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The Washington Post Company (WPO) is a diversified media and education company that publishes newspapers and magazines, and provides electronic information services and educational and career services. The Company publishes popular newspapers including The Washington Post, and magazines (principally Newsweek). The Company owns Kaplan, Inc., a leading provider of educational and career services both in the United States and international markets.

Washingtonpost.Newsweek Interactive [WPNI] develops and manages electronic information services, principally for the Internet. Slate, an online magazine founded by Microsoft Corporation (MSFT) in 1996, was acquired by WPNI in 2005. WPNI also holds a 16.5% stake in ClassifiedVentures LLC, a company that provides online classified advertising databases for apartments and car rentals.

The Company also broadcasts six television stations in Detroit, Houston, Miami, Orlando, San Antonio and Jacksonville, and cable systems serving subscribers in midwestern, western and southern states. It has ownership interests in the Los Angeles Times-Washington Post News Service and BrassRing, Inc. It also had equity stake in Tribe Networks a social networking site, now part of Cisco.

In the company’s 2006 Annual Report (.pdf), Donald E. Graham, Chairman of the Board and CEO writes:

Our Company owns four large businesses, and it was a terrific year for three of them. It was a poor year, however, for the business we are named for, The Washington Post. Circulation continued to fall and a sharp drop in classified advertising raised questions about the future of the business. I don’t have all the answers for these questions.

In 2006 the Washington Post’s Interactive business delivered a stellar performance. Advertising revenues of washingtonpost.com were 14.5% of Washington Post’s print ad revenues in 2006. Washingtonpost.Newsweek Interactive (including washingtonpost.com, Newsweek.com and Slate) saw its revenues jump by 28% to $102 million in 2006. Washingtonpost.com averaged more than 220 million page views per month during 2006 and 85% of its unique visitors were from outside the Washington area.

The substantial national/international readership augurs well for the Company as it will enable it to garner significant national/international advertising and high CPM rates because of its affluent customer base and reach. Do the numbers indicate a change, however?

Well, the numbers clearly indicate that more and more people are reading news and searching for information and classifieds online, resulting in a shift in the advertising dollars from print to digital. No surprises there. All the newspaper companies are experiencing this shift, as we have seen before in the case of The New York Times (NYT), Tribune (TRB), Gannett (GCI), McClatchy (MNI) and Dow Jones (DJ).

BudgetTravelOnline, launched in 2005 by the company’s interactive business division, is what gets me excited. It is a travel site that integrates certain aspects of Web 3.0, though the site could integrate vertical search features like hotels, connecting flight, car rentals, and community features (like TripAdvisor) that allow users to discuss various travel related topics or reviews of exotic locations to make it more interesting. Nonetheless, it is absolutely a step in the right direction, to focus on building up verticals that tend to have big advertising draw.

In fact, Travel is where the post’s new Blogroll program has scored its first major success, and has been able to attract Lufthansa (DLKAY) as a key advertiser to a network of 100 travel blogs. Now, the blogroll program is still relatively underleveraged. The travel blogs should be integrated into the other high traffic online properties, including washingtonpost.com and budgettravelonline.

Similarly, Washington Post like its peers needs to focus on aggressively growing its online properties in other verticals, and expand its network of blogs for the blogroll program vertical by vertical and push Web 3.0 efforts to develop a sustainable internet business model that will enable it to maximize advertising revenues by keeping the eyeballs glued to its sites and explore alternative sources of revenues.

In terms of alternative sources of revenues, the most promising program I have seen so far is actually a variation on its core advertising business, but converts the Post into an ad network, rather than just a publishing house. You know what I am talking about, right? Yes, the Blogroll program is a win:win for publishers and advertisers alike, and can be a huge win if executed and scaled properly.

I made a case for Yahoo (YHOO) Publisher’s Network killing Google (GOOG) Adsense for Content earlier. Washington Post, with its Blogroll effort, could also tap into the same unmet need in the marketplace, and turn their massive eyeball presence and advertiser relationships into a Google-esque ad network.

The question is, does Washington Post’s executive leadership understand the latent power of their Blogroll program? Or is it simply a little, obscure project buried in the depths of the organization with limited visibility and minimal attention?

Alas, I think, it is the latter!

Source: The Blogroll Program: Washington Post's Hidden Jewel