7 Habits of Profitable, Hyper Local 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 feature vague remarks about revenue plans still being explored and the perplexing challenge of finding a way to pay the newsroom bills.

CUNY’s Jeff 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 going to move the needle 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 and field-testing the leading revenue and sales models used by leading online operations. This research identified a robust collection of revenue models that are currently thriving in the local marketplace.

So why are most hyper-local sites 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 we submitted to CUNY’s New Business Models for News project:

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

Moneyball: Fixing Newspaper Web Sales

Traditional Newspaper management is just like the old guard in Baseball. That’s what you’ll think after watching Moneyball starring Brad Pitt as Oakland A’s general manager; Billy Beane.

Based on a true story, Moneyball shows Beane going up against his old school, know-it-all, front office. He’s tired of being in last place and squeaking by on a shoe string budget. Unable to afford star players, Billy decides to slaughter a few sacred cows and installs experimental yet logical tactics into his game plan.

Today’s Newspaper industry is like that once great, but now struggling baseball team. The key difference? They’re now forced to play on a new, hyper-competitive field called the Internet.

Think about it: the veteran print team is stuck in a rut using the same, tired strategy that served them well for years, but no longer. Today, they get trounced by those with more money & muscle ( think Google, Reach Local, Yellow Pages, independent online publishers , etc.)

Did your publisher waste time and money at a so-called “innovation conference” recently? This is something rank-n-file newspaper staffers should blow a gasket over. Is this really helping to save industry jobs? Is that expensive research working? How about that salaried VP of digital at your company? Think they have fire in the belly?

Answer these questions to determine if you’re playing on the right team.

Anyone on your news team play the role of Billy Beane? Go find one. Their job: encourage the ditching of tactics, managers, research consultants, conferences and professorial pundits that just don’t help anymore. This person will need entrepreneurial tenacity and a thick skin. Some old school execs will immediately try to torpedo their efforts. This person will be a threat to ‘the way it’s always been done’.

Let’s slaughter a few sacred cows in Newspaper, just like Billy in Moneyball…did with the Oakland A’s.

Areas critical to your Newspaper’s digital success or failure

Compensation & Financial Motivation. If you can’t fix this, just turn off your site and retire. While adjustment of compensation is the most direct way to positively affect digital sales, it’s also the most challenging…..especially when surrounded by whiny sales reps and ad managers who threaten mutiny. If you can’t apply this simple & proven principle of comp adjustment to digital, you don’t have a web business… you only have an expensive hobby.

Management Structure. Who’s in charge? If the person managing your digital effort is salaried, you’re either bleeding red ink or you’re hitting a too-low web budget. You’re also leaving a load of cash on the table. Would you ever hire a publisher or ad director and then pay them a nice salary whether they hit their numbers or not? Then why do it with those who control your digital business? Need proof that salaried execs will kill your digital business? AOL Patch, The New York Times, Allbritton’s TBD and Gannett placed salaried, editorial execs in charge of building out the company’s hyper-local business models. To date, these brainiac-led efforts have either been shuttered or still bleed rivers of red ink. Tip: Do the exact opposite of what these egg-heads did. Tip #2: Run digital like a real business, not a hobby.

Inventory Management. Publishers, editors and ad directors vigorously defend the value of their content and readership in print. They smartly price the ad inventory adjacent to the editorial. But we’re floored how often they let Google Ad Sense, Centro and other 3rd party rep firms dictate CPM’s for prime positions on their sites. This over reliance on ad networks & deadly CPM selling contributes to the worse crime of all: web managers boasting of an online ‘sell out’. Duh. Would you ever tell an advertiser that you’re sold out in tomorrow’s Newspaper? Being ‘sold out’ online exposes a serious lack of inventory yield management, poor understanding of supply & demand pricing, and the painful in-ability to quickly create programs that help a client spend money with you.

Market Intelligence. If your staff is blind to what local business wants to do online, you’re in for a rude awakening. Instead of just picking up checks and taking orders, sales reps must be vigilant with collecting client ‘intel’. They must keep up with the ever changing need of the advertiser…especially now, as many are moving their marketing dollars to online.

Some media companies blindly follow the advice of market research firms. They invest in studies about local Internet expenditures. Does this expensive market data provide a road map to digital success? If it did, wouldn’t the industry be better off today?

