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Battle Heats Up. Hyper Local News & Revenue

June 24, 2010 By admin 4 Comments

The hyper-local, online news space is getting crowded. Maybe it’s time to start throwing some elbows?

Digital marketing dollars of most small business, are still up for grabs. When you take these tiny but high volumes of mom & pop budgets, and combine them with the ‘asleep at the wheel’ efforts of traditional media, you can see why AOL/Patch, Reach Local, Groupon, Hyper-Local Incubators, and other indie efforts are doubling down and are going in for the kill.

Yet, when it comes to big media’s foray into this space, it’s full of well intentioned, but often misguided efforts. Here are recent items of note, on what’s working and what’s not…..in building profitable, hyper-local initiatives:

  • Jan Schaffer from J Lab was recently asked if any online news projects will be ‘sustainable’. She answered: “time will tell”. We absolutely adore Jan, but we absolutely hate that answer. Since Jan is not an expert in sales and advertising, why do we even ask her questions like that? These so called ‘elusive’ business models we’re supposedly looking for…already exist. Pure-plays (Reach Local, DataSphere, Groupon, etc) are already using these models to grab local market share right now…right from under our noses……while we continue to “discuss and explore”.  Read Jan’s speech here.
  • Philly.com’s incoming CEO; Greg Osberg recently told Poynter: “His top focus initially, will be on building audience, especially online. While conceding the point that small growth in unique visitors and other measures may not greatly impact ad sales, I think we can get 100 percent more audience, and that would make a difference.” Whoa. Since revenue is likely the top priority of his bosses (including the investment firm of Angelo Gordon) we are confused with Osberg’s statement. We believe Philly.com (and most news sites) have a sales strategy problem, not a traffic and page-view problem. Driving zillions of page views = inventory glut = lower effective cpm. Even MSNBC declared: pageview ‘dead’. Osberg also hinted of  his plan to find local collaborators, especially in the suburbs where editorial coverage has been cut. We think this will be tough in the fiercely independent, Philly blogosphere, where some indie sites are getting bought up. (see next item)
  • A Philly sports blog called 700Level, was recently acquired by Comcast. Another local sports site called Beer Leaguer was also just snapped up by the cable giant. This should give local, independent site owners a much better sense of the value of their work. If your stuff is good, why give it away for peanuts? If your not sure how to value your site, contact us for assistance. Indie-sites like Philebrity.com, Philly2nite.com and SuburbanOneSports.com are not likely to sell out for the relatively small pay day and employee status that the 700Level & Beer Leaguer jumped on. (we think much too quickly). Kudos to Comcast Sports Net vp; Eric Grilly, for making this smart move, while the 2 sports Radio stations in town 610WIP.com, 975TheFanatic.com, as well as Philly.com, were snoozing.
  • Early efforts from Tribune showed promise, but stumbled a bit. Read why a local blogger pulled out of ChicagoNow network.
  • The Washington Post hoped local bloggers would drop everything to work with the legendary site, for what some say, free. Read the laundry list of rules you need to follow, if you want to work with the WashPo.
  • AOL/Patch reaches out to local website publisher in Alameda, California…. tells Patch: ‘no thanks’.
  • SacPress.com is the self-funded news project that reportedly reaches more Sacramento online readers than the daily Newspaper (Sacbee), by leveraging their Sacramento Local Online Ad Network (SLOAN). The network is now over 40 sites strong, even repping the web inventory of 4 local Radio stations. (stations owned by digitally-challenged, Entercom)
  • Radio & TV taking a shot at hyper-local news. Some broadcasters admit their weakness, and are outsourcing web strategy to DataSphere. Others do it themselves, and make clumsy mistakes (out of date obits) and leave money on the table. But promising Radio efforts like WYDaily.com and the forthcoming Baltimore Record, are signs of things to come.
  • Albritton’s TBD.com in DC, won’t pay bloggers directly — instead, the sales staff will work with interested advertisers. This does not sit well with local online writers.
  • CUNY’s New Business Models for News, and NYU provide excellent editorial guidance for The New York Times’ hyper-local effort, called The Local. But for some reason, they were also given the responsibility for sales & revenue leadership. With little advertiser support, we fear that The Local could be considered a failure and potentially shuttered, due to poor financial performance. It’s local sales strategy seems non-existent. We wonder if NYU’s Jay Rosen will be making sales calls, once he launches the East Village NYC version of  The Local. UPDATE: July 1, 2010…NYT unloads their Jersey hyper-sites to indie-blog; Baristanet.
  • YouTube is experimenting in San Francisco, inviting local VJ’s and digital journalists to contribute. But we gotta ask….why just post your video on YouTube? Sell your footage to local TV or Newspaper instead!
  • Sites like TheBatavian, NewzJunky.com and NewJerseyNewsroom, are gaining traffic and advertiser support. They use the not-so-secret formula of “running their sites like a business”. They spend less time with research and theory, and more time on the streets closing deals, and making sales calls.

