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

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.

So the question is what will be the accompaniment to the display ad business? We’re seeing a few different approaches explored. For example, micropayments and non-profit/foundation support are oft-discussed. I don’t believe those have much opportunity to scale beyond some exceptional situations which are terrific but hold little promise for most media organizations.

Then there‚Äôs the problem of transitioning from a for-profit to not-for-profit model which typically begins by laying off the entire staff and getting the investors to agree to donate all of the assets of the enterprise into the new nonprofit entity. My friend Jonathan Weber expanded on this in his Endowed and Out piece. There are a number of other potential second business models but I think the Search-related model is a viable “other” business model.

The interesting and loose parallel with the classifieds being enabled by the news distribution historically is with those sites selling online directory solutions bolted on to a news site. Since most local news sites have the highest PageRank in their area, the PageRank is a form of “distribution” advantage that the news sites have and usually don’t recognize. One could argue when we see the demise of newspapers like the Rocky Mountain News that one of their most valuable assets in a liquidation is their high PageRank. When you have a high PageRank site with a leading directory solution, the businesses in that directory should show up very high in SEO and thus the news site has some unique value they are adding to those local businesses competing to be found.

The challenge remains setting up a winning sales model to capitalize on this. I wrote a couple of pieces for David Cohn’s and Jeff Jarvis’ NewsInnovation.com site expanding on this.

The approach I’d espouse is much closer to Dell than it is a traditional local media sales force, which is generally ill-equipped to sell these new products. When I was at Microsoft and focused on the local space (I was part of the founding team at Sidewalk), we often thought that the biggest asset that the incumbent newspaper and yellow page companies had was their local sales force and relationships. Having gotten closer to “the last mile” of the Internet, I’ve come to observe that in most situations the local sales organizations of the incumbent media is more encumbrance than asset.

Consequently, the smart incumbent media should setup a parallel tele-sales based model that are filled with “hunters” and leave the existing “farmer” sales force to harvest the longtime advertisers as long as they can. It is important to note that this outbound tele-sales organization is dramatically different than the typical “call center” that newspapers have for classifieds. Thus, thinking that that group will have success is a long shot. The sort of tel-esales organization that exists at a place like Dell is able to prospect and close business into the low six figures. In other words, it’s not taking a $150 classified order over the phone.

The sooner local media businesses recognize it’s critical to have dual business models rather than dueling business models, the sooner we’ll see hiring rather than firing being the storyline of local media.

Someone's going to get rich in Denver next week…

…and then, someone else will get rich later this year in San Francisco, Seattle, Philadelphia, Miami and Minneapolis if papers in those cities close, as they are rumored.

By now, you’ve heard that the Rocky Mountain News in Denver is publishing its final edition today. Owner E.W. Scripps is closing Colorado’s oldest newspaper, two months shy of its 150th anniversary. I write those words with a deep sigh, as I used to work for the Rocky, and consider my experience there essential to my development both as an online journalist and online entrepreneur.

For a little over three years I edited the Rocky’s website, and I remain darned proud of the work a tiny staff did during that period. But what does the Rocky’s closing have to do with someone getting rich? Hundreds of journalists just lost their jobs!

Yes, and hundreds of local advertisers just lost the publication that they were using to connect with local readers. Those advertisers have budgeted the money they would have spent, some have even written checks and will await reimbursement from the Rocky for ads never run.

With the economy tanking, some of those advertisers, I suspect, will just bank the money and forget about the ads. But smart businesses will not. They still need to reach local consumers.

Like lottery money falling from the sky, that advertising cash will land somewhere. The Denver Post will pick up some, I’m sure. So might local TV, radio and direct mail vendors.

But with thousands of now-former Rocky readers looking for a new daily news source, there’s a huge opportunity here for someone to get rich. Just put some of those readers together with some of those advertisers, using a fresh new online publication, and without the capital and corporate overhead, JOA obligations and debt that’s weighing down so many newspapers across the country.

Perhaps Scripps could have done that with rockymountainnews.com. But, according to Rocky website editor Mike Noe’s Twitter feed last night, JOA partner MediaNews (owner of the Denver Post) wouldn’t let them, undoubtedly eyeing a newspaper monopoly in Denver for itself. Still, Scripps retains its ownership of the Rocky’s masthead, archives and URLs and is offering them for sale to any interested third party, without the entanglement of the JOA that bound Scripps.

A new online news publisher need not capture all of the Rocky’s former readers, or advertisers, to do well. If a former Rocky reporter, or a small group working together, managed to claim just a few advertisers and a few thousand daily readers, they easily could clear more money than they did working at the Rocky. (Heck, I’m making more from my websites than I ever did working at the RMN.)

