OJR: The Online Journalism Review

Dave Chase

Sun Valley, Idaho

Homepage: http://sunvalleyonline.com

I am the owner/publisher of www.sunvalleyonline.com and co-founder of NextNewsNet with Jonathan Weber of www.newwest.net. My consulting firm (www.altusalliance.com) focuses on the Art of Revenue Traction building low cost customer acquisition models for media and technology organizations. Thus far, we have built 15 sales organizations that are highly successful in the two years we have been doing this work.

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These articles are the work of their author, and do not necessarily reflect the opinion of nor an assignment by OJR.

Time for newspapers choose between the DEC or IBM model

November 6, 2009
It is painful to watch the steady decline of newspapers. For some, I expect we're about to see the dead cat bounce as the economy turns around. This will only delay the inevitable. The challenge they face at this late date is immense but surmountable.

Their near death experience is similar to what Digital Equipment Corp (DEC) and IBM faced. Only IBM remains a blue chip market leader. However, IBM completely reinvented itself from a "big iron" mainframe and minicomputer driven company to the market leader in I.T. related services. There were some valuable assets that they were able to leverage but it took an outsider like Lou Gerstner to make that wholesale change happen.

Meanwhile, the vanguard company of the minicomputer era (DEC) wasn't able to make that shift and sold at a deep discount to Compaq (who in turn was bought by HP). It's important to recognize that IBM and DEC were in highly competitive markets. DEC along with countless other mainframe and minicomputer companies were unable to transform themselves and are mere footnotes of history. In contrast, the newspapers have largely operated in non-competitive markets by comparison. It will take a true newspaper leader and visionary to make this happen as opposed to someone just milking the cash cow until it withers and dies. More...

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Thought Leadership drives local media revenue

June 3, 2009
In an earlier piece "Local media survival depends on Low Cost Sales Models," I detailed the favorable economics of pursuing a broader base of advertisers if you employed a sales model appropriate to the size of ad budget. McKinsey had done some analysis that echoed the experience we have had setting up low-cost customer acquisition models using telesales-based approaches. A critical facet of developing this lower cost model is having very cost effective lead generation.

Today, most of what I have observed with local media is they are using phone-based sales methods akin to the uninvited and irritating telemarketing methods that can interrupt our evenings. Not surprisingly, these "script readers" have had very low yield. Script readers can be fine for simple things like setting appointments but that's a far cry from closing meaningful business. The successful alternative is to become invited and to establish a relationship with prospective customers through high quality lead generation.

There are many different tactics for lead generation but the one I've seen perform the best has been the organizations that establish thought leadership in their field of expertise. More...

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Local media survival depends on Low Cost Sales Models

May 29, 2009
Amidst the doom and gloom of local news media, it's lost on many that there's a sector of local businesses that can provide a 20% lift in revenue. McKinsey did an analysis using a market of 1 million people to determine the revenue increase a newspaper could get if it attained a similar share of ad budgets in small and medium sized businesses (SMBs) as it had with larger local businesses. It represented a 20% revenue increment over where they are today. In an environment where "flat is the new up", that's significant. It does require a fundamentally different sales approach than what most local media have practiced which I outline below.

In my experience as a revenue traction consultant and local publisher, I have seen 20% growth is attainable as we saw that with a number of clients in Q1 when most businesses saw a decline in revenue. McKinsey also found that already the penetration of SMBs spending online is greater than the penetration of SMBs spending in newspapers. Though we often think of smaller businesses being behind larger organizations, it turns out they have deeper penetration with online than any other form of measured media. It is worth noting that SMBs aren't simply interested in display ads, however. McKinsey's findings echo my experience that SMBs have interest in other online marketing tools like Search, Email and other non-display tactics.

In general, we have seen a gap between the high-end of the market where shoe-leather sales models are still appropriate and the low-end of the market where some local media have pursued self-serve models. Our experience has been that added sales focus in the mid-market will increase sales yield. This isn't lost on companies like ReachLocal, Citysearch and others who are grabbing swaths of the market that local media has every opportunity to capture with the proper focus. One of the ways to differentiate versus the national players is outlined in the follow-on piece on thought leadership I outline below. More...

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Top 10 business mistakes that newspapers must avoid as they go online-only

April 1, 2009
I'd like to welcome the Seattle Post-Intelligencer to the world of pureplay, online-only local Internet sites. They have a heckuva a jumpstart with their level of web traffic which any local site would be thrilled to have. Unfortunately, there are many other items that they must put in place to succeed. To their credit, they have taken some good first steps. The first and painful step was reducing headcount which reflects the reality that revenues will be lower for awhile. However, no business can cost cut your way to a successful business. The second laudable step was outlining how they plan to position themselves as a digital marketing agency with their advertisers selling everything from Yahoo display ads to paid search from all the major search engines.

Nonetheless, this is all moot if they don't develop a viable revenue model to go along with it, something they have no apparent experience with since the Seattle Times had done all of their advertising sales as part of their JOA. The painful truth is that 99% of the local Internet plays have proven how NOT to develop a sustainable model. Some newspapers have claimed their online properties are profitable but this is a suspect claim since they weren't burdened with the costs borne by the print product. In other words, most local online plays are subsidized by an offline counterpart which the P-I no longer has. More...

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Local news media needs dual business models, not dueling business models

March 13, 2009
I own and run a hyperlocal site www.sunvalleyonline.com. While we've managed to be one of the few pure-play local Internet media ventures to eke out a profit, the financial returns aren't anything to write home about. This resulted in a minor epiphany when it comes to thinking about the viability of local media.

If you think about what made newspapers viable for so long it was the fact that they had two products/businesses that were largely unrelated but delivered by the same organization. Newspapers have had a news-and-information business monetized by display ads and a classifieds business monetized by classified ads. The classified business was enabled by the distribution and audience of the news franchise. However, it's been clear that that second revenue stream doesn't translate on a sustainable basis online.

To date, most local Internet plays have struggled to make it work relying solely on display ad revenue. I've come to the belief that it's going to take a similar dual business model to support local media (we're working on doing that ourselves). Unfortunately for many local news organizations, it has been more about dueling business models (i.e., worries of cannibalization) than recognizing that what they need is a dual business model to make their online business much more successful. More...

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