SimsBlog

9 Things: My Keynote to the ACNA

The start-up world has kept me hopping these past few weeks and I've been a very bad blogger.  Time to get posting again!  And I'm starting with the keynote presentation I delivered to the Atlantic Community Newspaper Association on May 13th.

Slide-by-slide commentary is below the SlideShare.

 

Judy Sims ACNA Keynote Presentation

View more presentations from Judy Sims.

1. Title

2. My name is Judy Sims and my day-job is as the COO of a Toronto Internet start-up called CanSport LIVE where I’m busy revolutionizing the business of amateur sports.

3. But up until 2009, I worked at the Toronto Star where as VP Digital media, I was responsible for thestar.com and also launched 4 digital products in 2 years.  Though my day-job is no longer in the newspaper industry, I keep a toe in the water as a member of the PostMedia Digital Board of Advisors.   I’m going to set the stage for our conversation today with a few slides on the new economics of media.  My apologies, there will be some charts and graphs, but I’m a nerd and I can’t help myself.  But the truth is, I find that talking in scientific terms, rather than emotional ones is the most effective way to begin discussing change.

4. What we’ve seen happening over the past 15 years is a fundamental shift in the way the economics of media work.  The root of that shift is the move from a world where media content was relatively scarce to one where content is very abundant.  The barriers to entry are down and anyone can become a publisher.

5. And not only is there a lot more content available, that content has become “atomized”.  Media is now consumed in smaller and smaller chunks across a wider and wider range of media sources.  The average YouTube video is only 3.5 minutes compared to a 30 to 60 minute TV show.  A blog post is only 3 to 10 paragraphs verses 20 or more in a newspaper or magazine article.  Twitter has reduced this even further to only 140 characters.

6. And now we’re even seeing this happening in the advertising world.  Ads have become unbundled from news.  Flyers are becoming daily deals. 

7. Workopolis, Kijiji, Autotrader, Flyerland, Craigslist – the ads are the content.  They’re the prime attraction.

8. The result of this atomization is that economics of this new media world are the inverse of the old media world.  Where content was once scarce and attention was abundant. 

9. Now content is abundant and attention is scarce.

10. Okay, here we go with the charts.  The economics of media, like the economics of any product or service are based upon supply and demand.  Where supply is low, demand is high and where demand is low, supply is high.  Where the two curves intersect determines the balanced market – the quantity produced and price it sells for.  This applies to the cost of a newspaper or movie or the cost of advertising.

11. This is what supply and demand for media looked like before the Internet.  Because there were significant barriers to entry as a media company, i.e. you needed a printing press or a TV studio or movie camera, supply was relatively limited and demand was relatively high.  Thus prices were high.  In our case, that meant that we were able to charge high rates to our advertisers.  Looks good doesn’t it?  We could even do a little marketing or increase circulation by moving into a new town or subdivision and we could even grow our demand and increase the price we charge advertisers.  It was awesome.

12. This is Umair Haque.  He’s an Oxford-trained economist who has been studying the impact of the Internet on various industries.  He defines this media 1.0 world as the Age of the Blockbuster.  The blockbuster resulted in very high revenues and profits for media companies for decades.

13. But Media 2.0 changed all that.  Reduced barriers to entry have increased media supply exponentially.  All this new content has made it easier for us to find what we like online so we actually consume more of it, shifting the demand curve out.  Good news right?  Well, the problem is that the demand curve hasn’t shifted out nearly as much as the supply curve.  The result is a hyper-deflation of media prices.

14. And we are in fact seeing this in action in the online world where supply of advertising inventory is much higher than demand.  And, technologies are being created everyday that make the purchase of advertising inventory increasingly efficient and increasingly complex.  As a result, there has been downward pressure on advertising rates both online and offline.

15. Umair Haque believes that we are witnessing the end of the Blockbuster Age

Three Things Newspaper Companies Need to do Now

Tomorrow, I will join the digital advisory board of a very large, and, assuming they’ve read this blog, very brave newspaper company.  After almost two years of firing my unsolicited opinions at the newspaper industry, I must say, it feels nice to actually be asked for them.

 Here’s some thoughts I’ve been having about newspapers lately:

1.  Newspapers need to stop swimming against the current of the Internet.  It’s a sure way to drown.

Wikipedia lists one of the 8 behaviours associated with downing as “trying to swim in a particular direction, but not making headway.” 

