Commentary
Hyperlocal Will Be A Newspapers Game For Some Time
- by Dave Morgan , Featured Contributor, August 27, 2009
"Can Anyone Tap the $100 Billion Potential of Hyperlocal News?" That question was posed in the headline of an article in Fast Company chronicling the recent high-profile moves in online community news led by AOL, The New York Times Company and hundreds of others. As I read the headline, two things struck me. One, that the $100 billion number bandied about as the potential size of the "local" online ad market spend has always seemed high to me. And two, why do folks assume that doing local news well online will necessarily bring local online ad dollars with it?
I spent this week in my hometown of Clearfield, Pa., a very small town in the mountains of western Pennsylvania, in a place where coal, timber and brick refractories used to rule. I relived my thoughts about the Fast Company headline when I picked up copies of some of the local newspapers earlier this week. First, the region's "big city" Sunday newspapers (Pittsburgh, Johnstown and Altoona) weren't at the big convenience store in town early Sunday morning. And second, when I picked up copies of the local and regional newspapers on Monday, The Progress, the "little" local paper of Clearfield, was now fatter than the "big" regional newspaper, The Centre Daily Times of State College. The Progress was chockful of ads, articles and inserts, the CDT was not.
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How could that be? Not only does the CDT out-circulate my hometown's paper 3:1, but State College is six times the size of Clearfield, boasts one of the country's largest universities and has one of the fastest-growing local economies in the U.S. Clearfield hasn't been vibrant since it was named an All-American City in the early 1960s and its economy collapsed entirely, in lockstep with Pittsburgh's steel mills, in the early and mid-1970s. Wal-Mart has been its #1 employer in town for many years. How then could the little newspaper in the dying town seem so much healthier than the one from the much bigger boom town an hour away? The more I thought about it, the more I realized that the answer to that question goes to the heart of the issue about the future of "hyperlocal" news and ads online, at least with respect to very small towns and communities. This is what I mean:
Local distribution does not make a product "local." Local markets are exactly that, particularly rural areas, and they are very hard to penetrate from a distance and even harder to maintain. When newspaper companies were doing well, they bought lots and lots of "regional" distribution for their products to fatten up circulation numbers and rate cards. Newspapers in Pittsburgh, Johnstown and State College dumped hundreds and hundreds of newspapers in small towns across western Pa., paying for the distribution by taking away the free standing inserts ("slick" coupons) from the small papers and putting them in their own. They never really had any truly local news or local ads, just "local" distribution. When their businesses started to collapse, they started to pull back from these small towns. Thus, it's now harder to obtain "big city" Sunday newspapers in Clearfield -- but the truly local newspapers got back the regional ads that had been taken away from them the past 15 years.
Paper still has power for advertisers, particularly local. In most small markets, newspaper products are still the heavyweights when it comes to delivering value for advertisers. There is no local TV, and analog products are not so hard to deliver if you only have to get them to a couple of thousand homes in an eight-mile radius. Plus, when customers carry newspapers into the stores under their arms as they buy, you know your advertisers will renew.
Not enough density for online. In many local markets, particularly those that are older and poorer like most in western Pa., there is not enough density of online users and online-savvy businesses for local online directories to prosper -- just try checking out Yelp for Clearfield, Pa. I suspect the same situtation will be true of online news and community information for some time.
I know I said I wouldn't write about newspapers any more, but when I saw my hometown newspaper doing so well relative to its much larger competitors, I had to break my rule. I do believe that the "hyperlocal" market is a good one for online companies to focus future efforts on. However, I believe that those companies had better come into the market with their eyes wide open, or they will end up like the big-city newspapers that learned that national and regional publishing is not "local." What do you think?
Thank you for hitting a few critical nails precisely on their heads. Even when entrepreneurs have bought up thousands of ostensibly "local news" domain names, plastered the country with automated "local news" sites, and allowed businesses to submit cheap ads automatically, they have failed to capture local business ad dollars or local eyeballs, for the very reasons you've stated. In any community, and especially in a small one, "local" is a state of mind that is jealously guarded by the locals against outside intrusion.
Dave -- I can not grasp the scope of the revolution in thought we'd experience if more "thought leaders" left the big cities once in a while like you did. We could end up having simple truths of real life served up to us this elegantly on a daily basis and be spared oceans of perspectiveless prattle about Twitter changing the world. Dave, you were just IN the world. So tell me - is everyone in Clearfield tweeting each other nonstop like all the media kids in the big city? Of course I know the answer. And so do you!
