LMA Fall Conference, Sept. 17–20, 2013“Revenue” was all the talk at last week’s Local Media Association annual publishers conference, as well it should be for publishers. But the buzz moved beyond print and pay models to alternative non-news revenue opportunities (events, deals, promotions, digital marketing services, games and more).

“Revenue per print subscriber is typically 10 times that of a unique (online) visitor. Eroding print readership is a bad idea,” Gordon Borrell told his audience. He believes that giving away news online is an equally bad idea because it can and does erode that valuable print readership. Yet we all see the numbers for the past two decades — steadily declining print advertising revenue. The goal in print is to stabilize, and for some smart, innovative or lucky operations, eke out incremental growth in print.

Gordon BorrellThere are two basic reasons usually offered to give away news online — competition and/or the fear of lost revenues due to loss of visitors/page views that result in lower CPMs.

Most television, radio and hyperlocal news operations can’t really compete with most local newspaper print and digital operations. They do compete for breaking news — fires, wrecks, crime — but typically don’t have the staff and resources for watchdog and comprehensive news.

According to Borrell’s research, the opportunity to grow visits, visitors and reach has become stagnant for newspapers online. About 84 percent of Web users are not interested in local news, Borrell says, so there is no competitive pressure to make if free.

And holding on to a free online model doesn’t really have much of an upside for higher CPM revenue. Yes, when walls go up, traffic declines by 20 to 40 percent… but it typically returns in 12 to 14 months. Still, this suggests incremental growth at best. Advertising for print or digital does not suggest a game changing solution for news operations.

Borrell believes the opportunity for publishers is not around digital news. His research says newspapers get only about 24 percent of local online advertising, and that's down from a 57 percent share in 2004. He says news readers often don’t see or pay attention to ads on the Web; the recall is poor for Web ads within news websites. “Banner ads are a pipedream.”

“Advertisers aren't looking for local news readers online. Web-based marketing seeks a buyer, not a reader.”

[Some] “48 percent of Sunday paper buyers buy it for the ads [not the news]. To those readers breaking news is the latest sale, discount or offer. Advertising may be the most important content in your paper” [on Sunday].

His poignant example: People might read a paper or magazine for 20 minutes a day and glance at a Yellow Pages book or website for just a few minutes a week, yet advertisers are willing to pay hundreds of dollars for a Yellow Pages ad or listing vs. pennies for a Web ad. Why would they do that? “The Yellow Pages readers are wallet ready” [buyers].

To further drive home his point, he noted that 60 percent of Gannett’s digital revenue comes from non-news sources such as CareerBuilder.

Chris HendricksThis viewpoint was repeated two days later by Chris Hendricks, vice president of interactive at McClatchy.

“Pure play digital revenue is essential,” he told LMA attendees. Digital revenue is now 24 percent of his company’s total ad revenue.

While Hendricks believes that good journalism is good business, “You can double down into print and try to make that grow or you can chase where the wind is at your back. We want to diversify and stabilize the business, and the primary way we're going to do that is through digital."

That focus includes news operations, where digital accounts for 17 to 31 percent of revenue at McClatchy news properties. “We focus on growing DMA audience penetration, not uniques or total visitors,” Hendricks says. Higher penetration lifts CPMs. And higher CPMs are achieved with products and services beyond news.

"Don't show up without digital growth being above 10 percent until further notice," he says of the company's new mantra. "It's the most watched metric in our company."

Brian Steffens  
Director of Communications


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