NEW YORK: The New York Times Company and the Washington Post Company are both ramping up their focus on digital innovation, reflecting the pressing need to identify untapped sources of revenue.

Established seven years ago, The New York Times Company's R&D Lab now boasts 20 staff responsible for developing products and business models helping the firm adapt to the new media age.

"The 'mad scientist in the belfry' situation tends to trickle down, and it creates an atmosphere of innovation and curiosity," David Carr, a journalist at the New York Times, told Ad Week.

"The future is uncertain, and it is good for the industry. With declining revenues, investing in R&D is counterintuitive, but you have no choice."

One service created by the R&D Lab, Ricochet, lets marketers purchase ad space around articles of relevance to their preferred audience, and provides them with a unique web address for this content, allowing for precise targeting and measurement.

Brown-Forman, the alcoholic drinks company, and SAP, the software group, have already utilised this system.  The latter organisation found clickthrough rates were 14 times higher than the norm.

"We had no idea what we were going to see, but the results have been astounding," Michael Brenner, senior director of global marketing and content strategy at SAP, said.

Another project, Cascade, has yielded software that shows how and when content spreads across Twitter, and who has shared it, in an attractive infographic-style format. SAP has also made use of this tool.

A major force supporting these moves is the difficult financial climate for the firm, which has logged five successive years of revenue declines, and net losses topping $300m during the last seven years.

"I don't think there is anyone working in the media business right now that doesn't feel pressure," said Michael Zimbalist, vice president of its research and development operations. "The landscape is so volatile."

The Washington Post Company launched an R&D unit, WaPo Labs, last year. One product was the Washington Post Social Reader for sharing content on Facebook. At its height, this system had 17m users, but it did not directly generate revenues.

Rob Malda, chief strategist at WaPo Labs, said: "The guys responsible for keeping the site operational tomorrow might get a little jealous that a lab team gets to spend three months working on something that might end up fizzling ... But you have to make ten things that fizzle to find the one thing that works."

The Philadelphia Media Network, which publishes the Philadelphia Inquirer and Daily News, also formed the Project Liberty Digital Incubator this year, aided by a $250k grant from the Knight Foundation, a not-for-profit group backing innovation in journalism. 

Data sourced from AdWeek; additional content by Warc staff