The Sioux City Journal Experience

SIOUX CITY JOURNAL

A MODEL FOR SUCCCESS

The Sioux City Journal has just marked its fifth anniversary running the Xceedx eMerchant auction program, so we asked them recently to share the secrets of their success.

"Year in and year out this program just keeps working," says Angie Dye, Marketing Manager and auction project lead. "We keep doing it because it is consistently our most successful initiative in recruiting new, non-traditional advertisers."

"We've averaged annual revenue of $125,000 from the Xceedx program. We're located in North West Iowa with a circulation of about 29,000 and serving an area with a population of around 82,000. And we've learned a few things along the way that have allowed us to keep the revenue growing and reduce the workload."

But first some background: the Xceedx program features a continuous online auction that runs 52 weeks a year selling, in the Journal's case, mainly gift vouchers and cards. The participating businesses commit products and vouchers that are sold in the auction hosted on Xceedx's servers. Each item has a preset reserve price set at 60% of its retail value. The Journal retains the cash from all items sold at or over the reserve price and the business receives an advertising credit equal to the retail value of the items.

"Businesses like the program because they are receiving an advertising campaign with a value equal to the wholesale cost of the items sold," says Angie. "We call it auction financing."

General stats:

The Journal has a sales staff of 20 inside and outside reps, with about 15 of them selling into the auction as part of their normal sales activities.

The Journal runs the auction 52 weeks a year, starting new products every Monday that run through Sunday night.

Sales Approach:

"This has been one of the 'secrets' to our success," says Angie.

First, the Journal created an auction advertising rate that all participating businesses receive.
Next, the Journal created 3-4 advertising packages that each business chooses from to utilize their earned ad credit. These packages are based on selected advertising programs such as ROP or online advertising. "This has reduced any issues of tracking the ad credit earned in the auction," Angie reports.
The Journal sells annual contracts to businesses, with their offers typically spread over the next 12 months of the year.
The auction features items from 6-8 businesses weekly.
Throughout the year the Journal runs about 12-40 unique products from these businesses, in most cases with multiple quantities.
Once a year the Journal ramps up the auction, adding more items to create a larger auction (in the case of the Journal this is in the fall).
"Running 52 weeks a year keeps the registered bidders engaged with the auction year round," says Angie, "resulting in more products sold and higher revenue."
Gift Certificates/Gift Cards are one of the best performing auction categories as they can be tailored for just about any business.

Auction Effort:

"In terms of overall effort, the Journal reports that the workload overall is about the same as selling and running a print special section," Angie states.

Selling is less effort because they are selling annual contracts.
Initial administration work is higher as you must first set up the vendor and the first products, however this drops in subsequent weeks as the vendor's previous offer(s) can be copied and used as the basis for subsequent ones.
The Journal says it is key to have a keen project lead and manage the process.

Competitive To Other Programs:

Asked if it was competitive with other programs, Angie said they have run a daily deal site and it was competitive to it as the target market was often the same. She noted though that with the auction and its unique auction financing model was much more attractive to non-traditional advertisers such as restaurants.
Angie also noted that you can target both products and services with an auction. It is hard to sell products on a deal site as the business cannot recover their costs under the typical deal site discount and vendor split. Offering partial coupon savings on product deals (e.g., save $25 when you buy a $150 product) as done on many deal sites to address this issue are not popular with consumers.

"We run both an auction and a deal site but the deal site has only occasional offers on it. The auction financing model has been more popular with our advertisers," reports Angie.

"The auction program is a great way of increasing ad revenue and growing your advertiser base," says Angie. "We gave it a try after running two event auctions in 2008 and 2009 and it has exceeded expectations. Xceedx has the model and resources to help you be as successful in your market as we are in ours, so I have no hesitation suggesting others give it a try."