Given the continuing industry-wide decline in print revenues, Dallas Morning News Publisher Jim Moroney argues that embracing multi-channel marketing is the key to news media companies’ continued success.
But as the Dallas company began exploring potential new businesses, it soon became apparent that there was not enough time to organically develop competencies — or clients — across a range of channels.
“We want to demonstrate to our customers that we can earn another part of their marketing budget and earn their investment,” Moroney says. “We don’t have the bandwidth to do that in the amount of time we have.”
So the media company is pursuing a dual strategy: It encourages organic innovation within its traditional business, including new product development or line extensions of existing products, such as a housing magazine built on the newspaper’s existing vertical.
But to expand into new channels, the Morning News is focusing largely on acquisition.
“We don’t think we can build these businesses fast enough to offset the decline in print revenue, so we said that we have got to buy some channels of marketing and bring some business in that’s already functioning,” Moroney says.
To enter the content marketing business, The Dallas Morning News reached out to Slingshot, a 17-year-old, full-service marketing agency, and proposed a joint venture in 2012. The Morning News now owns 70% of the new Speakeasy content marketing agency. Slingshot’s original owner holds the remaining 30% share and actively manages the business.
That acquisition was followed by three additional companies in January 2015. The Dallas Morning News acquired Distribution (a marketing automation platform), Marketing FX (a reseller of branded merchandise), and Vertical Nerve (an SEO/SEM company).
Together, they make up what the Morning News calls DMV. And in this case, the traditional media company is helping build the business for these smaller units, by referring the news media company’s large enterprise customers to their services.
“We have relationships with upper middle-market companies,” Moroney says. “These are the ones we can go to and say ‘tell us what you’re trying to do.’”
The Morning News took a similar time-critical approach when executives looked at the events space. Moroney saw the company’s own efforts, which included daylong seminars licensed from One Day University, as more akin to exercises in brand-building than revenue generators.
“We bring in talented professors in interesting subjects that are important to Baby Boomers and even older folks that mirror the print subscriber base,” he says. “It’s a good business. But they’re not going to drive a tremendous amount of revenue and EBITDA because they’re not set up to do that.”
Instead, Moroney says, revenue gains must come from attracting a critical mass of people to entice sponsors to support the event and connect it with the activation of their own products.
In 2012, The Morning News launched its event marketing company, Crowdsource, beginning with Savor, a 10-year-old wine and food festival, and followed with the Untapped Beer Festival, which has expanded to five cities in Texas.
Further expansion into additional markets is planned for 2016. Crowdsource has also been approached by sponsors of other large events, including an annual event centered around a college football weekend and a music, light, and art show held in downtown Dallas.
“We’ve begun to get a reputation for being able to [deliver] big-scale events,” Moroney says.
As the business continues to grow, Crowdsource will also consider creating new events — “but big events — not just a couple of hundred people,” Moroney says. “We want to crack 6,000 Millennials, a demographic we won’t have as much contact with, and bring some advertising partners as sponsors with opportunities to activate their products.”
Crowdsource will bring in between US$3.5 million and US$4 million in revenue this year, Moroney says. When it acquires events, Crowdsource has often brought in the original owners of its events on contract for a set period of time or retained existing staff.
“We try to remember what we don’t know,” Moroney says. “We’re not an event marketing company. We bring the people in and the resources they need to do their job that they might not have had to do on their own. We’re not taking inside people and saying ‘go be an event marketer.’”
For Moroney, the Morning News’ success in these emerging channels is due in large part to its ownership stake in each business:
“The marketing world is … multi-channel … today. Most sophisticated advertisers with reasonable budgets are looking at a whole range of marketing alternatives and are going to create a campaign that takes advantage of multiple channels. We need to be in a position to do that ourselves for our customers.
“If we own these channels, we can capture more of the margin in the business. We can also say to our customers, ‘Not only are we going to execute a multi-channel marketing strategy, we’re also going to stand behind it.’ Our reputation is on the line.”
This is one of 14 case studies featured in INMA’s strategic report “Revenue Diversification Beyond Traditional Print and Digital,” released in December 2015.