Watching newspapers committing to strategies that are sure to fail is to stand helplessly on the shore as they thrash against wave after wave of inevitable digital upheaval.

Where the Internet is about openness and abundance, newspapers are attempting to recreate scarcity by moving toward the closed environments of iPad apps and paywalls.

Where the Internet is about receiving information anywhere, anytime, News Corp is about to release “The Daily”, an iPad app whose publishing schedule follows an old-fashioned, once every 24 hours news cycle.

Where the Internet is collaborative, many newspapers are continuing to engage in one-way conversations.  In fact, to some, community interaction is considered a “gimmick” rather than the fundamental factor that has lead to the development of the web as we know it.  As Clay Shirky said recently: “We have greatly overestimated the value of access to information and underestimated the value of access to each other.”

I’m not saying don’t ever swim against the current.  Sometimes it’s necessary.  But that kind of risk should be undertaken by only the very strongest of swimmers.

2.  Newspaper executives need to determine an audaciously awesome vision for the future of their companies, and then align their organizations to make it happen.

It’s simple.  To be controlling and defensive is to contract.   To be open and visionary is to expand.

Have you ever noticed that there much of discussion about “the future of newspapers” but no real conversation about “a vision for newspapers”?  We all talk about how the Internet is changing things and how uncertain everything is and how uncomfortable that makes us all feel, but not about how awesome it could be.

Ah, vision.  What happened to that?

Many of the world’s best newspapers were founded on a vision.  The New York Times, the Guardian, and my old workplace the Toronto Star were the products of visionaries who wanted to change their cities and nations for the better.

But somewhere along the way, that changed.

Perhaps newspaper executives are too focused on very real short-term economic issues such as crushing debt and shrinking revenues to form an inspiring long-term vision.  Or perhaps the day-to-day 24-hour news cycle has created a culture where long-term thinking is not required or valued.  Or perhaps newspaper executives have simply been unable to adjust to the ever-shifting world of new media, the resulting lack of understanding and fear leading to paralysis. 

Having a clear vision and aligning resources to it works, even for media properties in the 21^st century.  It resulted in the Atlantic turning its first profit in decades in Q4 of last year. 

What if newspaper executives imagined the best possible outcomes for their newspapers and then aligned their organizations so that they had the means to achieve those outcomes?

And what if they created that vision without ever using the words “still”, “once again”, “regain” or “recapture”?

Perhaps a newspaper could become:

A platform that facilitates the coming together of individuals, organizations and governments to solve a city’s great problems: poverty, education reform, joblessness, environmental degradation, transportation, budget deficits…

A platform that facilitates interactions between consumers and businesses –whoever, whenever and wherever they are.

An interactive and continuously evolving guide to living, working, shopping, playing, parenting and doing business in a city.

Who knows?  But it’s time to start thinking about it.

3.  Journalists need to stop looking at new Internet developments as frightening or frivolous trends and start looking at them as tools that can be used to achieve a vision.

You cannot succeed on the Internet without using the tools that it affords.  In my opinion, refusing to use these tools is the same as refusing to use a telephone, tape recorder or word processor.

Social Media.  Many a journalist hates Twitter because “it’s not journalism”.  I honestly don’t know if it’s journalism or not.  What I do know is that it’s a fantastic tool for disseminating information, rallying communities and tracking trends.

Aggregation/Curation.  I can’t understand why newspapers have not sought to create a Huffington Post – like aggregation site around not just news but also vertical content areas such as parenting, health, automotive, sports, business, etc.  These sites would attract loyal and engaged users and deliver advertisers a healthy ROI with minimal cost to the publisher.

Online Gaming.  Newspapers could use online game dynamics to engage a community in solving a city’s large problems.  Before you dismiss the notion outright, watch Jane McGonigal’s TED Talk on how “Gaming can Make a Better World” and then consider the implications of Cubeduel’s “Who would you rather work with” game built on the LinkedIn platform.

If I were a newspaper executive trying to align my resources to achieve an audaciously awesome future, my next hires would be community managers, curators and game designers.

What would you tell a newspaper company executive team if you had the opportunity?

 

 

If Newspapers Cease to Be, There Will be Two Causes of Death -- Part 2

Cause of Death #2: Failure to focus on ROI

Read Cause of Death #1

Mainstream media organizations have spent insane amounts of time and effort trying to teach traditional sales reps to sell digital ads (give up, they will never do it well).  

