As a news media executive, it’s hard to avoid constant messages that urge newspapers to better embrace the digital world, do more, deploy more resources, and pursue all platforms aggressively and so on.
I get it; digital is important.
But what if it’s not enough?
For the most part most, news media organisations and their executives have understood the message and have invested heavily in their digital efforts. However, in most cases, the financial results have been soft. The Internet isn’t new anymore. It’s been around for 20 years and new business models for news providers have yet to materialise, at least in a significant way.
Digital advertising is a prime example of “perfect competition” where the inventory is unlimited and the cost of providing the service will eventually drop almost to zero. Only the largest and most efficient players will be able to deliver a reasonable return on their efforts.
When the best in our industry only deliver a fraction of the audience produced by Google and Facebook, the picture becomes obvious.
I’m not for a minute suggesting that traditional news media organisations should not invest in digital news efforts. Indeed they must. In fact, basic survival means functioning effectively as a digital media organisation.
The important point is that to survive long term, organisations must find revenue streams that are not directly related to their news operation, but rather are extensions of it.
In local markets, news media organisations have a number of core competencies they can leverage to launch new business initiatives. Among these competencies are relationships with marketers, brand reputation, data, and a large local audience, just to mention a few.
At The Toronto Star, we have recently launched a sample-packs business with a focus on very specific events, such as frosh week for students, local festivals, and sporting events. It’s been profitable since its launch and has the potential to be a multi-million dollar contributor to the organisation.
Recent INMA postings reported that the Dallas Morning News is investing in a sports app, events, and a luxury magazine. The Chattanooga Times Free Press is now heavily into the events business, and the San Diego Union Tribune has been dabbling in local television for the past few years.
While not all of these efforts will ultimately turn out to be successful, it is important to be testing business models that fall outside the traditional digital news area.
To effectively grow outside your comfort zone, it’s critical that you have the right internal operation to allow for trial and innovation.
Do you have an innovation leader outside your digital team? Is your organisation willing to fund initiatives that offer a reasonable return but that might not be a digital offering? Do you have access to research to allow you to test your concepts before launch?
At Star Media Group, which includes the Toronto Star and our Metro free newspapers in seven Canadian cities, we believe our significant reach in each of our local markets will be our path to success in a rapidly changing world.
Print still has a runway and digital will be critical to sustaining our brand, especially on the tablet. But we must do more, and we must leverage audiences better in non-news-related activities that will lead to new revenue streams.
Recently, we had our research team conduct a deep analysis of our total audience to better understand exactly where our readers over-index with their spending patterns. The obvious use of this data would be to then sell advertising against those specific targets.
Our approach, though, was slightly different. We wanted to see if there is an opportunity for us to earn profits directly through this consumer spending stream. In doing so, we built a filter system to help reduce the number of categories in which we might invest.
These filters included categories for those that are currently heavy advertising clients, have high levels of regulation, are global enterprises, and pose major ethical considerations.
In the end we have a list of nearly a dozen types of businesses that fit perfectly with the audiences we currently attract. It’s a very different way of analysing our marketplace for future business opportunities.
Think about it: Even if it’s possible that ultimately our digital news business efforts are limited, shouldn’t we be looking for additional ways to leverage our key capabilities?
Such possibilities are one reason that it’s a great time to be a news media executive.