Local media execs also seem to perpetually debate digital innovations in both journalism and sales. Much of this happens during conference panel sessions and keynotes. We have some advice for these folks: stop debating and start selling stuff your local business community wants to buy.

Fact: Your sales force with those direct relationships with local business should be your #1 source of market research. Reps should always be doing CNA’s (client needs analysis) to uncover clues to help point your Newspaper web sales model in the right direction. If anybody should have high levels of market intelligence and know the spending habits of local business, it should be your local feet on the street….NOT an expensive research or consulting firm. Duh.

Digital Business Model Evaluation.  Coming Soon: Questions to help evaluate the revenue potential of your newspaper website and other digital efforts.

Even New York Times Admits Digital Deliquency

Don’t feel so bad about your website. Even the New York Times admits that their digital business model & execution is seriously lacking. That’s according to this infamous ‘leaked’ report that documents the paper’s struggle to embrace and succeed at online publishing.

None of this stuff is a surprise. To us anyway. Secretly, those inside many local media companies will admit that they too, suffer from the same issues as The New York Times. But as long as they sell a few banner ads and juggle some client dollars into the digital revenue buckets, all will be cool. But that only lasts so long.

Some of us knew back then, that traditional media was vulnerable to this over-confidence. Time to pay the piper?

Even with deep pockets, smart content creators, and the biggest, most recognizable name in news…..you can blow it and lose your audience, advertisers and business.

Some take-aways…

  • Leverage your amazing archives
  • Questionnaires invite engagement & valuable market data
  • Leverage Social, but don’t over rely on Facebook
  • Personalization for users
  • Better tagging & category use

The Full New York Times Innovation Report

If Steve Jobs Ran Your Newspaper, TV or Radio Station

Loved the movie ‘JOBS’. Reminds me of this article I wrote a while back. But first… a look at the JOBS movie trailer:

The story of Steve Jobs is beyond epic. There’s not many who could change the world of personal computers, music, phones and animated films in one lifetime. His character DNA was a mix of sheer genius, vision, tenacity and often disturbing habits that easily puts him in the same league as Edison, Ford and Tesla.

As I finished the best-selling biography of Steve Jobs by Walter Isaacson, I wondered what would happen if Jobs, with his highly combustible yet potent management style had decided to become the publisher of a Newspaper or Broadcast outlet, instead of being the king of Silicon Valley. It’s this kind of hardcore leadership, combined with brutal austerity measures that Newspapers (and Broadcasters) would certainly benefit from today. Introducing someone like this into your operation wouldn’t be easy. But as they say – if you want a great omelet, you have to break a few eggs.

How would Steve Jobs stop the bleeding? How would he re-invent the Newspaper industry, in much the same way as he did to rescue Apple from the brink of bankruptcy in 1996? With digital advertising on the verge of becoming the second largest money maker for media, what are some of the first things he would do as your boss?

Based on tactics I gleaned from the book, here’s a top 10 list of stuff that Steve Jobs would likely do if he was the Publisher of your Newspaper.

#1.  Remove the bozos. You already know who they are. Internal poison. Clean house and get rid of B level players. Strive to have all A players since they prefer to be around A players, whereas B players surround themselves with C players. Dismiss those just putting in time while cruising towards retirement. Ditch those with little passion or vision for the future, or those who would prefer to protect the way it’s always been. Watch this short clip from a recent News conference to see the type of journalist you don’t want in your newsroom.

#2.  Simplify. Identify. What business are we in? Apple dumped the word ‘computer’ from their company name because they saw it as limiting. Today, the word ‘newspaper’ is being replaced with ‘media’ at many news organizations. That’s a good start, but it’s not enough. As Apple Computer morphed into a consumer technology company, Newspapers would be wise to stop seeing themselves as Newspapers with a website. Rather, they must become the dominant news, information and marketing source in their market…no matter what the format, product or service. What’s the #1 asset, a local media company has and should put primary focus on? Answer: relationship with advertiser. Lose that, and your great journalism will never see the light of day.

#3.  Fix it or ditch it. Prioritize, then eliminate any distractions that are not singularly focused on core products and competencies. Identify the worst performing 50% of your website and take it offline until further notice. Ex: Steve Jobs trimmed the Apple product line, much to the horror of those who wanted more products. Do you have too many products to sell? Are your sales reps burdened with trying to be excited about all of them? Recommendation: direct all resources towards the best performing ‘top half’ of your web efforts.