Filed Under: Hyper Revenue Watch, Hyperlocal Networks Tagged With: , , , , ,

Gannett Web Fumble, Punts to DataSphere

June 15, 2010 By admin

gannett logoGannett Broadcasting is putting some of their local  web sales on auto pilot. The media titan announced they’ll join Raycom, LocalTV LLC and other digitally frustrated media properties in outsourcing some web efforts. No surprise, they’re punting to DataSphere; the master of call-center web sales and quickie blogs. Was this surrender by local media predicted many years ago? Yup.

Back in 2003, the local media analysts at Borrell Associates republished a report about the Disruption of Local Media. The study was conducted with Clark Gilbert, a protege of Harvard Prof. Clayton Christensen, author of business best seller; Innovator’s Dilemma. (a must read on how incumbent companies, run by really smart managers, are unable to build new businesses while focusing on core customers) Read Chapter 1 of Innnovator’s Dilemma here. The report tried to answer the question that was a recurring theme in the book:

Can local media tackle the Internet with existing management, content and sales personnel?                     

The answer was no back then. Seems like that answer still stands today. Historical analogies suggest, that traditional media will try to win on web, but will ultimately fail.

Despite smart management and a high degree of awareness, no company – including newspapers armed with this knowledge – has been able to achieve new net gain by tackling a disruptive technology with an integrated management approach. Traditional managers tend to disbelieve the implications of what is happening to their own industry.

So let me get this straight…..

  • If the TV GM and/or news director is responsible for the TV station website, it will fail.
  • If the Radio PD, GM or Marketing director is responsible for the Radio website, it will fail.
  • If the Newspaper publisher or news editor, is responsible for the Newspaper site, it will fail.

The key take-away from this 7 year old report?  As long as a traditional media manager is calling the shots at the local media website, it will most certainly fail. Whoa.

Solution? Separate general management, sales, programming, editorial……separate everything. Build a business that can, and should attack the mother ship. Not following this path of action will allow pure-plays like Patch, ReachLocal and DataSphere, to make serious inroads into the local marketplace, in what once was the wholly owned domain of mainstream media.

Other online-only and hyper-local business models to watch: Hyper-Local Incubators, The Batavian, Philebrity, NewzJunky, WestSeattleBlog, SacramentoPress.com, MainStreet Connect, BrooklynBugle.com, and Nashville24.7

 

Filed Under: Hyper Revenue Watch, TV and Radio Tagged With: , ,

Starting Hyper-Local News and Ad Networks

June 10, 2010 By admin

Whether you’re a big Media company, or an up-n-coming indie-journalist/content creator…. participating in Hyper-Local Advertising & Content Networks could be critical to your online success.

FACT #1: Small businesses are quickly moving their ad budgets to web. In addition to your own direct sales efforts, there are substantial revenue & cost reduction benefits when you take part in the efficiencies of a shared sales and service “Co-operative”, or ‘Hyper-local incubator’. (see below)

FACT #2:  Your work as a writer/reporter has incredible value. Especially to big Media. Why ‘donate’ it or sell it for peanuts? Understand online journalism business models, before you act.  See the 25$ per post sweat shop known as Demand Media, and how some journos are just saying NO! to offers from Patch.

