Hearst zips onto the superhighway - Hearst Corp - Editorial

Folio: The Magazine for Magazine Management, March 1, 1994 by Keith J. Kelly

Following the lead of Time Warner, the Hearst Corp. says it plans to become a major player on the information superhighway. It will be way up in northeast Quebec, where everyone speaks French. But the language of the first 34,000 people signed up for the test is less of a concern than the hardware and software--as well as the long-term implications for capturing ad dollars. Hearst's partners include a cable system operator, a national bank, Loto-Quebec, Canada Post Corporation, Videoway Communications and the local power utility. Interestingly, while many people are saying that magazines have tremendous potential to be the information providers to the superhighway (we already deliver our product to highly targeted audiences) Hearst is not joining this venture as an information outlet for magazines.

Hearst president and CEO Frank Bennack says magazines my eventually flow as information providers--but that is not the primary motivation. Hearst anticipates that the system, called the UBI (for Universal Bidirectional Interactive), will be a vehicle for advertising. Its early efforts seem focused on classified material as an augmentation of Yellow Pages and classified ads in Hearst newspapers.

At first blush, the Hearst project looks a little more ambitious than the Full Service Network under development by Time Warner. Of course, Hearst's test is more than a year away, while the Time Warner blast-off is only weeks away. Hearst does not anticipate going live with the service until the spring of 1995. The second phase will involve Quebec City and Montreal and will attempt to reach 1.4 million people.

Hearst says it will be kicking in 10 percent, or $20 million of the $200 million needed. The money will be used to wire and equip each home with a special interactive box allowing users to order goods and services, bank electronically, even set their home heating. It will employ a debit card similar to the automated teller card used for making bank withdrawals.

All the interactive highway players my be wise to heed Roland J. Sharette at J. Waller Thompson Online in Detroit. He told me at one high-tech gathering last year that advertisements in magazines fare far better than ads in online services in terms of user retention of the message. However, if the user can be induced to take some action with the online service ad--say, clicking on an icon in a car ad to call up the colors and/or other options available--then the online ad far outperforms the magazine ad. And that is probably going to be the strategy question for the rest of the decade: How can we spur the consumer into action?