Instead, that time and money should have been invested in discovering what drives Return on Investment (ROI) for advertisers and then building new products and services that deliver it.  Relationship selling is nice, but an advertiser cares much more about making the cash register ring than they do about who walks in the door to sell the ad.

Let’s face it, in the past, newspapers really didn’t have to worry about ROI.  They were the biggest game in town and sheer mass reach created results for advertisers.  There was no way to accurately measure ROI because there was no way to know how many people saw an ad.  Besides, there were very few other options.  So advertising rates could keep increasing and advertisers would keep paying because they believed that their businesses depended on it.

Unlike newspapers, advertisers (particularly retail advertisers) have always been very concerned about ROI.  Until recently, there simply weren’t tools to provide an accurate picture of what was working and what wasn’t.  But if legendary retailer John Wanamaker were alive today, he wouldn’t be worried about which 50% of his ad budget was wasted.  He’d know.  And everyday, he’d be finding better, more efficient and effective ways to spend his ad dollars. 

Hell, he might not even need media at all.

PFI Western Wear are online retailing pioneers (no pun intended) who have taken to creating their own high-value content including 30 to 50 second product videos and a weekly ½ hour show.  The results have been phenomenal.  More time on site, higher order values and a 50% higher conversion rates on products that have a video.  You can learn more about PFI and commercial video here.

Media execs need to get obsessed with what drives ROI.  They need to create teams of advertising, marketing and product development staffers to focus on nothing but building now ROI-based advertising products.

The solutions don’t have to be overly complex or even original. The simplest things can make all the difference. 

The Starlight Theatre in Kansas City (another PFI venture) discovered that marketing emails that include video (of live performances, interviews, behind the scenes) increased ticket sales by 593%.

Group-buying service Groupon is a relatively simple product that not only provides direct, measurable ROI, but guaranteed revenue too.  It’s also highly replicable.  I must admit, I’m somewhat puzzled by the newspaper companies which have opted to partner with Groupon rather than go it alone.  Most of them already have the advertiser relationships and are sitting on HUGE customer email databases.  It could be a highly profitable business opportunity.

Contextual environments provided by vertical sites are another way to drive ROI.  Vertical sites create much more engagement, more time on site and a more receptive audience for appropriate advertising messages.   

Behavioural advertising drives ROI.  A March 2010 study by the Network Advertising Initiative revealed that behaviourally targeted ads are more than twice as effective at converting click-throughs into purchases than run-of-network ads.  These ads also generate significantly higher CPM’s – on average 2.68 times higher.

Yodle and ReachLocal both offer live up-to-the minute reporting so advertisers can see exactly how effective their campaigns are right now.  No waiting with fingers crossed for the monthly click-through report.  They will even provide a custom phone number and record customer calls so advertisers can determine the quality of leads produced and their sales rep’s responsiveness.

That’s proving your value.

By the way, this message is not just for mainstream media companies.  Pure plays such as Washington’s TBD.com and Toronto’s OpenFile.ca need to focus just as much (probably even more) on ROI if they’re going to support themselves with online ads alone.  TBD is off to a great start (along with the Journal Register Company) by partnering with GrowthSpur.  (Full disclosure, I'm on GrowthSpur's advisory board).

In an age where ad blindness is causing click-through-rates to continue to fall through the floor, banners and big-boxes are surely to die.

Then what?

Without a dedicated focus on ROI, I predict that the end will be near.

If Newspapers Cease to Be, There Will be Two Causes of Death

Last month, there was all kinds of excitement about the recovery of American newspapers.  Share prices were up and both the Atlantic and the Economist wrote fluffy, happy pieces about the state of the industry and its future.

But print executives know otherwise.  They know because in Q1 they were still looking at a 10% decline in advertising revenue as the rest of the media are showing rosy Q1 improvements of 6% to 10% and more.  As Alan Mutter put it in a recent Newsosaur post: “Make no mistake: Newspapers are still in trouble.”

I often suspect that there is a creeping defeatism among news executives – almost an acceptance of the inevitability of the end of their industry.  How else could one explain their refusal to focus on the real factors that will make or break their businesses?

It’s not about bloggers vs. journalists, websites vs. apps, advertising revenue vs. pay walls, Google News vs. copyright laws.  Those issues are merely distractions and continued focus on them is preventing the real issues from being addressed.

