State of Local

The Project For Excellence In Journalism has issued its annual “State Of The Media” report, and there are a number of good takeaway points that are applicable to any local news organization. But as is always the case with this type of report, take all the points as interesting nuggets of information, rather than the complete story of the state of the media.

The two points getting the most attention involve audiences and advertising.

The good news for the news business is that audiences are continuing to shift the attentions online, and the traditional media outlets are grabbing larger percentages of the market than they did in the offline world. But the downside of the story is that while the online news audience is thriving, the advertising side of the equation hasn’t kept pace. Content and advertising are increasingly becoming uncoupled, and that only increases the bottom line problems for many so-called “legacy” news organizations.

Here are a few of the highlights from the report (which really should be read in its entirety):

Increasingly, news is moving from a traditional story-based presentation to a world of options. Audiences are moving toward information on demand, to media platforms and outlets that can tell them what they want to know when they want to know it.
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This recent Newsweek article has sparked a lot of comment in online news circles. The premise (which is drawn primarily from Andrew Keen’s book “The Cult Of The Amateur” ) is that audiences are moving away from user-generated content and back towards content written and edited by professionals. It’s an idea that is appealing to many local news companies, which are struggling to find the best ways to integrate UGC into their web sites. In fact, the article was brought up in a phone call I had with one local news executive earlier this week. Aren’t people tired of all that “amateur” stuff?

No, no, no. The thrust of the Newsweek article is that readers find professionally edited sites such as Maholo or Google’s new beta site Knol much more useful than they would Wikipedia or even perhaps YouTube. And not surprisingly, executives with those companies tend to agree with the premise.

The problem with the article (and the discussion) is two-fold. The piece doesn’t give any indication that it’s a trend that is applicable to online news operations. In fact, there are a number of studies that trend the opposite way. Readers are indeed looking for a trusted local news source. But they see UGC content as part of that mix.
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Representatives from 10 news organizations met at the Institute for New Media Studies at the University of Minnesota from Jan. 31 to Feb. 2 to kickoff the Digital Storytelling Effects Lab Research Consortium.

Funded with donations from interested news companies, the consortium is working with DiSEL researchers to answer the design and usability questions deemed most relevant in multimedia newsrooms today. The companies represented included USA Today, The Washington Post, Yahoo! News, The NY Times, Time Magazine and Gannett.

This might sound a bit boring or esoteric, but I would argue that knowing how and why visitors interact with your web site is one of the most important factors in the ultimate success of a local online news organization.

During the meetings, Amish Desai, a customer insights researcher at Yahoo! and human/computer interactions specialist, presented some information on the stages at which customers decide whether or not to click on a link or continue to interact with the web site.
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Online advertising revenues exceeded $21.1 billion for the first time in 2007, according to a report based on research conducted by PricewaterhouseCoopers (PwC) and sponsored by the Interactive Advertising Bureau (IAB).

In the latest of their Internet Advertising Revenue reports, the two companies estimated that 2007’s figure will dwarf the $16.9 billion in online advertising revenue reported in 2006. That $5.2 billion increase of 25% percent year-to-year, which is both a record-setting dollar figure and a decline in growth rate compared to prior years.

Which is one of the things to keep in mind as you take a look at the news coverage of these numbers. There are a couple of ways to write the takeaway headline for the report. And while they’re both correct, it’s the perspective that really matters.

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The American Press Institute’s Newspaper Next project has released a report on the state of newspapers and how their role is changing.

One key finding is that readers are increasingly searching for information that is pertinent to them rather than what just would traditionally be thought of as “news.” The report advises newspapers to become “a local information and connection utility.”

As you read the 100-plus page report, it becomes clear that many of the problems and possible solutions are also applicable to Internet Broadcasting’s broadcast TV clients. Like newspapers, they’ve struggled to grow or even retain their local online audiences, with mixed results.

The study observes that the most common solution among newspapers is to offer up ideas which offer added value to current readers, instead of developing ways to bring in new eyeballs. Things like video are mentioned in this category, and we suspect that if our industry had the metrics to prove it, the same would be the case with visitors to our sites, and those of our competitors.
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The launch of QuadrantOne is perhaps the clearest signal to date that the local online advertising has come into its own in the past year. QuadrantOne follows Cox Cross Media and, to a lesser extent, the Yahoo - newspaper consortium as publisher efforts to mine the national market for local advertising.

How do these plays affect IB? Well, in one sense, they are direct competitors - they, like us, sell across a national network of branded online local content, and they bring inventory to market for the advertiser interested in targeting local. Most of these organizations, however, are closely aligned with if not directly part of a traditional media, allowing them to also sell cross-media advertising. How much these initiatives focus on cross media bundles vs. selling online only packages will tell part of the story regarding how much of a true competitors we will end up becoming. IB has and will continue to focus its efforts squarely in the online only world.

Another way that these players affect IB is by bringing more attention to the local market - and specifically to the value of professionally produced local content. While online local advertising has been growing quickly, the true competition has been geo-targeted impressions on portals and ad networks. Often, this inventory was easier to access for the media buyer, and was cheaper to purchase. One phone call, a couple of targeting parameters, and the buy was done. However, what is becoming clear is the value of advertising around professionally produced local content. Desire to capture the pricing power derived from high quality content and high quality local media brands is driving these new entrants into the market. We believe that the attention these new entrants will bring to our market will cause more advertisers to seek out professional local content. We believe the market opportunity for IB will expand even further.

The last thing that we must realize, however, is the true challenge that these new entrants will pose. One of the issues with buying local in the past has been that it is hard. It’s hard for the media buyer to assemble all the right inventory. Its hard for the advertiser to measure results. Its hard for the publisher to optimize the campaign. Its hard for everyone involved to know if they extracted the necessary value from the transaction. By entering the local market at scale, quadrantOne is saying that they want to make it easier for advertisers and media buyers alike to purchase local inventory. Making local inventory easy to buy is perhaps the number one prerequisite for local online advertising to continue to grow. We must recognize that today’s state is not good enough. Things are not easy enough. There are not enough metrics. We need to do more. Unless we in the industry meet the needs of the media buyers and the advertisers, local online advertising will migrate to portals, networks and other places that will solve those needs.