#4.  Break down the silos. Steam would be blowing out of Steve Jobs’ ears if he found out that some Newspapers created separate sales forces or so-called digital divisions. Well-known, research consultants have pushed this faulty tactic for years. On the other hand, smart operators like Morris Communications, are now bringing everything under one roof and moving to a plan that forces everyone to row in the same direction. A separate division for digital allows your traditional staff to get even weaker. It also silently conveys to a local advertiser, that their print rep can no longer be trusted to keep them up to date with all forms of marketing.

#5.  Tell it like it is. No sugarcoating. As you’ll find by reading the book, Steve Jobs would either think your idea was great or a ‘piece of shit.’ No middle ground here. Is your online game plan awe-inspiring? Is it a cheap knock-off of what other publishers are doing, or what you picked up from a conference panel? Are you uncomfortable calling your editor or VP of Digital on the carpet about the lack of a realistic business plan associated with their cool new idea ? Do you hate your CMS ( content management system) because it’s ugly and tough to use? Do you have the guts to fire a respected VP Digital or sales manager that consistently misses their digital budget? Steve wouldn’t be.

#6.  Play by your rules, on your own field. Steve Jobs hated the thought of being controlled by anyone, especially a competitor. That’s one reason why Flash animation never made it to the iPad and iPhone. Jobs didn’t want to make programing decisions based on someone else’s (Adobe) timetable or software. As a Newspaper publisher, Jobs would banish anything that allowed outsiders to meddle with the actual value of the product.

For example: Jobs would hate the online CPM model. He wouldn’t take too kindly to accepting a middleman’s valuation of his online ad inventory. He would also discourage journalists’ fanaticism in the placing of so much time and content on Facebook & Twitter. We certainly understand the need to leverage these platforms, but why build your business being highly dependent on a platform you don’t own? If you don’t having a well-defined business plan for social media, that’s an issue you need to deal with pronto.

#7.  Cannibalize your business. Steve understood that the iPad could hurt sales of his line of desktop computers. But he knew it’s better to cannibalize your own company, rather than let someone else do it. That’s why any executive that fought against the future, and saw digital as a distraction, would be sent packing…pronto. Is your staff afraid that digital will cannibalize print?

#8.  Impute.  Jobs was heavily influenced by early Apple investor, Mike Markkula, who preached the concept of ‘impute:’ People do judge a book by its cover. We may have the best product, the highest quality and most useful software. If we present them in a slipshod manner, they will be perceived as slipshod, if we present them in a creative, professional manner, we will impute the desired qualities.

Let’s apply the concept of ‘impute’ to our printed Newspapers and Newscasts. The design, flow, pace and layout are executed with great care and precision. We have the most comprehensive news coverage, highest editorial integrity and substantial reach in each market. Now let’s compare that to our local media websites. In this news website example, we see a visually confusing train wreck of text, images, navigation and other promotional muck. This reflects or imputes poorly on the integrity of our News org’s journalism and marketing expertise. We would never put out a paper or newscast that looks and acts like this, but we accept it in our digital version. Why?

Impute can also apply to the sales effort. The sales team exudes passion and expertise in selling the benefits of the paper, but imputes negatively when it comes to digital.  In terms of collateral and marketing materials for our Internet products, Jobs would not suffer fools if he saw substantially less professional collateral developed for Web, compared to the printed product. What do you think that tells a prospective client?

#9.  Dump the market research. Jobs didn’t ask consumers if they wanted an iPod connected to iTunes. He simply connected the dots: he knew they loved music but didn’t want to rent it or be forced to buy the whole CD. The ability for them to carry an entire music collection in their pocket was icing on the cake.

Instead of staking the success of your media company on expensive 3rd party market research, your local staff should bone up on the lost art of the CNA; client needs analysis. Mandate them to have a solid understanding of the one customer that pays most of your bills: the advertiser. That’s simple business 101. If you’re delegating marketing research & analysis to an outside contractor, you lose that valuable face-to-face interaction with customers. Fortunately, that flawed model is already being phased out at many media companies today.

#10.  Share best practices.  Steve Jobs loved creating products that would literally change the world, or as he would describe it: ‘put a dent in the universe.’ As mortality crept closer, he put more into the challenge of building a company and culture that would survive long after he was gone. This is the reason behind Apple University; case studies to train future employees. Imbue them with fundamental Apple DNA.