If news organizations cease to be, there will be two causes of death:

Cause of Death #1: Failure to recognize the necessity of Community

Ask someone under 30 what websites they visit first thing in the morning.  They’ll list a number of social networking and aggregation sites.  Most of them don’t actually visit media sites at all.  Rather, they’ve come to know that “If the news is important, it will find me”.  And, they’re unlikely to outgrow this behaviour.  That’s why according to Compete, Facebook now beats Google as a referral site to large portals such as AOL, Yahoo and MSN.

Social media is a media site’s new best friend.  In fact, a recent Hitwise study revealed that over 75% of Facebook referrals will return to print and broadcast media sites in the same week.  Twitter is the fastest growing video referrer and it’s users watch a stream for 63% longer than a Google user.

65 million Facebook users “like” something everyday.  Typepad bloggers who installed the Facebook “like” button have experienced a 50% increase in referral traffic.  (Just installed mine, I’ll let you know how it goes)

Why is social media so powerful?

Two reasons.  Trust: we don’t send our friends crap to read.  Relevance: we’re more likely to have common interests with our social network and therefore our links are more likely to be relevant.

Ah, trust and relevance.  Sound familiar? 

If a newspaper’s job is to reflect, affect and connect the community it serves, trust and relevance are what get the job done.  It’s amazing to me how at this time, with more tools available than ever to fulfill these objectives, newspapers are turning away from what made them great brands in the first place.  By refusing to listen to and engage their readers by ignoring social media, limiting comments and erecting pay walls, they are destroying trust and hastening their irrelevance.  

They are destroying the core, not protecting it.

It’s time to embrace the community.

Every section, every beat and every neighbourhood should have a community manager.  That’s a real human being, not an RSS Twitter feed with headlines.

Washington DC’s much anticipated and soon-to-launch local news site TBD.com already has 6 busy community managers.  That’s more than 10% of the total editorial team.

Media companies need to do three things: listen, listen, listen.   Who’s out there? What Facebook groups, Flickr groups, blogs and Twitter accounts already exist?  What are people saying?  Who’s leading the discussion?  What are their concerns and passions?

Listening has never been easier.  Start a TweetDeck to find all Tweets relevant to specific areas of interest.  RetweetRank will help determine the impact of existing Twitter feeds.  Twitrratr will reveal if events, people or topics are being mentioned negatively or positively.  Backtweets will help find who’s linking to the main site.

Community managers can quickly become community leaders if they engage bloggers, commenters, tweeters and Facebookers.  They need to follow influencers and people who frequently tweet on a particular topic, retweet them and then provide them with a rich mix of links (from the main site and from around the web), updates and commentary.

The Guardian isn’t wasting time worrying about whether or not bloggers are journalists or if they’re stealing content.  They’re making full text articles available to them.  That’s right, full text.  The genius bit is that the articles have ads embedded in them.  The Guardian is harnessing the power of social media to extend its reach for advertisers.

Besides distributing content, users can be drawn back to the main site with links, comments, graphics, photo galleries, polls, contests and invitations for user submissions.  Smart and frequent commenters can be invited to write an editorial.  Flickr galleries can be created for each neighbourhood and event.

Users should be encouraged to suggest stories and investigations and reporters should be assigned.  This is the philosophy behind Toronto start-up Openfile.

And for God sake, when users talk to them, community managers need to talk back!

That’s how to become relevant.  That’s how to build trust.  Hell, it might even improve the core product.

And here’s the best part.  Community drives engagement.  Engagement drives ROI for advertisers.

Which brings me to Cause of Death #2: Failure to focus on ROI.  I’ll cover that in my next post.

Why Newspapers Aren't Winning Online: Until You Believe It, They Won’t Buy It

I’m continually amazed by the work Journal Register Company CEO John Paton is doing to transform JRC into a media company that will survive well into the 21st century.  I devoted a post to him and have Tweeted about him so often, I’d be in danger of becoming president of his fan club if not for the even more frequent Tweeting from Jeff Jarvis, Jay Rosen and others.

Why are we all so enamored of John? 

It’s simple.  He believes in the digital future of the news.  He believes that in the long-run, the Internet will be good for the news industry, good for the communities he serves and good for democracy.

It’s not just John.  Alan Rusbridger at the Guardian and Jim Brady at the soon to be launched Washington DC site TBD.com believe it too. 

It's called leadership.

As Simon Sinek says in his recent must-watch TED Talk, “people don’t buy what you do, they buy why you do it”.  Understanding this simple truth is how great leaders inspire action.  If you communicate an authentic belief and readers share it, they will interact with your site for their own sake, because it feels right to do so.