HyperLocal News.Incubator UPDATED 8.3.2010

Local online competition is on the rise….and now, at a much faster pace. Don’t be fooled into thinking that hyper-local news doesn’t work. Those early journalist-lead experiments from CUNY, New York Times and ChicagoNow still struggle for financial stability due to this common flaw: revenue & sales expertise seemingly took a back seat to editorial & tech in the start-up phase. Indeed, ‘build it and they will come’ does not work so well on the web. Today, a growing list of hyper-local news efforts are being lead by those with deeper revenue & business experience. It’s about time. Well-funded projects from outsiders like Patch, Main Street Connect and Reach Local, are proof of the substantial opportunity that exists in all markets. Even though these big dogs have financial muscle, indie-journos from the neighborhood still have an excellent chance to own this space. Take a look at the strategy they are using: Hyper-Local Ad & Content Networks. (See below) Who wins the local, online revenue game? The winners will likely be organically-grown websites and independent content creators from the community. These online publishers take their efforts seriously, and are exploring realistic plans for revenue. These future, local online titans are not encumbered with legacy business concerns that need to be ‘protected’. Need some advice on how to proceed?  Send us an email or let’s talk. Maybe we can help, or at least point you in the right direction. Some of our Hyper-Local services:

  • Content networks
  • Advertising networks
  • How to work & partner with other media
  • Platforms, tools, training
  • Shared resources & co-operative efficiencies
  • How to effectively beat PATCH, DataSphere, ReachLocal and others
  • How to quickly attract local advertisers
  • Syndication and licensing arrangements
  • Attracting investors & partnerships
  • Web 101 Workshops for Local Business
  • Creating rate cards, sales packages, media kits
  • Business plan development

Filed Under: Hyper Revenue Watch, Hyperlocal Networks Tagged With: , , , ,

Local Media Eco-Systems

June 2, 2010 By admin

Local news & info sites need more than just a banner sales strategy. While display ads are still a major part of online advertising, they’ll certainly not be the cash cow you hoped for. Instead, consider a variety of other revenue streams, like Local News Incubators, to quickly move to sustainability. Counter-intuitively, some of the best revenue producers are offline.

Here’s a graphical look at the business plan we developed, and are deploying in a mid-size market. This road map uses proven tactics that are already working independently, in many markets. We’re rolling this out in measured increments, not all at once. This allows for ability to build a solid foundation, prior to adding more complex elements.

hyper local online news and eco-system model

hyper local online news and eco-system model

Filed Under: Hyper Revenue Watch Tagged With: , ,

Radio Websites, a Hyper Local Opportunity?

May 30, 2010 By admin

Warning: If you have responsibility of managing the station website and you think web sales is un-appealing, or just not worth the time and effort……you may not want the big boss to read this!

Can Radio get into the hyper-local, and online news business? That all depends if they run their online assets as a business, rather than a hobby. Can they move from old school tactics like mascots and remotes, to offering local business owners a portfolio of online solutions they are clamoring for?

Radio remote, cat country, atlantic city

What's Better for Radio; Silly Remotes or Web ?

Radio purists, Broadcast vets, Wall Street and even hardcore music geeks agree on one simple fact: without profit to pay the bills, there’s no programming excellence. So when it comes to the Radio station website and the hyper local opportunities it provides, why aren’t they run in the same financially disciplined way?

When a Radio GM wakes up each morning, what’s likely on their mind? What new Lady Gaga song should be added to the playlist? A morning show bit to post on the station site? While these play a role in the overall success of a station, it’s really not the stuff that keeps the GM up at night. Rather, it’s the sales and profitability issue that makes them toss and turn.

For Radio’s digital initiatives to dramatically drive more cash to the bottom line, they simply need to be operated under the same strict financial, programming and operational pressures of their on-air brethren. It’s really that simple, and there’s no two ways about it.

TIP  #1: Web-training for upper management: Understanding new competition, compensation/hiring issues, rate card, forecasting/inventory yield management, overcoming common objections, managers lead by example (not from behind desk), leverage web to increase overall Radio share, take share from TV, Newspaper, and direct marketing budgets.

