There’s been a great deal of back and forth lately about the plausibility of ad supported local news sites as presented by a team at CUNY and their New Business Models for News. The team focused on what would happen if a major daily newspaper (in a single newspaper town) closed “today”. Team lead Jeff Jarvis makes the very clear point that the goal of the project was not to determine what model or strategy will be the lasting solution for local news.
I really don’t believe we’re likely to have a lasting strategy for some time. The online world is still changing too rapidly. And as the economy begins a slow recovery and new entrepreneurs appear, I believe that the competitive landscape for local advertising is about to get much more complex.
Most business models for local news sites assume that advertisers who might once have appeared in newspapers will migrate to online as soon as they are given a viable alternative that works as effectively. I agree, they will. But I’m afraid the migration won’t all be to news sites. A large portion of it will be to Google and a new crop of specialized listings sites. (I’m amused by how newspapers are spending so much time and effort worrying about Google “stealing their content” when it’s their advertising revenue that they should be worried about).
Put yourself in the mind of a local business. You have limited funds with which to advertise. Every advertising dollar comes directly out of your own pocket and you need to ensure that the money you invest drives store traffic and sales. This means advertising in the place most likely to supply qualified leads. As click-through rates for display ads continue to decline, ad efficiency is not likely to be achieved through display ad on a news site.
Now put yourself in the mind of a consumer. It’s highly unlikely that you would be reading an online story about a local fire, see an ad for an interior designer and click on it. The context isn’t right. You’re not in the right mindset to be thinking about hiring an interior designer. (Unless I guess, it was your house that was on fire.)
No, if you’re looking for an interior designer, you’re most likely to Google the name of your city and “interior designer’. First, you’ll find Google’s local business results complete with photos, profile pages and user reviews. We can argue about the quality of those listings. When I searched Los Angeles Interior Designers, the 5th listing was for a restaurant and the 3rd listing was for a cheap and cheerful fabric shop. But it’s Google, I think it’s safe to assume they’ll improve this experience in time.
In the near future, you might find that the next listing is for Decorati.com. I’ve been spending a lot of time on Decorati lately. I can’t get enough of it. I’m addicted to it because I think that it and sites like it are going to have a major impact on the ability of local news websites to operate profitably.
Decorati is a national site that connects interior designers and customers at a local level. But it is much more than a simple directory or listings site. It’s cool, well designed (of course) and VC funded. It’s a great mix of content, shopping and listings. You can look for furniture, explore different styles, participate in forum discussions, read a blog and find a decorator in your market that suits your taste and budget. It makes money by charging decorators for listing fees.
One thing I know for sure is that advertisers love context. It attracts qualified leads and makes the cash register ring. If Decorati really takes off, it’s easy to see how it could become the top source for lead generation in its category.
This site can serve as a blueprint for many other listings-based businesses that directly target the very same advertisers local news sites are hoping to attract. Think of sites for hospitals, cosmetic surgeons, furniture stores, spas, camera stores, private schools, and any other number of local advertising categories, with each site combining content, forums, products and listings.
How can local news sites compete?
In my opinion, the best hope is the Complete Community Connection proposed by Steve Buttry on his blog back in April. Steve argues that you create engagement (and therefore advertising results) by becoming the ultimate resource for living in your city. The site becomes valuable to advertisers because of the sheer comprehensiveness of the site’s value to the city and community. It becomes the place locals look for information on their city.
In Steve’s own words:
“For consumers, we will be their essential connection to community life – news, information, commerce, social life. Like many Internet users turn first to Google, whatever their need, we want Eastern Iowans to turn first to Gazette Communications, whatever their need. For businesses, we will be their essential connection to customers, often making the sale and collecting the money. We will become the Complete Community Connection.
Our company will provide an interactive, well-organized, easily searched, ever-growing, always updated wealth of community news, information and opportunities on multiple platforms. We need to become the connection to everything people and businesses need to know and do to live and do business in Eastern Iowa. We need to change from producing new material for one-day consumption in the print product or half-hour consumption in the broadcast product to producing new content for this growing community network of information and opportunities.”
I love it. He’s got some fantastic ideas all designed to help the site “be the answer’.
The very good news is that there are two opportunities for newspaper companies in the local space. First, choose a local advertising category and create the next Decorati (or several Decoratis). Second, create a team that is completely separate and independent from your regular operation, put a smart product development person in charge and let them create the Complete Community Connection in your city. Yes, yes, it will cost money to create, but it could very likely save your business.