I'd like to welcome the Seattle Post-Intelligencer to the world of pureplay, online-only local Internet sites. They have a heckuva a jumpstart with their level of web traffic which any local site would be thrilled to have. Unfortunately, there are many other items that they must put in place to succeed. To their credit, they have taken some good first steps. The first and painful step was reducing headcount which reflects the reality that revenues will be lower for awhile. However, no business can cost cut your way to a successful business. The second laudable step was outlining how they plan to position themselves as a digital marketing agency with their advertisers selling everything from Yahoo display ads to paid search from all the major search engines.
Nonetheless, this is all moot if they don't develop a viable revenue model to go along with it, something they have no apparent experience with since the Seattle Times had done all of their advertising sales as part of their JOA. The painful truth is that 99% of the local Internet plays have proven how NOT to develop a sustainable model. Some newspapers have claimed their online properties are profitable but this is a suspect claim since they weren't burdened with the costs borne by the print product. In other words, most local online plays are subsidized by an offline counterpart which the P-I no longer has.
One of my observations from attending the New Business Models for News conference hosted by CUNY and run by Jeff Jarvis (of Buzzmachine & What Would Google Do? fame) and David Cohn (Spot.us) was that virtually all of the new business model discussion was about ways to lower production costs or new ways to fund journalism. While those items help, it's clear the only path to long-term economic viability is to directly address the revenue piece of the equation.
Having spent the last 13 years off and on working on local Internet media, I've made my share of mistakes and have learned many lessons along the way. I've applied those to the site that I own and run (SunValleyOnline.com) and have managed to build a modestly profitable business. I hope the P-I has success so I'm sharing what I believe are the 10 most common mistakes that have prevented most local media sites from having success.
The following are the list of things the P-I, and other online-only newspapers, should avoid that most other local websites haven't avoided:
1. Many local websites assume that since they've been in the business for a long time that they don't need to conduct any research with their customers and non-customers. When we did research, we learned things that changed how we positioned our website to our advertisers as well as it informed our editorial direction. We also gained terrific insights into how much we did/didn't overlap with our competition.
2. While most of us in the local publishing business think our site is available to everyone, the P-I should avoid the one-size-fits-all mentality. It's a mistake to have your sales team start calling on as many advertisers as possible without regard to vertical market, psychographic attributes, etc. A well-honed value proposition for a particular segment is more work but worth it.
3. Until we did research, we had no ability to quantify the value of our audience. Just because one is the market leader (in terms of traffic) you still need to articulate a return-on-investment calculation to a prospect. Just as important, it's important to worry about calibrating expectations with your advertiser about your advertising. Most small businesses need help and can have unrealistic expectations. If you don't set expectations properly, the advertisers will "one and done" -- i.e., they won't renew as they may have had wildly out of proportion expectations.
4. Most newspaper sites clutter up their pages with as many ads as possible. After all, if there are more ads on the page, doesn't that mean more ad revenue? [Hint: No] Many of these sites also use tiny static ads. There has been ample research on ad effectiveness of various types of banner ads. Apply that insight. While banner ads are the mainstream "solution" today, I'm fully convinced that new models of matching buyers and sellers will emerge. Google's AdWords has been the "killer app" for online advertising but there'll be others. Our motto is to test, analyze, refine, test, analyze, refine. I have little doubt that we'll look back 10 years from now and laugh at what we considered to be state of the art.
5. Most media sales organizations aren't tightly defining each step of the sales process with the corresponding likelihood of closing the deal. Too many also don't have a systematic Win/Loss analysis process. While there are thousands of businesses in Seattle, it's a path to failure to think you can just churn through advertisers.
6. Most local media sites simply create a rate card and when it's time to ask for the order, toss it over the transom. The thinking is "A rate card is just a rate card. No need to use it as a strategic selling tool." In reality, it has a lot to do with driving long-term retention of an advertiser as well as creating scarcity during the initial sales process. If they understand the rate card and you remind them on a monthly basis of how you are delivering against your agreement, advertiser retention rates will climb.
7. There's a myth that since advertising is a "relationship" business it's necessary to hire expensive shoe-leather salespeople as that's the way it's always been done. Many don't have a grasp of how one builds a world-class Inside Sales organization and assume that an Inside Sales organization wouldn't work for media sales. Unfortunately, they forget the fact that they are trying to extend beyond the normal 10% penetration of local businesses that newspapers have and that this means less revenue per account. That demands a lower cost model. Just because you are hiring an experienced media sales person with lots of field experience doesn't mean that they'll know how to create a low cost customer acquisition team/model. This is a radically different skill set.
8. Unfortunately when many local media organizations hire their online sales people, they don't worry about making the distinction between "hunters" (i.e., sales people adept at developing new relationships) and "farmers" (i.e., account manager types that like to develop long-term customer relationships). Just because some sales people have an impressive roster of past clients from their offline sales experience it doesn't mean they will know how to build a new book of business.
9. The P-I is fortunate that they have a buyer's market when it comes to hiring but that doesn't automatically mean they'll hire the sales talent with the greatest potential. I've seen growing sales organizations hire unseasoned but high potential sales people and have great success. Having the right job descriptions with accompanying compensation and quota models is critical. It's also vital to have a structured and ongoing process for developing the sales team's sales and marketing skills. The P-I needs to have much more than an initial training curriculum and then "turn them loose" to make some rain. High performing sales teams train all the time.
10. The P-I needs to do more than just provide the sales team with a salesforce automation tool so they can use it to manage their pipelines. It can be a strategic tool for the business on a daily, weekly, monthly and quarterly basis not only for the sales team but also the executive team. We often see a tool such as Salesforce.com be under-utilized.
There are many astute and experienced readers and I hope you add your thoughts so we can tap the collective intelligence as no one I know purports to have all the answers in this evolving area. It's an exciting (and challenging) time for those of us in local media. I wish the P-I all the best.
Source: Knight Digital Media