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Posted on January 11, 2013 by Mike Fourcher
Three years ago this week I launched a neighborhood news site that eventually transformed into Center Square Journal. It’s hard to believe it was so long ago, and yet really only three years. For the amount of learning I’ve absorbed, it feels like I’ve been to college. Some of the things I learned may be obvious to you, dear reader, but they weren’t to me.
Here, in easily digestible list form, and in no particular order, are 21 things I learned while running hyperlocal news sites.
1. Building an audience is getting harder.
As a member of the original writing crew for Chicagoist in 2004, I was stunned at how I could write a post at 8:00 a.m. and by noon thousands of people had read it. Good content got lots of word of mouth, and nine years ago there were few competing outlets.
Contrast that experience with Lakeviewing.com, a recent project carried out by Andrew Huff of Gapers Block and I. Focused on Lakeview entertainment news, the site was backed by advertising and social media promotion on our sites (where many of Lakeview’s readers frequent), L stop flyers and billboards as well as stickers in a thousand Lakeview business doorways. After six months, we’d barely broken past 200 daily readers, a tiny number for a community with over 90,000 residents.
What changed in nine years? Competition, direct and indirect. Readers in 2013 have thousands of news sites to choose from, as well as social media, electronic books, and so much more. Launching a new brand and gaining mind share is getting logarithmically more difficult to do. (Remember when local TV would do segments on bloggers?)
2. Building an audience is easier than selling ads to small and medium businesses.
Even though #1 is getting harder, selling digital advertising to SMBs is getting more difficult (see #3). The result is that there’s plenty of folks (small and big publications included) drawn in by the lure of creating an audience. Because it’s relatively easy, you can see lots of progress in early stages as the audience grows. Then, when the time comes to sell ads, the audience might still be there, but the ad sales aren’t.
3. There is a lot of competition for SMB marketing dollars in large markets.
Center Square Journal’s strongest ad competition did not come from other digital news sites. For instance, I learned that I’ll never get a funeral home to advertise, because in Chicago there’s a company that sells ads for most of the Catholic parish bulletins and they’ve that vertical locked up tight. Local radio is a competitor, as are CTA billboards, Groupon, ZIP code coupon mailers, and the latest big entry: Loyalty management systems likeBelly and Ox & Pen.
An example: Belly, which is founded by former Grouponers and funded by the Groupon founders’ investment fund, showed up at a local merchant group meeting unannounced. They brought a pile of iPads for businesses that sign up, and thus signed up everyone in the room in a flash. Now Belly is a major competitor for neighborhood marketing dollars.
Anecdotally I don’t hear similar stories from operators of suburban or smaller market hyperlocals. Maybe it’s just a matter of time, but it seems that in larger markets, there’s more competitors trying to carve up the same pie.
4. Social media outreach has become a major business in the last three years.
Two years ago I heard a new sales objection, “I spend most of my marketing dollars on a social media consultant who promotes my store.” When I first started Center Square Journal I knew of a few people that managed social media clients on an independent basis, but for the most part that sort of work was limited to small brands.
No more. Now it is common for retail businesses with $500k annual business to pay a social media consultant $1,000 a month to promote their brand on the web. Restaurants and bars especially do this.
5. Community needs are incredibly diverse.
There is a tendency to think about community diversity in terms of economic, racial or ethnic terms, but Chicago neighborhoods have major cultural differences, even compared to adjacent communities. For instance, Lincoln Square has a very activist community, intensely interested in every aspect of local politics. (Someone once told me Lincoln Square’s ZIP code, 60625, has Illinois’ highest density of Sierra Club members. I believe that.) On the other hand, West Lakeview, less than a mile away, tends to be much more disconnected. Neighborhood meetings don’t attract nearly as much attendance.
My experience is that for West Lakeview, readers are more likely to respond to a story about a new store opening, whereas Lincoln Square readers want to know every last detail of a zoning change.
6. Community engagement can build readership, but readers move on.
Early on I spent a lot energy on community engagement through parade marches, events and inviting local activists to write editorials. It paid off with readership and helped CSJ‘s traffic grow. But, I don’t get the impression that it kept readers long-term. As a neighborhood publication, you’re always striving to attract new readers, since residents move or lose interest. If you’re going to have a community engagement plan, it needs to be consistent and something you can plan on doing year-in-year-out.
7. Readers go to where the information is, and are generally not brand loyal.
This was a tough lesson to learn. While CSJ and every other publication has a core group of devotees, that group was never more than 20% of our total readership. Our reader surveys, analytics results and discussions with readers over the years showed that news consumers go where they see useful information – first. This could be from SEO, Google News or it could be from an aggregated list of stories.
I had two important takeaways from this experience. First, in order to keep a build readership, a big investment in pumping out large volumes of stories first (regardless of how little information you might have) is necessary for SEO. Second, aggregation and linked lists do draw readers, but making those lists often takes as much energy as writing an original news piece.
8. Local news was created to solve a business problem that has been solved and superseded.
Another tough lesson that required learning a bit of history to understand.
