local media insider

Key Take Aways from the 2014 Mega-Conference

Alisa Cromer

The hallway and cocktail party circuit at the 2014 Mega-Conference was abuzz with conversation about where newspapers are headed - or should head.

The top talked-about take away was the gist of Gordon Borrell of Borrell Associates's opening speech that framed the meeting.

"The message I got from the conference is that you need to decide," said the veteran of a family-owned small newspaper chain.

"Are you going to invest in change? ...If not, this may be a good time to sell."

Borrell's advice seemed carefully composed to appeal to all parties: For newspapers who choose to remain print centric - and there were many attendees in that camp - revenue declines have flattened, and they may even see a blip or two of political advertising-fueled gains.

But don't expect to grow, Borrell said. On the other hand, companies that invest in new markets - digital services in particular - will ultimately see substantial year-to-year growth.

And after the first one or two painful years of investing in infrastructure - new sales teams, fullfilment processes and technology partnerships - profit margins on well-run digital divisions will settle in at around 35% and the gap between the media companies who are digital haves and those who are digital have-nots will widen.

That's what he said. What some newspaper executives heard, however, was that print revenues would flatten ... for a while. And then they could drop again, leaving the have-nots also several years behind. Hence the decision by some companies to sell now may be a smarter move.

Other key trends and take aways from the conference worth noting:

• Borrell's target for newspapers to achieve at least 18% of revenues from digital this year was referenced by many of the companies moving aggressively in the digital services area.

• Those companies also target 50% year-over-year growth in the digital sector, and as goals for digital reps.

• Successful Investing in digital services cannot be iterative or piece-meal. It must be transformative and with full commitment to perservere in spite of early on lowered margins and business mistakes that are part of an evolving business model.

• Acquiring a supply-side programmatic partner yielded 30% gains from unsold inventory, according to Sam Metchalf, manager of digital yield,  Milwaukee Journal Sentinel.

• Adam Burnham, VP of interactive services,  Affinity Express ,offered another solution to raise revenue gains from unsold inventory - sell it off at reduced rates, say $3 cpm, to your best digital customers, the ones who are buying major campaigns at $10 CPM.

• Banner ads otherwise took a bit of a beating. Eric Bright, VP of e-commerce, Deseret Digital Media, noted that his company is moving away from this model: "There are two sets of customers, readers and advertisers... we talked to readers about what they like and what they don't, and every piece of research says they hate ads." Bright has guided the transition of travel from a pure advertising model into a booking engine, and partnering to supply real estate management as an direct upsell to landlords.

• Bright suggested that newspaper delivery should eventually be run as a separate business, offering delivery as a service.

• Better DIY and DIFM order-taking systems are on the rise accross the board. Kudo's from media companies also went to Memoriams by AdPay, which allows funeral directors to place orders into newspapers directly from the platform, and PRLink, from Creative Circle Media, which partners with media to allow SMB's to order and pay to publish press releases directly on the media-owned site. PRLink, which combines SEO, content marketing and e-commerce, was mentioned as part of an SMB package successfully sold during a sales blitz run by The Blinder Group.

• The new darling of new business models is content marketing. Speakers focused on the need to alter newspaper platform infrastructure to accomodate clearly marked sponsored content.

• An additional, more disruptive model of content marketing may be helping brands sponsor or create "smart" curated channels (ie automated but with a human editor), according industry visionary Terry Heaton, senior vice presient, Media 2.0.  

• Look for entrants into the local media space by well-funded aggregators and "Plashers," as in platform-based publishing companies with unique strategies. Mentioned were a number of innovative platform-based start-ups such as UpWorthy whose formats have garnered millions of readers almost overnight.

• The return of the weekend  was a key editorial take away. Studies show readers want a longer, more thought provoking read on the weekends, and that they want news, not soft features.

• In general, surveys also show a preference for news on the home page; news is prefered by all to big photos of kids playing in the fountain. 

• John Temple, founder of Pierre Omidyar's Honolulu Civil Beat, and a senior fellow  at the John S. Knight Foundation, argued "nothing is more important than the culture of the newsroom" in engaging audiences in a conversation.

"User generated content is a horrible word," but that's the end game, he said. At Civil Beat, topical channels on core community issues feature a standing box with the beat reporter's photo and direct message framing the issue in a conversational tone. 

• Dick Larken, president of Commando Marketing,  made a compelling case for selling text ads to small businesses, as the best low cost, high perceived-value solution (averaging $5.75 per text customer) that delivers immediate results even with a small number of customers. He suggested you could start a text list that delivered results with just 10 customers.

At the group of community yellow pages he ran, the teams sold $995 a year packages (the optimal price point among those tested) to 8,000 small businesses, for an astounding $8 million in text advertising.

To SMB's, "selling ads on someonelse's platform is like share-cropping," he said. The reality however, is that text opt-ins, unlike email lists, cannot be transferred from platform to platform. So the owner of the owner of the platform is still the software provider and its media partner, though small businesses own new proprietary and exclusive customer lists.

• 85% of small businesses are planning to develop a new web site. The capacity to fulfill this need will be a critical advantage for companies offering digital services, difficult as it can be to streamline a process that works.

• Leading with mobile was mentioned yet again as an easy way to "get in the door" with SMB's,  as most small businesses still do not have mobile-ready sites. Ad directors say this is a key way to open a larger conversation about the overall web sites and digital marketing plan. 

• Finally, a couple of digital executives grumbled about the difficulties in exiting partnerships they have outgrown in one way or another.  Make sure to discuss how to secure key data such as customer content or passwords from the outset, when you have the most leverage.   

Many thanks to Local Media Association, Inland Press Association and Southern Newspaper Publishers Association for another terrific conference. We'll have more reports and case studies from the conference in the weeks ahead.