TIP  #2: Beware of web sales trainers that haven’t sold web in years. Would you ever hire an overweight, personal trainer to get in shape? Are you following consultants that sound really smart, ‘wow’ you with gee-wiz technology and talk of ‘extending your brand’ online? Ask them to help you craft a pitch, overcome some objections and close a deal. See how they do with that one.

TIP  #3: While research, analysis and classroom lecture is helpful, you need to put money on the books NOW. Be wary of those who will have you believe that expensive data & training will lead you to web profits. The smartest ideas & concepts are worthless, until they are successfully implemented in the field.

Internet business 101 for programming & marketing. When PD’s, DJ’s, marketing execs, & webmasters understand basic online sales models, they create more advertiser-friendly digital opportunities, while developing greater loyalty with listeners. Just as sellers are trained, these non-sales departments need to also be well-versed in digital media & online revenue models. Programming knows how we make money with on-air, now they need the same understanding of our online revenue strategy.

Let me tread here cautiously, since as a former on-air and programming guy, I understand that I could ruffle a few feathers with the following. There’s too much, inherent risk when programming and marketing departments have virtual free reign in managing the online effort. Understandably and with all due respect, sales and revenue isn’t the top priority at this point, for Radio’s creative crew. Their job is all about audience, and they execute on this with great skill. That being said……just as a GM wouldn’t allow DJ talent to pick their own music, or allow the PD to push all the stop sets till after midnight, the GM needs to ensure that business-focused web rules and standards are properly set and adhered to.

TIP: Provide non-sellers with relevant background and regular training in how local businesses are spending their web dollars, the emerging online competition to Radio, and what issues the station sales reps are encountering in the field.

Manage your online inventory like on-air Nobody sells your product & audience better than your own team. Like on-air, local and direct selling of web is preferred over allowing outside middlemen to re-sell or commoditize your unsold inventory. [Read more...]

Filed Under: Hyper Revenue Watch, TV and Radio Tagged With: , , , ,

DataSphere Smart. Local Media; Not So Much

May 27, 2010 By admin 3 Comments

Gotta hand it to the fast growing DataSphere. The online solutions vendor recently closed deals with LocalTV LLC, Raycom and others. Could their offerings threaten WorldNow, Triton, and Emmis Interactive? Better yet, could their business model even hurt the local media partners they’re teaming up with? 

Recently funded by Fisher Communications, DataSphere clearly saw local media still struggling with turning a web profit. (even after all these years)

Combine that with viewers and advertisers losing interest in typical local news sites, and ever lower cpm’s….. general managers everywhere are scrambling to keep corporate off their a** and to quickly accomplish the following:

  • Have a half-decent website at the lowest possible cost
  • Populate it with news, content & info, at the lowest possible cost
  • Hit their new, mandatory web budget at the lowest possible cost
  • Get it all done while not screwing up the primary business

DataSphere to the rescue. Here’s the deal: We’ll turn on a whole bunch of ez-to-operate neighborhood blogs for ya, then have our call centers auto-dial the local businesses in your town, close lot’s of deals, rinse, repeat. How’s that sound? Oh, we almost forgot. We’ll take a ridiculously high percentage of the deal and we’ll have a primary contact with the client too. But hey, just sit there and promote it. No need to lift a finger. Cool?

DataSphere Technologies, Inc. (http://www.DataSphere.com) is a Software as a Service (SaaS) Web technology and hyper-local ad sales company focused on generating online profits for media companies. DataSphere offers a range of turnkey solutions to rapidly improve site monetization and experience with minimal investment of time and money

I like that last line; “minimal investment of time and money”

As a local media manager, you’ll love how this easily puts web revenue on the books. But in reality, you did a deal with the devil. You just handed over the most valuable part of your business (realtionship with local advertiser) to an outside technology company/middle man.

Just for kicks, ask the Newspaper publisher in town how that deal with Yahoo has been working out for them.

Filed Under: Hyper Revenue Watch, TV and Radio Tagged With: , , , , , ,

7 Habits of Profitable, Hyper Local News Sites

May 22, 2010 By admin
CUNY New Business Models for News

CUNY New Business Models for News

Still no sustainable business model for online news? That’s crazy talk.