The original business model for news, back in Ben Franklin’s day, was to create handbills that people would read because it had interesting material on it. Local businesses liked handbills because it enabled them to get their sales message out to local consumers. That model, modified by the subscriber system, essentially stayed strong for two hundred years.
Direct mail and electronic media dented the newspaper model, but neither could challenge the ubiquitous demand for news shared by every consumer. But then, the cost effectiveness of creating direct connections between businesses and consumers through the internet has obliterated most of the “consumer aggregation” news organizations used to provide to businesses.
I found many local businesses in CSJ’s coverage area with email or social media lists of thousands of local consumers. One martini bar has tens of thousands of email subscribers. Under these circumstances, these local businesses (who also tend to be the ones most likely to have a marketing budget) are no longer looking to throw a wide net, but actually target by psychographic even more than before.
9. Readers want local news but businesses don’t necessarily want local customers.
One of my original concepts was that by creating a series of neighborhood news sites across Chicago’s North Side, I would be able to serve readers who wanted targeted news and businesses who wanted to target consumers around the corner. In fact, “Reach Shoppers Around the Corner” was one of my first sales pitches. Outside of Realtors, it had almost no resonance among experienced small business owners. In fact, I found most small neighborhood business owners wanted to purchase ads that covered as much as the North Side as they could get.
The reason is that true or not, local retail business owners believe they are reaching across most of the city for their customers. Except for the most experienced and savvy business owners, it was hard to convince them that their marketing dollars would be better spent locally in a concentrated fashion, as opposed to across the North Side or the whole city. It’s hard to compete with people’s dreams.
10. It isn’t complicated to build a good custom website. But it does take a lot of thought.
I knew a bit of HTML and the basics of WordPress when I started working on CSJ in late 2009, but I really didn’t know much about design or using the Facebook socialgraph. My first stab at a news site design was atrocious, the second still bloggy, but better. Finally, the third iteration, what you see on CSJ today, was cleaner, functional, and played well with social media. It’s far from the best, but I think it’s better than most.
In short, anyone can put up a news website. But the line between good and great is pretty wide.
11. 20% of consumers consume 80% of your product. Make sure that 20% is big enough.
One of the challenges of running a neighborhood news site is that ultimately, there is a limited demand for the kind of news you provide. Only so many people live and work in the neighborhood: The good residents of Chatham really don’t care much of about Northcenter’s parking meter problems.
Now and then traffic would go up when there are items of interest that go beyond picayune neighborhood interests, like when a new Target plans to move in, a surprising Aldermanic challenger defeats the machine candidate or people want to learn more about the big Ribfest streetfest. But other than that, there is a clearly definable baseline of readership. For CSJ, that was about 900 unique readers a day. For RVJ, it was about 500. No matter how much reader development we did, those baseline numbers would not go up.
Then, we knew that about 30% of our readers checked our site every day. Another 50% checked at least once a week. Even though we had some really dedicated readers, the pool wasn’t big enough to generate lots of ad click-throughs.
While those numbers were highly geographically targeted, our reader surveys showed that about 70% of readers lived and worked in the neighborhood, the total numbers were never exciting to business owners who imagined themselves as having a city-wide clientele (see #9).
In short, for all the great targeted content we generated, our audience could never get big or broad enough to generate enough clicks for our advertisers.
12. Nobody has the answers.
I had a sneaking suspicion of this fact early on, but it wasn’t until my short tenure at Journatic that I became convinced of it. The truth is that reader habits are still shifting so much, and the habits of 50-year olds versus people in the 30s, versus people in their 20′s are so different. Each reader and consumer group has such difference expectations of convenience, privacy and how they consume information that the news and ad markets are still dealing with new seismic shifts every month.
The result is terrifying for anyone with anything to defend, but exciting for anyone looking for a new way to innovate.
13. The barriers to entry are virtually non-existant in news now.
With a free WordPress template and a sense of what’s interesting to readers, you can create a news site that attracts thousands of readers. It may not be any good, but it will attract readers. CSJ and it’s sister sites follow more traditional journalistic methods (inverted triangle, multiple sources, on/off-record interviews, etc.) but two of Chicago’s more popular local news sites, Uptown Update and Chicago News Report, make no effort to do so what-so-ever.
Regardless of whether they are making money – or even selling ads – these sites are competitors for local news eyeballs. They make it necessary for other local news sites to adopt their methods, because without readers there’s no advertising.
14. There’s a big difference between small and medium businesses’ marketing practices.
Lumping together small and medium-sized businesses as “SMBs” is a mistake when it comes to marketing practices. I’d break those groups into three pools, each with different habits.
The smallest retail businesses, with less than $250k in annual sales mostly make cash register decisions on marketing. If there’s money in the till, they’ll try it out. But they want quick results. If the marketing doesn’t result in more customers within a couple of weeks, they don’t want to do it again. They rarely market, if ever.