Distribution has always been a key factor and driver of their success for newspapers. Just see the revenue and power of FSIs thru the years. From an online perspective, the 'distribution/circulation/audience' is just too small.
Yet people want to know about local news, as well as issues that affect their neighborhoods and communities. Newspapers are the only one doing it, and some not very well, or who should be (er, Tribune).
Concurrently, are the major ad agencies looking at this potential 'power and impact'? No. With shrinking budgets - Reach is a major driver of which media channel(s) are utilized. This combined with a lack of perspective on the effectiveness of these vehicles from junior media planners make it a tough row to hoe. Sadly.
Yet, someone will do it well, and some money will certainly follow. Yet that $ 100B figure might be grossly exaggerated.
Distribution has always been a key factor and driver of their success for newspapers. Just see the revenue and power of FSIs thru the years. From an online perspective, the 'distribution/circulation/audience' is just too small.
Yet people want to know about local news, as well as issues that affect their neighborhoods and communities. Newspapers are the only one doing it, and some not very well, or who should be (er, Tribune).
Concurrently, are the major ad agencies looking at this potential 'power and impact'? No. With shrinking budgets - Reach is a major driver of which media channel(s) are utilized. This combined with a lack of perspective on the effectiveness of these vehicles from junior media planners make it a tough row to hoe. Sadly.
Yet, someone will do it well, and some money will certainly follow. Yet that $ 100B figure might be grossly exaggerated.
Dave, really, how can you stop speaking about newspapers? You are the one of the only people who understands the business. Speaking from the trench view look who is working for the papers and what they are getting paid. Those small papers pay about $25-35,000 anually or less which may work in Clearfield but not in most areas. On line brings in and pays much less. Those in both publishing forums which deliver local news with ads that cost less than $100 per AND can grasp the department store, supermarkets etc. (used to be auto and real estate) full pages have a better survival rate (production costs). But too many out there dilute the waters as in any other business and let's not forget DM as a local affordable favorite.
Have you pointed the right finger or what about the costs of distribution. Local sections of majors are disappearing and many have gone for awhile now. Of course, cooperation via various distribution companies are just too too, but that's a whole topic unto itself. So hyperlocal will have to be a sales technique more technically oriented whereby the large sites can reach a small geographic area.
Also, most of those hyperlocal sites are set up to be sold like a franchise so the "owner" is responsible to sell ads. promise results, collect some local news and promote themselves. I've been approached by more than one of the outfits.
Good article. I just read kind of the opposite that the newspapers were banding together for more reach sharing news around the country and i thought "who cares" i want local news or i'll go to CNN or MSN etc. I really want to work with and help these media / newspaper companies but they don't get it. They need to break the mold. I believe SMB advertising will be top of mind in the months to come and they want local. Ask some of the local business owners.
Even in the best of economic times, metro newspapers struggled to compete in the suburbs or out in the state, with the real "local" paper. And once you got into a rural area, with a metro distributing, not covering, as you note, the game was over. Now, as metro papers shrink back to their core, and eliminate suburban staffs, plus any thoughts of state coverage, it gives a new boost to the "true" hometown papers. Small papers do more than survive these days, many thrive. As smaller papers become more Web-savvy, they will strengthen their franchise, and be around for a long time. Great observations, Dave. Thank you.
It's all about community, connections and content. Some newspapers have figured this out .... others continue to fail online.
I'm biased, but I love what we're doing at OnMilwaukee.com.
http://company.onmilwaukee.com/index.html
http://onmilwaukee.com/
The future is local. Or maybe better said, Local is the future. Not sure which one. Good article. Two things I know to be facts. Publishers should be fine in todays environment if (a) they stay relevant and (b) continue producing primarily "unique" news. Relevant & Unique. Which means local. Doesn't matter the size of the market. Plus a very boring subject called "customer service" is an additional ingredient that is mandatory - now more than ever. Mix in strategic modified engines including parts of Facebook,Digg, and alot of old-fashioned shoe-leather staff generated reporting, shake well and all is good. Promise. Notice Twitter was not mentioned. It reminds me of those folks who are famous for being famous; fame usually ends up being their only redeeming characteristic at the end of the day. I would not want to rely on Twitter to actually produce anything tangible or of measurable value. Twitter can be a useful tool however.
Insightful and relevant article, thank you. From a recruiting perspective we are finding that old fashioned roll-up-the-sleeves relationship based hunter sales people are doing very well in the hyperlocal advertising space. Businesses are responding to people who understand their community. Interestingly, I've seen a handful of former national and key account sales executives settle into this entrepreneurial, feet on the street sales role very well. Some of them as publishers of the local paper.