Yesterday, on Twitter I urged the Rocky to run today in print the URLs of its reporters who will maintain their own blogs and websites, so that Rocky readers can continue to follow their favorite writers, and to help these former staffers start building the readership that they’ll need to create profitable websites. I don’t know yet if they did that or not. But I would urge Guild leaders at other troubled newspapers to think about getting that into their contracts – if the paper goes down, you print our members’ URLs on the last day.

Unfortunately, I fear that most Rocky staffers will not build or become part of profitable Denver-area news websites. But long odds are not impossible. The Rocky has a long history of online innovation, and with Noe’s assistance and the leadership of editor John Temple, that attitude has spread throughout the newsroom, in ways that it wasn’t allowed to when I worked there.

The Rocky was one of the first newspapers in the United States to embrace user-generated content, with reader-driven interactivity in entertainment, features and opinion sections as far back as 1998.

In the late 1990s, the Rocky had what might have been the industry’s first proto-“podcast” – a local studio recorded voice actors reading the paper’s top stories before dawn each weekday, which we made available as an MP3 download on the site. There was no RSS back then, so people had to come to the site each day to download the file. And there were no iPods, either, in fact, we promoted that people could “listen to the paper on their Diamond Rio.” (You may consider yourself a true Geezer Geek if you remember that early MP3 player.)

And in 1999, we live-“blogged” the aftermath of the Columbine school shootings, before we, or anyone else, knew what a blog was. We just posted fresh line-by-line updates to the site’s homepage as we got them from any sources we could find, not waiting for a staff writer to flesh them into a traditional, narrative story.

In the years since I left, the Rocky’s developed rich, reader-driven prep sports applications, as well as gorgeous interactive narratives, driven by a Pulitzer Prize-winning photo staff that has embraced multimedia. (Click around “Best of the Rocky” on rockymountainnews.com.) And it helped build one of the industry’s first large-scale efforts at reader-driven “hyperlocal” news coverage.

There’s a hell of a lot of online talent at the Rocky Mountain News. And a healthy amount of advertising dollars to support it. And readers who want to follow that talent. Just because Scripps, cut loose from its cash-cow cable networks and outmaneuvered by MediaNews in its JOA, couldn’t make enough money off that combination does not ensure that some enterprising Rocky staffer (or staffers) can’t make a go of it.

I’m rooting for them. Someone’s going to land that former Rocky advertising money. Why shouldn’t it be a Rocky alumnus?

And journalists in Seattle, San Francisco and those other newspapers on the brink – ask yourselves this, looking ahead to the day when your paper might close: Why can’t *I* be the one to get a piece of those ad dollars in my community?

Why not?

The ethical journalist's guide to selling ads on a website: Part three

I hope that over the past two weeks of this series [week one | week two], you’ve come to see the parallel between advertising sales and news reporting: That is, to be successful, you must do a great deal of reporting before you write anything on paper or the Web.

Now, it’s time to take that next step. As we do that, let’s not forget that the key to landing an advertiser is to make the case that by advertising with you, the client will be able to reach an audience of readers who are interested in the client’s product or service and open to trying it.

Step 7) Create your ad sales material

You will need material that you can post on your website, as well as printed material that you can hand or send to potential advertising clients.

This material should include:

  • The name of your site
  • A short description of what your site covers (e.g. “Sitename.com covers the Widgetville community” or “Sitename.com covers the flugelhorn players, teachers, makers and fans”).
  • A summary of relevant data from your readership survey and statistics
  • Your rate card
  • A short explanation why readers are likely to continue coming to your website (e.g. “Our [award-winning | interactive | daily] coverage is drawning a growing audience of readers from the [Widgetville | flugelhorn] community.”)
  • Contact information where potential clients can get more information or place an order

    The summary of data about your readers should include:

  • The number of absolute unique visitors to the site in a day, week or month (depending upon the length of ad packages you are selling)
  • The percentage of those readers who live in your geographic coverage area (if you are a locally-focused website – this isn’t necessary if you are publishing a topical website)
  • The average number of pageviews seen by readers in a day, week or month.
  • The time spent on the site by the average visitor.
    This information should be available from your site analytic stats. The information below would need to come from a random-sample readership survey.

  • The median household income of your readers
  • The median age of your readers
  • The percentage of readers who have interest in particular products or services
  • The percentage of readers who have taken action after seeing an ad on a website. (After several months of running ads, resurvey and find the percentage who have taken action after seeing an ad on your website.)

    Some publishers are not comfortable placing their specific readership numbers and advertising rates on the Web for all (including competing publishers) to see. Personally, I’m not. But you are, go ahead and use more general data for your readership (e.g. “we reach an audience of tens of thousands of readers each month…”). But be sure to write on your as sales page that you do have more specific data and that you are willing to send it to a potential client, upon request.

    As for your rate card, even if you do not publish the actual rates your charge, do include on your website a list of the ad packages available, including ad dimensions, formats and number of impressions available. Again, follow that with an e-mail address or phone number where potential advertisers can get the price of each package.

