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NYTD's Ad Renewals up 70%

Could NYTimes.com be leading a recovery in the depressed online advertising marketplace?

Total advertising sales in the online division of The New York Times Co. are up by 30 percent as of the end of September, the company said during a third quarter earnings discussion. So far this year, advertising renewals on the site are averaging about 70 percent.

As a result of strong ad sales during the three months ending Sept. 30, revenues were $18.2 million, up 26.8 percent from $14.4 million in the same, year-ago third quarter for the online division.

NYTD's operating profit was $2.8 million for the quarter, compared with an operating profit of $800,000 during the same quarter last year. The results mark the division's fifth straight quarter with an operating profit.

Pegging the results to an overall recovery in the online ad industry may be a bit of a stretch, however, given the cautious outlook company officials laid out during their discussion of The New York Times Co.'s earnings results Thursday.

But clearly, advertisers are re-upping for "site session" advertising formats, in which ads appear across all of the Web site's sections for popular morning day parts. As one of the most-visited sites on the Web during working hours, NYTimes.com is attracting advertisers eager to reach at-work audiences, and apparently taking ad dollars from other Web portals in the process.

In addition, company officials said that "surround session" ad packages -- placements that show only one advertiser to surfers for the duration of their visit to the site, and which are targeted based on the first area they visit -- are also proving popular with advertisers. The new "surround session" and "site session" formats were introduced this year.

Company officials said the online advertising revenues were driven by technology, finance and travel categories and that overall, online classified advertising rose with particular strength in real estate and autos. Strong categories for Boston.com, the online division of The Boston Globe, which is owned by The New York Times Co., were travel, finance and telecom.

During a conference call Thursday to discuss the results, Martin Nisenholtz, chief executive of NYTimes.com, said the division saw an acceleration in advertising renewals during the quarter, but didn't perceive the results as part of an overall improvement in the online ad industry. In his view, NYTimes.com took ad dollars away from other portals during the quarter.

CPM (cost per thousand impression) rates for the surround sessions are averaging about $50, and have brought in about $1.5 million alone year-to-date, company officials said.

The news comes as NYTimes.com expands its automotive and travel sections. The company is working with The Cobalt Group to pipe expanded access to new and used vehicle listings in its auto section (NYTimes.com/auto). The classified listings are from 650 dealers in New York, Connecticut, New Jersey and Pennsylvania. The Cobalt Group, which makes software for the automotive retail market, will manage the development, hosting and maintenance of listings pages on NYTimes.com/auto.

Cobalt is also expected to manage the vehicle inventory data from participating auto dealers and private sellers.

Automotive advertising clients of NYTimes.com are finding site sessions particularly effective, especially when the ads are targeted by users' zip codes, a spokesperson said.

In response to the growing online travel category, NYTimes.com is expanding its travel section in order to add more advertising inventory. The new features include a partnership with travel-booking concern Trip.com and expanded access to the site's archive of travel articles (with no charge).

The earnings results for the digital division were part of The New York Times Co.'s overall third quarter results. During the third quarter, the company's net income was $58.3 million (38 cents per share), up 4.9 percent compared with an adjusted $55.6 million (33 cents per share, adjusted) in the year-ago quarter (not counting special items).

Total revenues were $729.5 million, up 4.7 percent from $696.9 million in the third quarter of 2001. Circulation revenues increased 8.5 percent and advertising revenues rose 3.6 percent in the third quarter, compared with the same period in 2001.

"Our business results improved significantly in the third quarter led by an overall revenue increase of 4.7 percent," said Russell T. Lewis, president and CEO of NYT Co. "Advertising revenues, which improved in each of our operating divisions -- Newspapers, Broadcast and Digital -- continued to strengthen throughout the quarter, as they have done steadily throughout the year."