The perspective of the investor is different from the perspective of the salesperson.  The investor cares about valuation.

Valuation Matrix

This is a valuation matrix investors use to value companies.  The values in the matrix are multipliers of revenue, the result of the multiplication being the valutation of the company.  On the vertical axis is profit margin, and on the horizontal axis is revenue growth.  This revenue matrix can be applied to both products and companies.

Internet-based advertising products may make less in absolute terms than print advertising products.  However, Internet products such as email marketing, online video, coupon/call-to-action advertising, business listings/search advertising generally have higher revenue growth and higher profit margins. 

From an investor’s point of view, the print advertising business is decline, and gets a low valuation.  The Internet-based advertising business gets a high valuation.

The opportunity exists because newspapers are a convergence point for the shift of demand for local media to the Web as a medium.  Newspapers can displace their other local media competitors by capturing their advertisers as they look for new Web-based advertising solutions.

Consider the competition:

• Direct mail has no online presence of course.  A recent Borrell report reveals how direct mail is declining at the expense of email marketing.
• Yellow pages companies face the drastic decline of their print book, as the need to find local businesses converts to a demand for local online search.  With a sales force to rival that of newspapers, business listings companies have stepped up their online offerings, reflecting the urgency newspapers face in developing offerings that can help them capture a larger share of that audience as it shifts online.
• Local TV and radio have underperformed newspapers in website traffic.  Newspapers are in a position to look more attractive to advertisers, as they look for more online solutions to complement their buys in traditional media.

$4 million opportunity per category

Based on Q4 2008 data from TNS Market Intelligence, for a community of 100K people, there is approximately a $4 million market opportunity for each category.  This reflects the entire local advertising opportunity, not just the typical share of that opportunity the local newspaper has claimed until now.  Therefore, the circulation and frequency of the newspaper does not matter.  Increasing share of the opportunity involves taking business from competitors, including other newspapers in geographies newspapers have not competed in before.

2 visions for claiming that opportunity

The one-stop-shop for local advertising and marketing

Local businesses, even in the smallest of communities, have hundreds of advertising and marketing opportunities, on and offline.  This is confusing.

Newspapers have the opportunity to become a one-stop-shop for advertisers for all their local advertising and marketing needs, regardless of the medium.  Part of this means having a suite of stand-alone print and online advertising products–”stand-alone” meaning each product can hold its own water, rather than being a mere add-on to a flagship product.  Beyond this, it requires the newspaper to change its pitch from merely being the best choice to the place to go to understand your choices.

The vision: capture 100% of the advertiser’s budget.

Category sales experts

The intersection of this consultative approach and the $4 million opportunity is the category expert, formally known as the newspaper salesperson.  The mission of the category expert is to be a guide to advertisers within a specific category, helping them take advantage of the best opportunities to reach their customers.

This starts by dividing sales territories by category rather than geography.  If resources allow, give sales people category-specific training.  This will give sales people the opportunity to really dig deep into a given category.

The vision: lock down 100% of the advertisers for each category.

I talked to a large daily in the North East today, the new media manager shared with me that their legal notice business has earned more revenue than display advertising sales, despite their five display ad sales people. This 15K circ paper expects to do a million in notices this year.   “If it was not for the notices, this paper could not stay afloat.”Yesterday I chatted with the associate publisher with a group that has bilingual publications targeting Hispanics in large metro areas. “We have strong business from the government, but there are so many missed opportunities for newspapers”.

The Obama administration has made it clear that reporting on stimulus spending should be “street-level” granular. We haven’t quite gotten there yet:

This is a service newspapers could be offering, for a fee. Not just printing notices regarding stimulus spending, but digging in with journalism to put it in terms citizens understand and can digest easily, and taking advantage of social media, digital visualizations to maximize the reach of this information. We should not be leaving it up to Recovery.gov and State-run websites:

This is something press and newspaper associations have been lobbying against for some time::

Let us go beyond just printing them in the paper. As content producers, newspapers can be the one using new media to really keep the spotlight on the spending, while making money at the same time..