The next up, small businesses with sub-$1 million annual sales usually have an actual marketing budget. But it’s likely no more than $2-3,000 a month, so there is not much room for experimentation. They stick with what they know, as much as what works. Unless you can offer something for less than $250 to try out for a month that will show instant results, you probably won’t make a sale.
Finally, medium-sized businesses with annual sales above $1 million tend to have large enough marketing budgets that they’ve been scooped up by a one or two person marketing shop. In Chicago, these tend to be boutique agencies run by former large ad agency folks who offer ad buying, creative services and maybe also social media management. There are literally dozens of these shops. Some are experimental, but all of them have thin margins and are thus looking for the tried and true for their clients. Back to square one.
15. Small business owners are constantly fighting off salespeople with a stick.
It took me a while to appreciate this, but the bane of small local business owners seems to be the cold-call salesman. They are selling credit card processing, new products to stock, marketing opportunities, you name it. It took at least a year of publishing useful neighborhood news before a majority of local businesses acknowledged me and our salespeople as something other than a nuisance.
16. It’s easier to find a good writer than a good sales person. Great writers and great salespeople are both hard to find.
Lots of people like to write. Very few people like to sell. Even fewer people want to do the hard work of honing their craft so they attain a new level of ability. It’s a cynical statement, but true. Worse yet for managers, there is no sure fire way to identify the people who want to go to a new level.
17. Small business owners rarely market themselves and even more rarely experiment with marketing because they’re so cash poor.
Building #14, so many hyperlocal news sites’ dreams (including my own) are built on the idea that local businesses are ready and willing to advertise. They aren’t, because most don’t have much money, especially in this economic climate.
One relatively successful small business owner put it to me this way, “If I buy a $300 ad, I need to make $3,000 of new sales that month, just to break even, since I have a 10% markup. Why would I take that risk?” Of course I responded with talk about making an investment, growing their brand, etc., but those are luxuries for businesses that have cashflow to spare.
Another important difference between the smallest businesses and larger ones: They’re usually set up as sole proprietors or S-corps. So, when they spend money on marketing, the owner is taking home less pay. In the owner’s mind, either they spend money on you, or on their kids. That’s a tough sale to make.
18. Big publications and small publications have the same problems.
This builds on #12, confirmed by my time at Journatic. The decline of display ad revenue, and the importance of fostering audiences you can sell to through events, deals or whatever, is increasing. Publications of all sizes are struggling to diversify their revenue streams, and it isn’t getting easier.
On the readership side, while big publications are dealing with the thousand-Lilliputians threat of hyperlocal sites popping up everywhere, hyperlocal sites like CSJ struggle with dozens of personal blogs popping up across neighborhoods. Some are very popular with no reason to team up with anyone. It’s not getting easier to keep a steady audience.
19. I’m not sure if real innovation in news or advertising is possible. Most things seem to be merely iteration, and maybe that’s possible.
I’ve linked news and advertising together here because really, they are just two sides of the same coin. News exists to sell ads, and ads exist to be paired with content (you could say direct mail and billboards are an exception). Ultimately this space is dependent on human social interaction, whether it in response to the ads or content or with other people to discuss the ads or content. And there’s the rub: Humans have a limited number of ways they can interact with things, what merely changes are ways to amplify or accelerate how we have social interactions.
And here’s my big thought: I think we humans have to learn how to use these new tools, these new interactions before we go to the next level. For instance, I’m sure something like Google Glass is coming, and one day lots of people will use it. But I’m not sure our human society is ready to take on such an acceleration of interactions. For instance, can you imagine someone from the 1940′s using Facebook? It would be a big adjustment, and one of the reasons why many people in their 70′s and 80′s are having a hard time adjusting to the media environment today.
Pure innovation, something radially world changing, like the steam engine and AC power, is not possible when it comes to news and advertising, I think. Things will have to move slowly.
20. The most interesting stuff is coming from the little guys.
All of the most interesting things in news, content and advertising have come from small players,. My favorites are Flipboard, Instapaper, The Magazine, and Buzzfeed. I know the last one isn’t small now, but they were a year ago. Note that none of these projects came out of Google or The New York Times Co.
Yes, there are cases of big media doing interesting content stuff, like last month’s avalanche story in NYT orBrian Boyer’s always great work, but what stands out for me is that these projects are not tied to any kind of revenue creation. They are just great content, the modern equivalent of a beautiful coffee table book, but one that’s free. In this environment, that doesn’t make any kind of sense to me at all.
21. Pretty much everyone that works in news is passionate about it.
I can’t emphasize how big a deal this is. Probably the number one thing about working in news is that no matter where you go or what you do, you quickly meet people in the industry that care a great deal about practically every aspect. True, it has made the business somewhat conservative (change is anathema for mature industries), but people care, and that counts for so much.
I’ve met so many great people in American news and marketing in the past three years, and I wouldn’t give that up for the world. If anything, it’s their spirit that makes me believe the world will be a better place soon.
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Posted by: Randy | Tuesday, January 22, 2013 at 11:55 PM