We love reading about online editorial success and greater activity in the hyper-local space. Yet, most of these reports include vague remarks about revenue plans still being explored, or the perplexing challenge of finding a way to pay the newsroom bills.

CUNY’s Jarvis, NYU’s Jay Rosen & other veteran journos have been trying to crack the business model code for quite some time now. These entrepreneurial endeavors are well intentioned as they seek  to support the emerging legion of news sites that may one day replace traditional Newspapers.  Seasoned educators like Jeff and Jay used their editorial credentials to wake up many online newsrooms. But that’s not enough. Now it’s time for seasoned sellers and revenue focused execs to step up and take the lead here. Maybe we need those with actual sales and revenue experience….. to tackle this sales and revenue issue?

Since 1998, we’ve been tracking, field-testing  and documenting the leading revenue and sales models used by leading online operations. This research identified a robust collection of monetization models that are currently thriving in the local marketplace. So why are most hyper-local sites like Patch and the CUNY managed ‘The Local’ still swimming in red ink, or looking for financial bailouts? With plenty of proven and active revenue models available for adoption…..are these models being intentionally ignored, or just mistakenly dismissed?  

Here’s a summary of findings, recently submitted to CUNY’s New Business Models for News project. This is top line insight into proven business models, currently in operation at a variety of leading websites. Most of these best practices will not only sustain the NEW, news organization, but many will allow it to thrive with high margins, attractive profitability and better editorial coverage of the community. Specific case studies available upon request.

7 habits of Profitable, Local News Sites 

1)      Lead by revenue-first executive (just like traditional media business) 

  • Profitability first, then operations, followed by editorial/content
  • Run site as a start-up business
  • Think like an entrepreneur…NOT just a manager or journalist
  • Borrow tactics from online revenue leaders 

2)      Running extra-lean & efficient w/content & platforms 

  • Open source platforms, software & applications
  • Outsource content via feeds, blogs, indie-journalism
  • Aggregation & curation. Do what you do best, point to the rest
  • Aggressively strip out & reduce hard costs/expenses
  • 24/7 news cycle; Twitter = first responder journalism
  • Hard news & data as commodity loss-leader
  • Monetizable soft news & activity, subsidizes hard news
  • Data as content

3)      Advertiser & sponsor friendly 

  • Enabling local commerce is priority #1
  • Advertising as content
  • High impact ad units & sponsorships
  • Removal of GAN’s; garbage ad networks
  • Feet on the street-sales efforts
  • Local business education via Web 101 workshops
  • Self-serve & outbound tele-sales
  • Ability to show quantifiable ROI
  • Local & regional advertising networks 

4)      Non-traditional revenue streams 

  • Rev-share, transaction fees & e-commerce
  • Free-miums & up-sells
  • Offline initiatives & live events
  • Marketing services for local business 

5)      Training, management & compensation  

  • Regular training of all staff (especially top management)
  • Performance based compensation
  • Mandatory budgets with bonus & penalty
  • Managers lead by example, not from behind desk 

6)      Seed, syndicate, socialize & mobilize 

  • More than just a destination site strategy
  • Leverage & monetize content anywhere & everywhere
  • Enable formation and leveraging of affinity groups 

7)      Database mining & video adoption 

  • Sales and editorial appreciation of well-defined databases
  • Sales-based uses of video; online infomercials & ad-vertorial
Filed Under: Hyper Revenue Watch, Hyperlocal Networks Tagged With: , , , , , , , , , , ,

Hyper Local Business Models 2010

April 26, 2010 By admin

Online advertising & digital investments are roaring back. Yet after substantial resource infusions, most local news sites and hyper-local initiatives are still struggling, or are shutting down. We recently found out why this is happening, and what the solution is to this online revenue issue. Both are simple and supported by historical evidence.

