The Chicago Independent Advertising Network is shutting down six months after it opened for business.
Business manager Mike Fourcher, who publishes the Brown Line Media hyperlocal news sites on Chicago’s North Side (all ChiAd members), said the network would close April 30.
Fourcher, brimming with optimism when ChiAd was announced in September 2011, called the network a “revolutionary step” in giving small, entrepreneurial sites the business tools and collective heft they needed to build advertising revenue that would put them on the path to sustainability. But ChiAd, despite $50,000 in foundation funding to hire a full-time sales rep and turn its ambitious concept into a functioning operation, quickly bumped up against the realities of the market.
“I am disappointed that it has come to this conclusion, but the old saying is, ‘When sales are good, everything’s good,’” Fourcher wrote to business friends on Tuesday. “Sales were not good, and therefore neither was publisher interest. While it seemed possible that we might be able to attract some test campaigns from agencies later this summer, the prospects did not seem strong enough to warrant the operations costs in the meantime.”
On his blog Wednesday morning, Fourcher said: “My personal opinion is that there is still potential for local advertising collaboration, but it would have to be conducted as part of a larger operation. In a market the size of Chicago, mass and momentum is critical. Many of the lessons learned above could have been surmounted if we were backed by more resources and existing sales relationships.”
In a report by Street Fight last month on ChiAd’s problems, Fourcher told us: “We got some ads placed. But the ultimate verdict of advertisers and ad agencies was that in a market like Chicago, 1 million impressions [a month] is just not enough.” Asked how many more partners the network needed to be viable, Fourcher said, only half facetiously, “Dozens upon dozens.”
The network was charging $12/CPM — an amount that ad agencies and their clients found too high, Fourcher told Street Fight last month.
To ensure that “their messages stay above the clutter,” ChiAd originally allowed only five advertisers a month to appear in the network’s publications, and with just one ad size — 300 x 250 pixels. But the network never did enough business to turn away advertisers. ChiAd also restricted its partners’ ad space to Chicago-based businesses.
ChiAd began with 15 partners, but most of them were relatively small neighborhood sites that even collectively couldn’t deliver the eyeballs that Chicago-wide advertisers wanted to reach. The original three publications of Fourcher’s Brown Line Media group – among the strongest community publications in the network – attracted 150,000 to 175,000 unique visitors monthly, Fourcher told Columbia Journalism Review’s Online’s Online News Start-ups in January 2012.
One of the original members of ChiAd – Steve Rhodes, publisher/editor of the the small Beachwood Reporter, an original partner with ChiAd – told Street Fight Tuesday he saw the handwriting on the wall months ago.
“The problem wasn’t the notion of an ad network, which I wholeheartedly supported; it was the absolutely horrible execution,” Rhodes said. For most members of the network, he said, “it was a total waste of time and energy – over an excruciating two friggin’ years of which the network operated for basically two months. I think the feasibility study took longer – and the decision to commission feasibility study even longer than that. Sad.”
ChiAd received a $50,000 start-up grant from the Chicago Community Trust, part of which came from the Knight Foundation. Fourcher told Street Fight last month that he was in negotiations with the trust for additional funding, but that the network had not made a formal application for a specific amount.
Reacting to ChiAd’s shutdown, Ben Ilfeld, chief operating officer of the Sacramento Press, which founded the Sacramento Local Online Advertising Network (SLOAN), said: “The local media ecosystem is a dynamic and volatile place right now. I’m encouraged that this experiment was undertaken. It takes courage on behalf of funders, leaders, publishers and advertisers to give it a go. I am confident that the pace of experimentation will increase and I’m bullish on the future health of local media ecosystems.”
SLOAN’s more than 60 members can deliver up to 700,000 unique visitors and millions of ad impressions in a much smaller metro market (1.9 million population) than Chicago (9.8 million).
Tom Grubisich authors the New News column at Street Fight.