When a print newspaper initiates an online version of its newspaper, what are th

Question

When a print newspaper initiates an online version of its newspaper, what are the possible outcomes for its current display advertiser? Are they likely to prefer one channel over the other to reach their customers, or are they likely to select both? If both, are they likely to expect a discount for a bundle of print and online advertising? How do these outcomes affect the newspaper’s bargaining power? When a print newspaper initiates an online version of its newspaper, what are the possible outcomes for its current display advertiser? Are they likely to prefer one channel over the other to reach their customers, or are they likely to select both? If both, are they likely to expect a discount for a bundle of print and online advertising? How do these outcomes affect the newspaper’s bargaining power?

Explanation / Answer

Display advertiser is the company who wants to advertise for its products and services. The display advertiser can opt to go for the ads only in the online version of the newspaper, ads only in print newspaper or the advertiser can opt for the both the versions of the newspaper. Since, the advertiser wants to reach the bigger size of the target audience, then it is likely that the display advertiser will opt for the both versions of the newspaper to reach out to the untapped audience also.
Yes, the bundled pricing always comes with the discount and this discount can be offered to the display advertiser. It creates a win-win situation for the newspaper publisher company. An advertiser gets the relatively lower cost of advertisement and Publisher Company gets higher revenue through the bundled price. These developments increase the bargaining power of the newspaper publisher, because it owns different channels to reach out to the audience and it improves the effectiveness of the advertising. So, bargaining power shifts toward the newspaper.

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