Shit Hitting Fan for Local Media

The shit is really starting to hit the fan. This time, with more shit and a more powerful fan.

Newspaper, Radio & TV managers are in a heightened state of panic due to their lack of digital revenue success. Pink slips are flying, private equity is taking over, and being a digital knuckle-dragger will get you a one way ticket to Shitsville.

For the past 10 years, these hard working managers followed the digital revenue ramblings of newsroom geeks, web masters, tenured college professors and research analysts. They hoped that these anointed thought leaders would eventually lead them to a sustainable, online business models. Nope. Sorry.

Why is local media still stuck in a mountain of manure? It’s not because local journalism is no longer important, or that the big, bad inter-webs killed the golden goose. Rather, it’s because we forgot to set up our digital operations as a profit-first business with financially motivated execs at the wheel. Instead, we’re running web as a non-profit, print-subsidized journalism project. Need some recent proof of how clueless our media leaders are? Read the latest Pew Study on Culture Wars Inside of Newspaper, that suggests a digital disconnect inside many publications. To that we say: no shit Sherlock. Need even more “no shit’ revelations? Enjoy this 10 year too late report by the Knight Digital Media Center.

I’ll tackle these issues at the America East Conference on March 13: For Publishers Only; Run Digital as a Profit-First Business. (Can’t attend? Provide your email at top of this page, I’ll send you the deck)

While all of this un-needed digital research & discussion continues, local business owners are quietly spending more on services like Google, Reach Local, Yellow Book 360 and Facebook. Ever hear these local competitors being discussed by your media  manager or VP Digital? Yeah. We didn’t think so.

Too bad sales reps don’t ask clients about ad spends. That could be incredibly valuable intel. Some consultants, like the always invigorating; Kip Cassino at Borrell  Associates, believe that local sellers are un-qualified to ask clients this simple question: “where do you spend your marketing  budget….and what digital marketing stuff are you thinking about buying?” Of course, we understand that the Kipster makes a good living by asking these types of incredibly complex questions, so we understand his position.

We also understand why hard working, local media managers read the online business model blogs, attend cool conferences and buy volumes of local market data. It looks like they’re ‘keeping up’. They patiently listen to agenda-driven advice from NPR’s Bob Garfield, Clear Channel’s Bob Pittman and JRC’s John Paton. But have ya noticed? This ‘advice’ is not working. That’s why there’s panic in the air as more poop hits the windmill.

A few of us stopped drinking the old-school consultant kool-aid a few years ago, while many more of us are finally getting suspicious. Of course, there are those that would prefer to keep their heads firmly planted you know where….God bless ‘em, we wish them well at Burger King.

We understand why media managers drag their feet with digital;

  • Even while in decline, print cash flow is still attractive
  • Retirement and cashing out is on the horizon, so why bother
  • Embarrassed to admit their lack of digital savvy
  • Push off responsibility to VP Digital (blame web failure on them)
  • Selling more print is in their comfort zone.
  • Comp packages are designed to reward print sales
  • Easy to hide web failure from corporate by juggling numbers & setting low budgets
  • Easy to hire outside sales consultants to blitz local biz..& quickly hit web numbers

Topics I will cover during my session at America East in Hershey:

    • How private equity firms are depressing your newspaper’s valuation
    • How to reduce costs of overall operations via digital
    • Determine if person in charge of digital, is qualified to reach profitability
    • Staffing best practices; why separate digital teams are recipe for disaster
    • How CPM & 3rd party sales efforts are harmful to your business
    • Best practices of online inventory & digital yield management

 

Patch, Reach Local & Pandora

The new, local online competition; more than just the other newspaper or TV station across the street. Outsiders like Patch, Reach Local, Groupon and Pandora are hell-bent on siphoning ad dollars in local markets. Even independent, hyperlocal sites are grabbing bigger shares of small business marketing budgets.

Local Market Web Competition 9.12.10

ONA 10. TBD Not Focused On Profit?

Been watching the live video stream and Twitter feeds of ONA10, The Online News Association conference in Washington, DC  this week. Totally loving that I can follow from my office in Philly… but I’m bummed at the lack of any coherent sales plan coming from my hyper-local heroes at TBD.com.

The ONA keynote this morning featured top execs of Allbritton’s TBD, the DC based online news effort steered by Jim Brady and Steve Buttry. These guys are some of the smartest in the business….when they’re discussing editorial and online news gathering procedures.

