Local online news publishers rely most heavily on advertising for site revenue. But many lack the time or expertise to develop strong advertising programs.
Our survey asked 66 local publishers whose sites qualified for our list of promising ones to identify their sources of revenue and estimate the percentage they take in for each source.
Highlights:
- Advertising: On average, advertising accounts for 45 percent of site revenue among these publishers. Nearly half of the sites, 28 of the 66 sites reported that 75 percent or more of their revenue comes from advertising
- Grants were the second largest source of revenue, accounting for an average of 17 percent. Only six sites reported grant funding accounted for 75 percent or more of their revenue.
- Donations brought in an average of 12 percent of revenue; four sites said donations accounted for 75 percent or more of their revenue.
- Other sources such as sponsorships, subscriptions, memberships and services accounted for miniscule mounts.
- More than half the sites reported 2009 annual revenue of less than $50,000. About one-fourth reported revenue of less than $100,000. Others reported larger amounts or declined to answer the question.
- Nearly three-quarters are working to some extent or to a great extent to increase site revenue.
Sites often operate for a year or two without substantial attention to revenue. They reason – correctly I think -- that they need to build a community for their sites before they appeal for advertisers or sponsors.
Tracy Record, co-founder and editor of the West Seattle Blog, noted in a 2008 interview that the site did not start selling advertising for a couple of years after it was established.
“Prove you can provide a community service, valued by a significant amount of community members, before trying to get people to buy space on it. Doing otherwise is unfair to your advertisers – they may not get a return on their money,” Record said.
Record handles editorial for West Seattle Blog and her husband and co-founder, Patrick Sand, sells advertising. The site brings in enough revenue to support their family.
Having a full-time ad sales person is not something every start-up can afford.
Oakland Local is accelerating plans to develop an advertising program. Founder Susan Mernit thought it would take the site a year to attract 40,000 unique monthly visitors but it had nearly reached that goal within six months.
Still, Mernit said she has found it challenging to educate herself about advertising and develop a plan while she and other site contributors, mostly volunteers, are so busy creating fresh content about Oakland.
Amy Senk, founder of CoronoaDelMarToday, reports similar challenges.
“In a nutshell, it's very tough selling ads, and I don't spend as much time on it as I need to. I am trying to find someone to help me, maybe even become a partner. It's too much to do by myself,” Senk said. “I have started locally but am willing to go out of the area. For example, the local tire shop is closing, so I was hoping to find a neighboring tire store who might want an ad to bring in CdM residents who will need a new place.”
Advertising is was the main source of income last year for the Sacramento Press. Ads generated $56,000 of a total of $86,000, according to Media Bistro.
Ben Ilfeld, COO of the Sacramento Press, said the organization relies on a three-person team: a director of development, who focuses on partnerships; an ad salesman, who focuses on sales, and an ad coordinator who takes care of details.
Ilfeld said it is crucial to hire a good sales person and let that person concentrate on selling.
“Online sales experience is not a top priority - contacts and sales experience are. Good sales people can sell anything,” Ilfeld said.
His advice for local news publishers? “Pay good wages and attract top people who have the contacts to make sales now. If someone is not performing, let them go quickly.”
Advertising networks may present another opportunity for small site operators. They can band together to produce more traffic to their advertisers and to hire advertising sales people.
One example is Kate and Cory Bergman’s Next Door Media, a network of nine Seattle neighborhood sites that delivers more than one million page views a month.
Advertising is an obvious source of revenue, and local advertising is a promising one for small news sites.
Still, online publishers are talking about and experimenting with other, less traditional sources, including:
- Memberships that give members perks such as access to special events. Voice of San Diego is exploring this. The Civil Beat, just launched in Honolulu, charges users to join the site to be part of an online conversation around public affairs.
- Staging conferences and other events the people will pay to attend. New West has reported significant income from conferences.
- Business services. Local news sites are uniquely positioned to give businesses training and advice on how to improve their Web presence and use social media.
More survey results:
Part 1: Bloggers no more June 1, 2010
Read More
Part 2: Community drives mission June 8, 2010
Read More
Part 4: Toward sustainability June 22, 2010
Read More
About the survey
Reynolds Journalism Institute conducted telephone interviews with 66 local online news publishers whose sites met our criteria for producing original news, working to be accurate, fair and transparent, and developing revenue in April and May 2010. The oldest site started in 1998 but about two thirds of the sites were founded in 2008 or 2009. The sites vary widely in reach – from 1,200 to 400,000 unique visitors a month. The online publishers are predominantly white men, more than half college educated. They range in age from 22 to 68. Our goal was to learn more about their successes and their challenges in operating local news sites.
The survey was conducted under the direction of Ken Fleming, associate director of research for the Reynolds Journalism Institute. Adam Maksl, a Missouri doctoral student, assisted in developing the survey questionnaire and in analyzing the results.
Kenneth Fleming Director of the Center for Advanced Social Research (CASR) Kenneth Fleming obtained a doctoral degree in mass communication and journalism in 2005 and an MBA in finance in 1993 from University of Missouri. His research interests include the relationship between social capital and mass media, health communication, political communication, and research methodology. He has extensive experience in social science survey research including research design, survey instrument development, sampling, data collection and complex data analysis.
Adam Maksl is a doctoral student at the University of Missouri School of Journalism, where he studies new media, censorship, and youth journalism. Previously, he was assistant director of workshops in the Department of Journalism at Ball State University, where he helped coordinate various scholastic journalism outreach programs and taught undergraduate courses as an adjunct instructor. He also briefly worked as a high school journalism teacher. He has a bachelor's degree in journalism and English education from Indiana University and a master's degree in journalism from Ball State University.
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