Chicago-block-advertising

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This wiki is running notes by Bill Densmore of the Donald W. Reynolds Journalism Institute on the proceedings of the event "Block by Block," bringing together some 70 local online news community (LONC) operators from around the U.S. and Canada.

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Now we’re sitting in on the panel: “The ABCs of Local Advertising.”

“This is the golden age of journalism,” says session moderator Mark Potts of the consulting outfit GrowthSpur.com, which is building local-online advertising networks in Washington, D.C., Philadelphia and other locations. Other panelists are Patricio Espinoza, Alamo City Times; Polly Kreisman, TheLoopNY.com; Mike Orren, Pegasus News and Liz George of Baristanet.com.


Q: Mark Potts – Who are your customers?


A: “People who pay us?”


Potts: “Your customers are your advertisers. That’s a big leap for journalists to make. But that’s important because that is where the money is.”


Potts recalls his effort, BackFence, to build a national network of LONC sites, “similar to what AOL is doing with Patch. We didn’t make it. Hint. Hint.” He calls the challenges of doing a LONC “mind expanding” because of so many skills you have to exercise. “Thinking I must be the only person having this trouble,” is wrong, says Potts. “No, actually there are thousands of us now.”


The idea of the panel is to demystify the process of making number. “It’s about hard work,” he says.


  • Espinoza: The priority for him, in San Antonio, is not making money. But he realizes that every step he has taken to get the website launched, has included thinking about advertising and other revenue streams. He has created a plug-in for doing self-service ads.


  • Kreisman: “What I think we need to do is reframe our relationships with our advertisers,” she says. Become a collaborative partner, and when you do that, they are more willing to give you money because they realize you are trying to help them. Even in a non-profit situation, you still need backers, advertisers or not.


  • Potts: We keep coming back to advertising as the traditional way media has been funded; circulation has been a small part. Local advertising in the United States is a $100 billion business. “That’s what we’re going after, we want a piece of that.” An ad-backed site can make six figures. How is it done? What works with ad sales?


  • George: Your readers are probably the best salespeople. Because if they are not talking up your site, how are you going to make a sale to an advertiser. You are working with your readership and they are the great advocate for you out there. When they pitch to a business the fact they already know about Baristanet is a huge advantage.


  • Orren: At Pegasus News they built an incredibly detailed system for behavioral tracking. But what they found is “we were complicating ourselves out of sales.” People just wanted a run of site ad. “What you are good at is rallying people around a cause. Maybe the cause for today is rallying people to get to a wine shop.” The No. 1 fastest growing area of online advertising now is things that are not traditionally considered advertising. Things like the Groupon dealspace. It’s getting people to events. They learned early is that they are a lot more like radio than newspapers. Radio reps were the most successful as sales people. “What do my advertisers need and how can I rally that community I’ve got to go spend money in their stores.”


  • Potts: Groupon has been an unbelievable success. Groupon is proving that local advertising can be successful online.


  • Orren: Pegasus built their own Groupon knockoff called “Seize the deal.” They then integrated ongoing deals into their site so that contextually if you are reading a story about a new restaurant that is opening and we have restaurant deals, we’ll put those deals in front of you. We transact and give the merchant their cut. There are services that will let you whilelabel rather than building it yourself as they did. One is called closely.com (SCRIBE’S NOTE: Another is Faveroo from 614 Media in Columbus, Ohio).

IDEA: Give your advertisers an RSS twitter stream on your pages

  • Kreisman: They bring people into the tend first with the traditional banner ad. “You sometimes have to educate them without letting them know they are being educated.” After that they offer a Loupon ad. “The first two Loupon ads we offered got zero response.” One was for a high-end candy store and the second a hardware store. But they had good success last week with a restaurant and a gym membership. “The businesses that already have the inventory are your targets,” she says. IDEA: Stream the tweets of your advertisers to your home page so that they can in effect publish their own text ad.


  • Potts: The daily marketing email is effective.


  • Jeremy Iggers: Daily Planet deals program – they tried it and made a little money but it consumed so much time and resources that it wasn’t worth it. They are now partnered with DealStores. Groupon has a 250,000-name list in the Twin Cities and they have only a few thousand. It doesn’t pay unless you are huge like Groupon.


Orren: Football and basketball tickets sell like crazy.


Potts: Groupon sold 3,400 subscriptions to the Washington Post.


Howard Owens: What works in every market is food. Restaurants love trading advertising for gift certificates. “Be much more careful about any kind of retail, you’ve got to be very selective.”


Potts: “The advantage you have over Groupon right now is localness . . . because you are local you are giving them deals that are close to them. You can beat them on relevance.”


Iggers: Has anybody experimented with three-way barter. Taking goods and selling them in exchange for advertising.