Do you know of any newspapers that are doing this? ]]> http://locoforlocal.com/?feed=rss2&p=114 0 http://locoforlocal.com/?p=113 http://locoforlocal.com/?p=113#comments Thu, 28 May 2009 20:00:51 +0000 admin http://www.locoforlocal.com/?p=113

• CellSigns – Mobile Platform for Newspapers
  “The Cellifieds™ Multi-Medium Newspaper and Publishing Platform allows publishers, aggregators and partners to distribute and monetize content via the mobile channel. The only 360° solution deployed in the publishing/classified industry.”
  The main attraction of CellSigns is the ability to use the mobile phone to do coupons, contests, and promotions.  These are models we have seen be very successful in markets with more developed mobile usage and should be put to work for Western newspapers.  Other features, such as mobile IDs and alerts, while cool, do not have immediate ties to revenue.
• Gumiyo’s Mobile Campaigns for Newspapers

  Gumiyo uses a newspaper friendly model of using a plug-and-play platform that a newspaper can stick its brand on and immediately get its sales people to start selling.  The marketing material targets automotive, real estate, and employment categories.  The website lists a few newspaper partners, including the LA Times and Pioneer Press (although I can’t find mobile advertising in their media kits).

• 2ergo mobile solutions
  2ergo does it a bit differently.  They mobilize the newspaper’s content, but then monetize through a proprietary ad network.  They call this a “virtual extension” of the newspaper’s sales force.  My concern is that mobile phones are personal, with advertisements much more likely to be perceived as spam.  National ads placed in their network will not be nearly as welcome or effective as ads that are more local, and have a specific call to action.  That said, according to their website, their customers include Investor’s Business Daily, The Washington Times, and the Toledo Blade.”Swift enables newspapers and other types of publishers to distribute and monetize content via the mobile channel. Daily news feeds, videos, slideshows, editorial content, classifieds, real estate listings, city guides, local weather, sports, traffic, blogs and more can be easily published, automatically updated and monetized through Swift. In addition, targeted mobile ads can be served through any of 2ergo’s mobile ad network partners, who act as a virtual extension to the newspaper’s advertising sales force and create an additional revenue channel. “

Advertising; Coupon Marketing Heats Up – The New York Times

“Joseph B. Fenton, its director of marketing, calls it ”the nation’s largest print advertising medium.” Advertisers can buy their way into any or all of 355 metropolitan markets and any or all of three demographic splits in each market.”

Proactive newspapers are installing coupon-related offerings on their websites.  Here is a short list of their competition.

• RedPlum.com
  “Redplum.com is a single destination for you to find special offers, great deals, valuable product information and coupons for products and services that are local and relevant to you. We search for the best offers, deals and products to feature in one place, so that you can easily enjoy the savings, splurge on the fun things and spend more time doing the things that matter.”
• DiningDuck.com: Free Restaurant Coupons Emailed to You
  “Dining Duck is a free service that delivers restaurant coupons to your email. To see participating restaurants and other establishments in your area! “
• Grocio.com
  “Grocio saves busy shoppers (moms mostly) a ton
  of EASY money at the grocery checkout counter.We do that via comparison shopping & coupon matching.”
• Printable coupons, Discounts, entertainment coupons on shopping, travel, dining attractions, theater
  “A new service that allows users to pick and choose printable Coupons from Shopping , travel, dining and attractions. Once a user chooses their entertainment coupons they save it to their mygrabaloo page. There is where they can Print the entertainment coupons, trade them or send them to a friend. Here at grabaloo we give the power to the community by allowing consumers to make the decisions on how and where they save their money!”
• CitySlick.net | Free Local Advertising | Advertise Locale Coupons
  CitySlick.net helps consumers and local businesses connect to each other through the ever growing world-wide-web. To get new customers, register and advertise local coupons, promote deals, post sale events, write articles, and upload public media. Our unique approach to online business marketing helps distribute local search traffic to businesses nationwide.