is a growing recognition of the Web as a significant force in our society, and as a significant channel of marketing for a variety of purposes from branding to direct response. I can't sit here and tell you that agency 'X' or agency 'Y' are further ahead in understanding that. I literally can't do that because I don't have that kind of reach into every agency in the United States.
MDN: Where do you go once awareness is raised and marketers start to ante up a little bit more money?
Nisenholtz: Well, you just answered your own question. It's a little bit more. Where you go from here is to continue to try to educate that community about the benefits of this medium so that more than a little bit is allocated.