The sad truth is, for most news organizations, “why” they are online has nothing to do with a belief in the power of this new medium.

At one time, news executives had a great "why".  They sought to reflect, affect and connect the communities they serve.  And it worked.  Their newspapers became very successful.  But somewhere along the way, the "why" changed.  The focus shifted to making money.  Lots of money.

As the world started to change around them, online became a necessary evil.  But they’ve never really believed in the Internet, or understood it.  Nor have they valued the its ability to enable community and collaboration. 

If they did, they’d be a part of it.  They’d be blogging and Twittering.  They’d be putting the digital folks in charge of the newsroom.  They’d be creating the Complete Community Connection.  They’d be looking at the iPad as a new medium, (the fifth screen after movies, TV, computers and phones), and create something new instead using it to preserve the look and feel of print.

But they’re not.  And that means they’re not doing their jobs. 

A News Exec who Gets it! John Paton, new CEO of the Journal Register Company.

Last week, I had the pleasure of spending an hour on the phone with John Paton as he drove from Ohio to Michigan.  John is the newly appointed president of the Journal Register Company and up until February of this year, he was Chair and CEO of the Spanish language newspaper company, impreMedia.

The fact that a kid from public housing grew to be a prominent newspaper publisher in both Canada and the US isn’t the most amazing thing about John.  What's truly amazing is that he is a publisher who gets it.  And in my opinion, that's extraordinarily rare.

John blogs and tweets.  His eyes are wide open, he isn’t lying to himself about the state of the newspaper industry and he’s not afraid to make the tough decisions most other newspaper executives are avoiding.  And though his papers are in some of the economically hardest hit regions of the US, if anyone is going to figure out how to keep newspapers alive in the 21^st century, I’m betting it will be John.

In his December 2009 speech to the WAN conference in Hyderabad, India, John outlined the steps he took to save impreMedia during the economic downturn.  I’d give you a link, but it seems the speech has been (ominously) removed from the impreMedia site.  I have a copy of it though and it reads as a blueprint for all publishers to follow:

• An acknowledgement that media companies must work with the sea of change brought on by the digital world, not against it.
• A web first, brand first strategy.  A breaking news story will start as an SMS message, then go to the web and social media, be enhanced with video and audio and then be printed for the newspaper last.
• Smart outsourcing of non-value creating activities such as pre-press, printing and distribution.
• Investment in value creators such as editorial, marketing, reader research and technology.  Investment in editorial does not mean editorial processes don’t have to change.  John heeds Jeff Jarvis’s advice to “do what you do best and link to the rest”.  That means not sending “10 reporters to the world cup”.
• The beginnings of a newspaper-curated, hyper-local blogging network.

I think it’s safe to say that the folks at JRC can expect similar initiatives in the coming months.  Within 3 weeks of his arrival, he put his money where his mouth was by providing flip cameras for reporters.

After all the changes are done, John believes newspapers will make smaller revenues but also higher profits. The changes won’t come easily and in John’s words, there will be “blood on the floor”.  But when I hung up the phone, I felt, well, inspired.  It’s been a long time since a newspaper exec left me feeling that way. 

Edit: My original post said John was from Winnipeg.  John tells me he was born in Glasgow, then grew up in Toronto and London, Ontario.  God knows why I thought he was from Winnipeg.  This is why I'm a marketer and not a journalist.

Local Media: The Magic Combination that Means More Trouble for Newspapers

It seems to me that 2010 is going to be the year the game changed for online local. 

The right factors are finally converging:  quality local content, awesome mobile devices, and local advertising services.   It’s getting much easier to envision what the tapestry of local media and advertising will look like in just a few short years.

And for that reason, I say to the newspaper execs of the world:  please stop fussing about with pay walls and get serious about online local.

Let’s look at what they’re facing.

Content

Yes, there are thousands of excellent local bloggers out there.  But online local is not just about independents anymore.  Big money is being spent on local websites.  And the new tapestry is a mix of professional and amateur, old and new.

Examiner.com is now in 240 major local markets in North America with plans for continued expansion.  In fact, they recently announced that they hope to increase the number of “Examiners” (local contributors with specific interests or areas of knowledge) from 30,000 to 85,000 by the end of the year.  The site brands itself as the “insider source for everything local”.

