Articles About Travidia
Baby Blue Chips: Travidia Inc. - Digital Acumen Boosts Newspapers Online
By Marti Childs & Jeff March
Published March, 2006
From the March, 2006 issue of Prosper Magazine, a Sacramento business publication.
After Mosaic, the first web browser, jump-started commercialization of the internet in 1993, the newspaper industry reacted warily. Some publishers questioned the wisdom of placing their news content on the web and were puzzled about how, if at all, to profit from it. They eventually realized they could generate revenue by restricting access to paid subscribers and by offering limited content to others, sponsored by advertising.
Newspaper ads and multipage inserts, however, didn't lend themselves easily to digital formatting for the web. Simply slapping images of ads on web pages didn't take advantage of the powerful database-oriented search engines. That limitation is where the founders of Chico-based Travidia Inc. saw opportunity. Travidia is a privately owned service company that transforms ads it receives from newspapers and advertisers as Adobe Acrobat PDF files into component parts entered into a web database. Much of the conversion process is performed using AdTabs, software that Travidia developed.
After extracting key search terms contained in each ad and loading them into a database, Travidia uploads the converted ads and accompanying data onto its web servers. Readers of client newspapers linked to the site can search for advertised items by categories, including apparel, automotive, business opportunities, department stores, electronics, furniture, legal services and classified advertisements.
"Research recently has shown that about half the people who buy something in a local retail store first do research on the internet before they get in the car to buy it. So retailers have to be on the internet now, to be part of that decision-making process," says Craig Diebel, general manager of the website of the Fort Worth Star-Telegram.
That newfound search capability comes at a critical time for the newspaper industry, which has suffered from continually declining circulation since its peak in 1984.
"That decline is challenging newspapers to generate enough advertising revenue. They have lost an enormous chunk of their classified ad revenue to companies like eBay, Google, Yahoo, MSN, AOL and Monster," says John Strisower, Travidia's founder and chief executive officer. "Our company is a very strong believer in the newspaper industry. We are building systems that help newspapers to gain in reader-ship and revenue streams in the online world as their print world is in decline."
Although the Star-Telegram - a client for the past four years - pays Travidia a flat fee for digitizing each retail print ad, the newspaper does not charge print advertisers for placing their display ads on the web. The paper does charge separately to post classified ads on the internet, however. Diebel says the web now accounts for nearly 30 percent of revenue the paper derives from employment classified ads.
More than 400 client newspapers participate in Travidia's network, which includes the San Francisco Chronicle, San Jose Mercury News, San Diego Union-Tribune and Orange County Register. It also includes most Canadian metropolitan dailies and a few papers in New Zealand.
Travidia also contracts directly with about 20 major retailers, including Lowe's Home Improvement, Orchard Supply Hardware, Lamps Plus, Ritz Camera, Red Lobster restaurants, and Raley's, Bel Air and Nob Hill grocery stores. Travidia converts their printed catalogs, brochures, direct-mail flyers and other advertising materials into searchable web presentations. Advertisers pay Travidia a fee for each visitor who clicks on the ad material.
Converting ads for retailers was the core of Travidia's business model when the 44-year-old Strisower (pronounced STREE-sour) founded the company in March 2000 under a different name: AdExpedia Inc., to connote expediting delivery to the web. Strisower, who has a degree in computer science from Chico State University, funded the company with $350,000 of his own money and nearly $500,000 from the Sierra Angels, an investment group from Northern California and Nevada. In August 2000, he attracted $2 million more through a Preferred Series A investment round.
As the business began growing, Strisower discovered newspaper publishers' pent-up need for a cost-effective means to recast print ads for the web. At about that time, he received some unwelcome news. AdExpedia had attracted the attention of executives of the Expedia.com travel-marketing firm of Bellevue, Wash., who asked Strisower to drop the AdExpedia name.
"Given that they had a much larger stack of chips than we did, we decided to comply," says Strisower. In early 2003 he spun all the assets out of AdExpedia and co-founded Travidia with his first employee, Randy Hutchison - now Travidia's president and chief operating officer. In a Series B investment round, they brought in nearly $1 million from Catalina Marketing Corp. of St. Petersburg, Fla. Travidia, which has been profitable throughout the past three years, has not sought additional investments since.
The Human Touch
Travidia's ad conversion process requires a significant amount of human intervention to make certain that all text in each ad is faithfully transformed, to identify search "key words" in each ad, and to assign each ad element to an appropriate category on the client's web directory. Travidia further maintains the online shopping sections of each client's website.
Travidia offers other products and services, including one called AdScripter. Its automated functions allow advertisers to create and post their ads on the "shopping channels" of participating newspapers' websites without involving the paper's advertising staff.
Travidia's revenues are approaching the double-digit millions. "I'm pretty confident that we will cross through that line in '06," says Strisower.
More than 100 of the company's 175 employees are engaged in the web ad production process. Most of their work is concentrated in Saturday's late-night shift, when Travidia receives content for the Sunday morning editions of its client newspapers. Strisower is convinced that Travidia is ideally positioned to capitalize on a substantial growth market.
"The contribution of revenue and profit to newspapers from online advertising over the past several years has gone from virtually nothing to as much as double-digit percentages of revenue," Strisower says. "It still is not the lion's share of the newspaper's revenue, but it is without question the only part that's growing, and it's growing very fast."