George: Bartering can work. IDEA: Give an ad to a retailer and ask for a reciprocal ad in their retail location.


Kreisman: She does sponsor stories. “When someone advertises with us, I’ll do a feature story. …. That business is going to tweet and Facebook and photocopy and distribute that story everywhere and that will bring traffic back to you . . . . your advertiser is your partner, that’s the exact opposite of what we learned.”

Critical need: Make sure the advertisers know who you are

  • Orren: Marketing to advertisers is critical and very difficult. Two years ago they had 250,000 unique visitors and couldn’t sell an ad. “The reason was that we couldn’t walk into a local business with any confidence that they had ever heard of us.” He jokes that at one point he No. 1 customer service complaint on their website was: “I did not get my Dallas News this morning.” The Dallas News is their competitor and their websites look totally different. He tells a second story about how he got a major auto dealership to test their results against print and they came out way on top. But when the deal was presented to the owner of the dealership, he’d never heard of PegasusNews so he killed the deal. “There is a lot to be done to make sure that the people who are going to be spending money with you know that you exist.”
  • Both Orren and Potts says a discussion about page views and hits does not sell ads. “What’s relevant to the advertiser is how many of my potential customers are going to be there the day I have to sell X,” says Orren. Just be able to demonstrate that people do come to the site – comment postings, registration for email newsletters – think about telling the story in terms of action. “The dry cleaner down the street doesn’t know if 25,000 unique visitors a month is good or bad, what matters is knowing how many of them are going to come into his store?”

Keep it simple: Ads for $100 a week

  • Santa Barbara EdHat founder: He says they keep it simple. A banner ad is $100 a week. Period. They invoice and the advertisers pay. “I think a discussion has to be started about paying models that don’t involve advertising. The people who get value from our site are the people who are reading our site and we have to figure out how to have them pay for it.”


  • Potts: IDEA: Charge $1 for comments. It really cleans up the comments section.


  • EdHat: Paid subscribers get a blue comment bar and it is highlighted at the top. When trolls post too much, they turn them into an anonymous number and the go away.
  • Another idea from EdHat: Advertisers trade tickets to events for advertising. EdHat gives the tickets to their PAID subscribers; the paid subscribers go and write reviews of the events.
  • Potts: To your advertisers, you are the web expert.
  • Orren: Did how-to-market your business on the web. Advertisers do look to you as the expert. Things that seem simple and elementary to you are obscure to the business. Sometimes they will buy a campaign out of gratitude for the advice and help you’ve given them.
  • Potts: You don’t have to sell yourself. But find someone who will sell. You’ve got to have a rate card. “What formula do I have to use to figure out how to charge for my ads? Here is the formula: Pick a number and see if it works. If it doesn’t, pick another number.”
  • Orren: You will likely have to train a sales rep. And you may go through several iterations to get the right person.
  • Potts: “Advertising is sold and not bought at the local level.” Self-service advertising and just putting up an “advertise” banner doesn’t work either. “You’ve got to go out and work it, you can’t just sit and wait.”

Compensation sales models

  • Orren: “There is no way you can pay somebody straight commission and that they can survive.” They do a combination of base plus commission plus bonuses. His best advice is: “Do not be stingy in compensating people who are going to bring in your revenue,” he says. “You may find the salesrep making more than you are for some time.”
  • Espinoza: What is the revenue per sales person?
  • Orren: More than $50,000 a month.
  • Sacramento Press: Some of their sales reps are pulling in $3K a month. Some of the senior people are making $25,000 a month for the organzation. “They are going to start out small and you are going to lose money on them.” Make sure they are selling things that last six months or more and do have to be continually resold.
  • George: Agrees sell campaigns. They give their rep a 20% commission.
  • Kreisman: The reality is most of us are one-man bands, posting all day, trying to sell, keeping up with technology and she has two small children. “I personally would rather chew a broken glass than sell an ad …. Sooner or later we are going to have to figure out what’s next . . . maybe we are going to have to collaborate. Maybe Patch will buy us, we can merge with the legacy media. But maybe there is something new.”
  • Small non-profit, two-person shop. They have had a public service model for five years with no advertising. Is he going to take this step into a dark arena he has no experience in. They have a Typepad blog that is very simple. They have two staff writing and covering local government. He has to think about how to deal with advertising technically. (Potts says it is one line of code in a blog).
  • Orren: The one line of code is easy, but it is just as easy to do a post.
  • Espinoza: TypePad has a program like Google Ads. If you are a non profit, go visit the TexasTribune.org – they have a PBS-type business plan. They have a plan for subscriptions going form $25 a month to $2,500 a month.
  • Potts: Those sponsorships look a lot like ads.