But when it comes to sales and revenue strategy, the discussion disappoints. Badly.

Journos are screaming at me now: ‘so what, it’s all about gaining audience for now’. Well, if the moderator thought it was important to ask questions about revenue, one would assume it’s a key part of keeping TBD, and others like it, sustainable? Or was she just filling time trying to sound ‘entrepreneurial’? I doubt that parent company; Allbritton Communications (Politico, WJLA) is willing to burn through millions to see what might emerge. Maybe they have too much confidence in their mature TV sales force as well?

The New York Times made content and traffic a top priority with THE LOCAL, and we know how that flamed out with little advertising support. Not even the top flight professors at CUNY could save that one. Like the NYT and their hyper-local plan, TBD.com might be committing the same fatal mistake of  NOT adding seasoned sales expertise to the mix, early in the process. Foundation support, angels, tip jars and the HOPE of future profit… is no way to run a  business.

I could sense from watching Mr. Brady answer questions about money, that the topic of sales is not his strong suit. And God bless Steve Buttry for trying to help Jim out with some tired, local-revenue factoids. Still, why are we asking two brilliant journalists about sales? I get the same nauseous feeling when I watch NYU’s Jay Rosen or Jan Schaffer from J-lab talking about those so-called ‘elusive revenue models’.

The folks at Reach Local and Patch are snickering right about now. These new local competitors are hell bent on revenue. They’re likely amazed and thankful that Allbritton put newsroom and old-school TV execs in charge of TBD revenue generation. They also love to hear college professors ask: “is patch evil?”

Some things mentioned from this keynote, that kinda made me cringe…..(para-phrasing)

  • Our ad network is not gonna make the blogger rich, but it’s more than what they’re used to
  • No magic bullet to revenue…only shrapnel
  • Maybe 5 different revenue streams we could tap
  • Quality staff & news coverage is long-term strategy, profit will follow later

Online Disruption: Local Media Screwed?

Not so long ago, small business was at the mercy of Newspaper, TV & Radio. If you needed to advertise your Italian restaurant or car dealership, you had to call the big media players in town. Often, they played the role of Tony Soprano (or Nucky Thompson if you watch Boardwalk Empire on HBO). They were in the driver’s seat and it was their way or the highway. But that’s no longer true today. Local marketing budgets are in flux. They’re up for grabs as the Internet enables and empowers every mom and pop in town. Yes, as my mentor told me…’the deer now have guns’.

Thanks to cheap and simple digital platforms, along with a growing army of online-only companies, SMBs (small & mid size business) are no longer trapped. No longer must they endure overly confident radio reps or cranky newspaper ad directors who are counting down to their retirement and pension. Small biz can now take low-risk chances and move larger chunks of their ad dollars to new digital solutions arriving on the scene.

Consider the facts. Consumers now get 50% of their media from online sources. Compare this to the fact that local business still only allocates 4% of their marketing budgets to online. Imagine when local biz wakes up to this disparity. This impending tsunami of local marketing dollars to digital is why Patch, Reach Local, Google, Pandora and others are making big bets in the local space.

TV, Radio & Newspaper losing kung-fu grip on advertisers? The short answer is yes. The longer answer is ‘yes but so what, they still make an awful lot of money’. Thanks to typical Q4 spikes and better than average political dollars, these types of short-term windfalls obscure the growing cracks in traditional media’s revenue foundation. It also blinds management to the growing success of digital outsiders like ReachLocal, (now in 45 markets) sucking bigger ad dollars out of their market.

Here’s a look at some recent local-media disruptions, affecting all local media outlets:

1. David and Goliath in Philly. Journal Register Company (JRC) recently fired a shot across the bow of every Philadelphia news organization. CEO; John Paton, announced his intention of launching a digital-first service for the nation’s 4th largest market. Paton’s plan calls for leveraging JRC’s suburban Philly newsrooms and sellers, with increased use of ‘cloud’ production. Paton will also look for some divine intervention in tapping a fiercely independent group of hyper-local content creators.