    Your printed ad sales material should look professional, on high quality or glossy paper, and include all of the information I listed above. You may choose to print the material as a brochure, or on letter-sized sheets, which might be included in a printed folder with your site’s name and logo. Either way, I would attach a business card to the material when you deliver it. Use a local printer, or your own desktop publishing skills (if they are up to a professional level), to create the material, and print enough copies to last you for a few months.

    Step 8) Deliver your sales material

    The first place to deliver your materials is on your own website. Post your ad sales page, and make sure that it is linked to in your site’s navigation, from every page on your site. I would also consider doing a front-page blog post or story alerting your readers to the new page, and the fact that you are now accepting ads. If people respond to that post, engage them. You might find client leads there, as well as reader concerns. You don’t want to create advertising that turns off your readers. That doesn’t serve you, or your advertisers. Whatever money you might make in the short term from such ads would come at the long-term expense of your business, the website. So listen to what your readers have to say, explain your point of view, and make changes to your plans, if necessary.

    You might find that simply placing the ad sales material on your website is enough to get you an initial batch of leads. Work them before you do anything else. Ideally, they’ll contact you with orders. If they simply have questions, answer them. You want to build a business relationship with these potential clients, the same way you would build an information relationship with a potential source. Ask them about their needs, what they want in reaching potential customers, then tell them how you see your audience potentially helping them.

    Okay, now what about approaching potential clients directly? Well, from looking at competing websites, you should have the names of their advertisers, who might be interesting in becoming yours, as well. If you are running a locally focused website, you can find potential clients looking at the outfield fences at Little League games, in the programs at performing arts events, and at sponsorship banners at local fairs and festivals. These are the business that are willing to support local enterprises, and therefore, most likely to support yours.

    Go to a chamber of commerce or local merchants’ meeting and meet people. If you are running a topic-focused website, you can travel to a trade show and walk the floor.

    When you meet people at these events, introduce yourself as the publisher of your website, tell what your site covers, and how many readers you reach. Say that you are looking for advertisers and ask if you can give or send them your material. If you are walking the floor at a trade show, have your packets with you in bag and hand them one, along with your card. If you are at a local merchants’ meeting, just exchange cards and ask for a time to call on them.

    Step 9) Close the sale

    When you speak with a potential client, don’t guarantee click-throughs, leads or sales. Don’t promise them anything that you cannot deliver. Simply promise them what you can deliver – ad impressions. Then tell the client what you’ve learned about your readers from your research.

    No hard sell: Don’t pressure a client into an ad that won’t for it. And don’t try to close a sale by promising something you cannot be certain of delivering. Both will destroy the relationship you are trying to build and prevent you from growing your advertising revenue in future months. Don’t fall into the “churn” trap that crippled so many newspapers. You want to sign advertisers who trust and respect you and will keep doing business with you in the future. You won’t bat 1.000 on that, but you want that percentage as high as you can get it.

    Don’t sell your content; just the opportunity to reach your readers: This is what concerns most journalists I’ve met who are thinking about selling ads on their sites. They fear that they will be compromising their editorial integrity. Well, you’re not selling that. You’re not even putting it on the table. You’re simply selling ad space.

    Truth is, most smart advertisers don’t want you to sell your editorial content. They know that they do better with websites that offer good, solid, accurate content that readers will turn to again and again. Where they’ll that ad, again and again.

    Still, some people are asking publishers to post favorable blog posts and articles in exchange for payment. I reject those folks when they come to me and I hope that you will, too. Besides, those advertisers don’t pay nearly as much as the ones who do want you to do your reporting job right.

    Which leads me to…

    Do appeal to their sense of community: You are not some out-of-town corporation. You are a member of this community (whether it be physical or topical) and you are doing something with your website that helps build and sustain that community. Civic-minded businesses appreciate that. So remind them.

    When you find a client who wants to sign, you will need a contract and an insertion order form. Often, you can handle both on one page. I’ve found plenty of good sample ad contracts and order forms to customize from USLegalForms.com or simply by Googling “sample ad contracts.” Then slot the ads using Google AdManager or OpenX or whatever ad management tool you’ve selected.

    Once you have clients, sustain your relationship with them. Send them delivery and click statistics each month, along with your invoice. Give them a specific due date by which to pay and follow up. Consider a merchant account on PayPal or some other online service to enable credit card payments from clients.

    And keep going to those trade shows and chamber of commerce meetings. Talk to clients about how their ads on your site are working for them. If you get some good testimonials, make sure to put them into your ad materials, both printed and on your website. The word of other advertisers can be your best tools to help land additional sales.

    You deserve to be well paid for your good work. For many of us, landing advertising clients will be the way we get paid. So don’t be afraid to ask for them. You know how to now. Best wishes for your success as go do this.