NPR also has plans to delve further into online local.  Prong 1 of Vivian Schiller’s 3-pronged strategy is “A focus on local”.  In April, Schiller told MediaBistro that there is “a big gaping hole to serve Americans local coverage”.  Why local?  Schiller says “Because our unique offering is the fact that we are local.  The stations know their communities.  There’s different demographics.  There’s different sensibilities”.

BusinessInsider reported this week that AOL’s Patch.com will increase their number of sites from 30 to something in the 100’s in 2010.  Patch hires professional journalists.  AOL’s careers site has 53 job openings at Patch, mostly editorial positions.  (I believe there is huge potential for Patch to drive ROI for local advertisers by utilizing AOL’s network of 80+ other sites, but that ‘s another blog post.)

And then there’s the much anticipated and yet to be named Jim Brady project at Allbritton.  Jim is hiring 50 of the digital world’s best journalists (including Steve Buttry, a big favourite of mine), to go head-to-head with the Washington Post.  If Jim is successful, his site will spawn many imitators across North America.  (I had lunch with him last month.  I think it’s going to be terrific.  And he promises to give it a name soon.)

Last, but certainly not least, the Guardian in the UK is getting in on the act with the launch of their Leeds site earlier this week.

Awesome Devices

An iPad not only allows you to take the Internet with you wherever you go, but unlike a dumb-old lap-top, it actually knows where you are.  It’s connected to your community.  So is an iPhone, Blackberry or a Nexis One.  If the job of local media is to reflect, affect and connect the community, things just got a lot more interesting.

Not only is there now more local content, devices are able to target that content, along with advertisements to consumers with greater accuracy, creating greater relevancy and likely, greater ROI for advertisers.

I’d say something about Google Buzz here, but frankly, I’m still on the fence…

Advertising

An August 2009 Kelsey Group survey revealed that 77% of small and medium sized businesses are using online media (compared to 69% using traditional media).  However, a Nielsen study found that half of small businesses spend less than 10% of their marketing budgets online. 

Why haven’t more local advertisers spent more on the web?

I think it’s because it’s just been two damn hard.  Too hard for local businesses to buy online ads and too hard for local websites to sell online ads.  

Advertisers have had to manage a complex dance of multiple ads across multiple sites, calculating multiple ROI’s and working with multiple sales reps.  For publishers, the problem has been finding a profitable business model. Sales reps often encounter high-maintenance, unknowledgeable clients who lack websites and online creative.  The cost of sale becomes prohibitive in a high service, high volume, low revenue environment such as online local media. 

But it’s starting to get easier.

Take PaperG’s PlaceLocal product.  Enter a business name and it will pull images, reviews and other information from the web and create an online ad for the advertiser.  Automatically.  Cool.  The time and cost of creating online ads has been one of the major stumbling blocks preventing local websites from acquiring new advertisers, or generating sufficient profit from the ones they have.

Mark Potts is doing his part to make things easier with GrowthSpur.  As he told BusinessWeek, the platform will help enable “citizen ad sales” as publishers will be able to sell ads onto each other’s sites.  GrowthSpur will also provide much needed sales training.

In addition to GrowthSpur, networks such as CityGrid by City Search, Reach Local, Local.com and Addiply are all trying to make it easier for small businesses to begin advertising online.  If they succeed, the revenue potential is enormous. 

Now.  How will newspapers respond?

I hope they will separate their print and digital organizations and operate their websites like lean, mean, start-up machines.  I hope they will enable a team of smart, excited digital staffers to create the Complete Community Connection like the one that Steve Buttry will surely introduce at the new Allbritton site. I hope they will see the iPad as a tool for delivering more context to readers and ROI for advertisers instead of a great way to finally make users pay for content.  I hope they will form a local ad network such as GrowthSpur and hire expert digital sales staffers to make it hum. 

But I fear they will do none of those things.  I fear they will hinder themselves with their large, expensive infrastructures and traditions. 

You know what I mean.  Print staff selling online ads, old media notions of staff roles, (i.e. one role, no multi-taskers) and how they should be paid, a fear of voices and opinions from outside the newsroom…

Ugh.  It’s depressing.  I hope someone proves me wrong.

 

Lots of Smart People, No Simple Answers

Last week, I went on a dream tour for media geeks.  I had 10 meetings in New York and Washington DC with some of our industry’s best thinkers.