The JRC plan is a direct assault on dominant Philly news orgs like The Philadelphia Inquirer, CBS, Fox, NBC and KYW News Radio. It also kicks sand in the face of other market competitors like Gannett and Calkins Media. While all of these companies have competence in the interactive space, traditional management still plays a far too dominant and protective role in strategic digital decisions & resource allocation. I imagine an uncomfortable meeting where NBC corporate asks their local Philly management team: “why did we allow a former bankrupt company (JRC), take the lead in the Philly hyper-local news race? (sounds funny but could be true)

2. Hyper-local advertising and content. Speaking of my home base of Philadelphia, the hyper-local eco-system here features sites of every make and model. Examples: PhillySportsDaily.com leaves local sports radio 610WIP.com & 950TheFan in the dust with its 24/7 online sports coverage & analysis. Gawker-influenced; Philebrity.com, probably assisted in the decline of our once great alt-weekly: City Paper. Smart and dominant technology coverage of ‘Philacon Valley’ by the team at TechnicallyPhilly.com certainly must embarrass the top brass at the legendary Philadelphia Business Journal. And if you taste-test the foodie editorial of JerseyBites.com, it’s easy to imagine this content eventually being licensed or sold to The Food Network or Fodors.

All this content creation sounds like a fully staffed newsroom, huh? That’s why traditional media is desperately attempting to lure these indies into some level of partnership. Getting cheap or free content to replace empty newsrooms seats is an understandable move for anyone looking to cut costs. But as many have found, Philly blogs and sites are mature, revenue bearing efforts that see big media partnerships as win-lose proposition. Big media wins…local blogger loses. They’re not too impressed with the traditional sales forces and horrific rev-share deals being offered.

To survive, indie online publishers didn’t have to teach themselves the voodoo art of entrepreneurial journalism. They just get off their ass and knocked on a few doors. Just like former Gatehouse exec; Howard Owens, at TheBatavian did. Some have formed their own hyper-local networks and share the cost of hiring a sales team. This is how many become self-sufficient and successful.

In one more crack at old media trying to be hip, KING-TV and The Seattle Times just announced a hyper-local partnership. In theory, it’s a great idea. But when executed by a traditional sales and management team, it’s destined for a slow ride to nowhereville.

3. Dump your expensive CMS vendor. Go WordPress! In a rare moment of brilliance, the CBS broadcast division has started to dump some of its pricey and stale, interactive vendor tools. They’re moving to WordPress as a CMS; content management system. (although we think CBS blew it by combining all of their excellent brands – The Fan, 1010Wins, 610WIP, KYW1060, under the consumer un-friendly url’s of CBSPhilly.com & CBSNewYork.com)

This big media move to WordPress should be a wake-up call to all companies stuck in crappy and outdated vendor contracts. It’s a fact. Open source platforms like WP are better and easier to use than ever. WordPress; an open source publishing platform, has humble beginnings as a simple yet effective blogging tool. Today, WordPress is also the leading CMS that handles everything from easy creation and upkeep of Newspaper sites, to helping TV Networks with a series of specialty blogs.

Some web development & digital VPs snobbishly look down their nose at WP. Understandably they’re fearful of implementing an in-expensive, yet robust and user-friendly platform where it would likely affect their employment and pay status. Nonetheless, watch for others to dump a few vendors and adopt WordPress and other free digital tools. Why not reduce interactive hard costs while increasing ease of use, functionality and consumer value?

4. Tribune and 435 Digital. It’s true. I’m still bitter over not being invited to those smoky poker games inside the Trib Tower. But before his exit, Randy Michaels was a big supporter of their 435 Digital division and we gotta love him for that. Imagine a newspaper & broadcast company getting in front of local advertisers…and NOT forcing them to buy print ads and broadcast spots. Instead, clients are given the option of digital solutions like social media management, web development and search engine optimization. This activity suggests some old school media finally willing to offer….what local advertisers increasingly want to buy.

Why do local media managers ignore or mis-play the new digital competition? Well, if your compensation is primarily tied to spot and print dollars, as well as archaic rating systems and circulation audits, what would you do?

But don’t place all the blame on middle management. It’s the broadcast/newspaper CEO’s and investor groups that are in charge here. They set the tone. Instead of stepping up and immersing themselves in the business of digital, they sheepishly delegate all that icky web stuff to the company web geek…

Translation: ‘we hired some heavy hitter who worked at a dot com. He was recommended by someone who used to build streaming websites and tweaked code as a teen. Sure, this guy with the prestigious resume is burning through a lot of our cash, but our sites look cool, traffic is building, and we win digital awards all the time. He swears profitability is right around the corner.’