The early days of Newspaper giants such as James Gordon Bennett, E.W. Scripps and Joseph Pulitzer offered many clues that confirmed one of our earliest theories. (Hat tip to Howard Owens at The Batavian.com) These men were first and foremost, entrepreneurs and sales men. They clearly understood the need for immediate cash flow to support their journalistic efforts. They experimented with new technologies of the day, slaughtered a few sacred cows, and did whatever possible to quickly build a Newspaper business model that was self-sustaining, scalable, and NOT primarily supported by subscribers and donations.

Recently, we were approached by a group of investors looking to conduct a study on potential opportunities in the local online space. Of course they wanted intelligence on websites that showed significant editorial or traffic gains, as well as trends in local advertiser spend. But more importantly, they wanted a deeper look into the eco-system, projects & trajectories that could be considered un-discovered gems of ‘value creation’. In other words, projects of community interest that were combined with content, functionality, management teams & revenue potential…..worthy of investment.

Some findings of note:

  1. Out of 50 sites and companies that were in the study, only 6 were run by an executive, journalist, or Interactive VP with any significant sales or revenue focused background.
  2. A whopping 90% of sites we studied, primarily structured their web model from an editorial & technical perspective, with minimal revenue strategy baked in from the beginning. These sites combine technology & journalism to build readership traffic, which would then presumably attract advertisers. Advertiser support for these efforts were either limited or non-existent.
  3. Most sites are captained by journalists, pro-am bloggers, or executives with similar characteristics. Most came up through the newsroom, editorial/programming departments, or imported from Internet pure-plays
  4. Major sites run by larger organizations had a cadre of advisors and consultants that were intellectually seasoned and arguably first rate. Their board of directors were chock full of academics, journalists, futurists and research consultants. Yet, less than 10% of the sites we studied, had an advisor or board member with actual sales experience.

Initial recommendations from this study

  1. “Build it and they will come”  no longer works as well as it used to. Revenue needs to be primary consideration.
  2. Beware of using faulty data & research from sources with limited hands-on experience with ad community.
  3. The retro-fitting of revenue tactics into an online news model after reader traffic has been established, is an increasingly flawed strategy that is blindly followed by far too many online operations. While online news sites certainly must have smart editorial & content focused executives, our research strongly suggests the importance of placing a revenue focused exec, side by side with editorial, in order to work con-currently on the challenge.

Part 2 & 3 of this report includes greater detail and recommendation. Please email us for details.

Filed Under: Hyper Revenue Watch, Newspaper Tagged With: , , , ,

Web Revenue 101 for Weekly Newspapers

April 6, 2010 By admin

Below is my latest presentation from the New York Press Association’s Spring Conference. This well-attended event was held in beautiful Saratoga, NY on March 27, 2010.  It was great to see the room filled with many publishers & editorial staff…and not just sellers. 

As we strongly urge: when your newsroom, programming & marketing folk understand basic online business models……they’re more likely to help create profitable websites.

Web Revenue for Weekly Newspapers 2010

Filed Under: Hyper Revenue Watch, Newspaper, Presentations Tagged With: , ,

Can Radio Build Hyper Local Web Business?

December 21, 2009 By admin

train-wreck-1.jpg

Ever taken a really good look at some Radio station websites? Aside from the layout and content, (some harshly call them a train-wreck) have you ever wondered how Radio can build a hyper-local business, and drive Internet revenue from these efforts?

Radio managers are knee-deep in these issues right now.

The pressure is on. While Radio’s primary revenue stream of selling spots has become much more challenging, there is an upside. Radio has the best of both worlds; on-air and online.

And it’s not just about selling banners and streaming spots. More importantly: Radio has ability to leverage it’s digital assets, to go after more of their client’s overall budgets. THAT’s a key distinction that separates the winners from the losers.

How can Radio seriously get into hyper-local game? First, it must admit that they need more outside help. Today, there are still too few people inside of the industry that have a handle on the fast changing digital landscape. Research, cool aps, and streaming will not be enough to get it done. And just relying on the local sales managers, or the GM’s to develop a strong web plan will only delay the pain of making a serious investment in hiring and re-training. Finding web-sales experts to help Radio will not be easy, but it will be necessary.

Filed Under: TV and Radio Tagged With: , , , , ,
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