I met with leading academics at CUNY and NYU, very smart people at large media companies (IAC, AOL and Bloomberg) and more smart people at start-ups (SeeClickFix, GrowthSpur, Daylife and Allbritton’s yet to be named “Jim Brady Project”.)

Here’s what I learned:

• No one feels good about the future of most newspapers and television networks.

• All agree that content curation will remain a key strategy for smart editors.

• No one can agree on which sites and models are going to succeed though Jim Brady’s new project for Allbritton (parent company of Politico) and Mark Potts’ GrowthSpur are generating a lot of excitement and curiosity.

• All acknowledge that existing revenue models aren’t working.

• Many think that the best opportunity for revenue is in local advertising.

• Others think that there is opportunity in national advertising, though the model will be built around sponsorships, events, vertical creation and content integration.

• All agree that mobile will continue to grow in importance, but no one had solid plans for monetizing it.

• Two people told me I should leave the media business entirely and try PR or perhaps managing a corporate website. (ouch!)

No simple answers indeed.

2 Big Myths that are Killing Newspapers

The Big Newsroom Myth: Reporters and editors don’t need to understand how the business works.

Earlier this month, I tweeted this Robert Picard blog post about how "The Biggest Mistake of Journalism Professionalism" is how journalists “spent nearly a century denying responsibility and involvement in business decisions”.

Bill Doskoch, (@billdinto), a much-respected Twitter friend, pushed back.  “What bearing does that have on the avg reporter’s job?” 

This thinking has been pervasive in the newspaper industry for a very long time.  There is a belief that journalists should be free of knowledge of the business side so that they can carry out their reporting with integrity and objectivity free of pressure from the advertising department to report favourably about their customers.  Journalists should be above it.

I get it.

But the more I think about it, the more I realize how damaging this thinking has been to the newspaper industry.

It infantilizes the newsroom.  “Don’t talk to the kids about money – it might upset them or worse, corrupt them”.  And, it creates a state of willful ignorance, the last thing you’d want reporters to be.  Surely a mature, intelligent group of people can understand that we must report with integrity and that we work in a business that must make money.

The result of this siloed newsroom is that a large chunk of the organization has no real understanding of how the business works.   

And it’s a problem. 

Innovation in large organizations often comes from the bottom up.  That’s why Google allows company time for personal projects and has “office hours” where any employee can approach management with proposals.

A lack of business understanding leads to poor product development efforts.  Editorial recommends (or worse produces) sections and features that advertising can’t sell.  I must have seen 10 different gardening magazine proposals in my time.  (Hint: we live in Canada, we have 4 months of warm weather/year)  And then there was that fishing magazine proposal….

But far worse, it’s resulted in the failure of newsrooms to create a sense of urgency when the web emerged.  Had the newsroom really understood what it meant when the very profitable classifieds started going away, or how new capabilities in customer analytics was creating a focus on advertising return on investment and changing how advertisers were planning their budgets, there may have been earlier moves to understand the online world and to succeed in it.

But let’s not let the advertising department off the hook!

The Big Advertising Department Myth: We sell eyeballs

Not really.

Eyeballs are about mass and placement in the form reader demographics, circulation numbers, lines, columns, colour and position requests.  

What advertising departments actually sell is connection and context that lead to sales results.

Had they been thinking about their product as a connection between buyers and sellers, they would have seen the devastation that online classifieds would bring a lot earlier and taken steps to win in that space. 

They would have also seen that in the online world, their audiences are relatively small and flighty and that in that world, they are not nearly as good at providing those connections as they were in print.

Had advertising departments been thinking about context, they would have known that it creates greater user engagement and advertising click through rates.  They would have seen the explosion of online content due to blogs and niche sites that focus on narrower and narrower content areas and realized that they would need to create more of their own verticals.

Had they been thinking about connection and context, they too would have seen that the instant accountability and return on investment provided by search advertising makes it the ultimate solution.  Advertisers can now target ads directly to people who are actively searching for their products and services.  They would have seen that this would change the advertising game forever.  Maybe they would have realized that it isn’t all about banners and big boxes and that most traditional print advertising sales reps aren’t qualified to sell online advertising in such a complex environment.

These myths caused newspapers to sit back and do nothing while their world was changing.

Perhaps the biggest myth of all is commonly heard in newsrooms and advertising departments alike: That the newspaper has to survive.  It just has to.

Why I'm a Huge Fan of Steve Buttry's Complete Community Connection

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.

Smart call. 

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 5^th listing was for a restaurant and the 3^rd 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.