IDEA: Use AdSense for prospecting

  • Orren: Take down the national remnant ads. Because the local advertisers appreciate it. He says AdWords is very little revenue. “I would bury it somewhere way, way down on the page.” It is good for prospecting – because whoever’s local contextual ads are showing up on your site are excellent prospects for direct sales. “Our reps would see their ads, ban them from our AdSense account and then call and prospect them.”
  • Teresa Wippel of MyEdmondsNews.com (north of Seattle): Likes to get into community and do Chamber of Commerce and Rotary Club. People see that she is sincere and committed. “And I’ve had people buy ads because they want to support me.”
  • Potts: “There is no free lunch on this. It doesn’t work that way. You are going to have to participate and do things.”
  • Kreisman: “I think in theory creating ecosystems is a very important thought process, even if it just the 14 blogs in your area or figuring out how to sell a national brand . … if you look at how newspapers evolved they would create networks and they would sell in networks.”
  • Potts: He suggests partnering with traditional media.
  • George: They had a relationship with The New York Times where The Times ran for 18 months and involved a traffic exchange, not a partnership. You have to define partnership for yourself. Sometimes there are mutual benefits, sometimes a rev-share, co-launching special sections with a print-online sale. All of this deals raise your profile and expose you to more readers and advertisers. “Every time this happens an advertiser knows you in a different way.”
  • Potts: He is working with TBD.com in Washington, D.C. Everybody is partnering there – but not with the Washington Post, which, according to Potts, went to blogs and said, “We’ll put your content on our site, we won’t link back to you and we won’t pay for for it, but you get to be in the Washington Post.”

See: http://www.tbd.com

What about Patch.com and MainStreetConnect?

  • Potts: Patch.com is coming in. It is starting to be crowded. It’s a $100B pot of gold and the traditional obtainers of that – YellowPages and TVs and newspapers – are falling apart. Potts notes what is going on in Westchester. What’s the competition like?
  • Kreisman: She was a TV investigative reporter. The tenaciousness and competitiveness never ends. The first instinct is to fight. “But I think there is room for everybody and I just want to make us different . . . I think of Patch as a MacDonalds and we’re a diner . . . make yourself different, as good as you can, tell your advertisers what eyeballs you’re going to bring to them and if you’re good people are going to come. Patch looks the same in every market. They can’t sort of push the envelope the way we try to do . . . the other company, MainStreetConnect … .he called me into a meeting and said look we are going to put you out of business anyway, why don’t you come and be our Westchester editor . . . and I said no thanks. Let’s see what they do.”

Other views: Advertising or sponsorship?

  • Marjorie Frievogel of St. Louis Beacon: ”We find it much more effective to go out and get direct support from people at this point,” she says. “I think there is an important difference between the concept of advertising and sponsorship.” She adds: Most advertisers are about engaging eyeballs. A sponsor you can talk about the quality of engagement in ways other than numbers and the importance of journalism to community.
  • Orren: “Why can’t you have that kind of discussion with your advertisers? The conversation you described is an excellent one and the right one. It’s not eyeballs, they want customers. I would stay off the eyeballs.”
    • Michael Stoll: San Francisco Press. Does not take advertising. He thinks there has to be a diversity of revenue models. They have six, including selling a print newspaper periodically for $2 an issue. Let’s talk more about that line between sponsorship and advertising. What is the value to the news product and to the community? What is the marketing value of saying you are non-commercial and independent.
  • Potts: “There is a lot of misleading going on among public broadcasting. NPR says we are member supported.” But they got a lot of money from the McDonald’s heir, Joan Kroc. NPR actually exists on multiple models. “It’s all hard. Pursue everything. There is no magic bullet here.”

Selling introductions: Knight backing NowSpots.com from WindyCitizen.com

  • Brad Flora of WindyCitizen.com: Knight News Challenge gave them $250,000 to start NowSpots.com – a new kind of ad program. They were not selling eyeballs but introductions. Go to http://www.windycitizen.com --- the are going to form a new company that will make it real easy to sell those kinds of ads. “It is going to be open source. We are going to need a lot of feedback from you folks.”

Q-and-A: Pushback on editorial/advertising line?=

George: “That’s a recurring dance that you do. Basically we could write about someone because we wrote about them, there’s always a question that we are writing about them because they are our advertiser . . . our readers are keeping track . . . when we really did want to give the advertising we did something called ‘A Word from our Sponsors.’ And it was clearly delineated. People really appreciated it, the readers appreciated it. That it was transparent and it was set up that way.”

  • Orren: There is a church and state separation at PegasusNews and Mike Orren is the only one that deals with both.
  • Potts: What about foundation money influencing coverage? Independence is not clear there. It is something you always deal with.

-- END OF SESSION --

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