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Are Digital Agencies a Bad Idea for Media?

6 Comments 10 February 2014 by

borrell logoI’ve gotten a number of calls and emails lately that leave me wondering whether local media’s rush to create freestanding digital agencies is a lemming jump. It’s one of the more important topics we’ll address head-on at #LOAC2014 March 3-4.

The latest notice came from Sinclair Broadcast Group, which last month created a standalone digital unit and named longtime media executive Rob Weisbord to head it. In so doing, they joined the ranks of LIN Media, Gannett, Yellow Media, GateHouse, The Dallas Morning News and dozens of others who’ve created separate brands with cool names like G/O, Mediative, Propel Marketing, or 508 Digital.

With big companies like that entering the space, it couldn’t possibly be a bad idea. Or could it?

First off, I don’t think it’s a bad idea for certain companies. It takes a clear strategy that the entire organization – especially the owners – need to buy into. I’m not talking sipping the Kool-Aid. I’m talking eyes-closed swallowing. The bitterness they’ll have to accept is lower margins and internal hard feelings as a business unit that represents 10% of the business gets 90% of the attention.

In the past 18 months I’ve watched a half-dozen companies create, then collapse, these freestanding units back into their organizations. They didn’t abandon the idea entirely. But after the leader left (or was asked to leave), things disintegrated. It happened to radio, newspaper and TV companies in Pennsylvania, New Jersey, Indiana and Maryland. I expect to see more disappear this year.

One of them was Strawberry Fields, a digital unit created 10 months ago by Federated Media, which owns radio stations and newspapers. While Strawberry Fields still exists in some form, its leader, Kelly Bolyard, left last month, and the company placed the remnants under the guidance of existing sales managers.

What happened? I’ve asked Brandon Erlacher, publisher of Federated’s The Elkhart Truth, to speak at our conference. He’ll be joined by none other than Rob Weisbord, who will describe Sinclair’s strategy and – more important – its level of commitment.

Digital agencies within traditional media companies represent change. Change is difficult. So it’s fitting that we kick off #LOAC2014 with one of the biggest change agents in the business, Jeffrey Hayzlett.

Hope you can make it.

Bring a seat belt.

Gordon Borrell is CEO of Borrell Associates.

  • Gareth Charter

    Gordon, Interesting … reminds me of the “should we publish our news online?” debates of 20+ years ago. But there’s no debating whether businesses and consumers are using these digital tools in increasing numbers. So it’s really about execution for media companies, because placing ad messages next to audience isn’t enough any more whether we like that reality or not. Clients are there. They win.

  • Nancy Lane

    I think digital agencies are a good idea if the company is willing to invest and be patient for profits. The ramp-up time is at least one year (three+ years in the case of Propel). Legacy media companies aren’t used to thinking that way. They need to act more like a start-up company in order to succeed in the digital agency space. Easier said than done.

  • thebeaver13

    I think the term digital agency is overused. The real question is, should media companies offer a wider depth of non O&O products to the local marketplace? Call it what you wil. And the answer is yes. This is the first step of an evolution of how media is sold locally. And how local SMBs will buy it. To me the future is clear, but getting there is the hard part.

  • Palmer Brown

    Digital agency services should be part of the offerings from publishers and broadcasters, BUT, not at the expense or in favor of O&O assets. Before a P or B goes in that direction they should know if they have maximized the yield of their company owned assets. It does not make sense to sell other company offerings at less than 30% top line revenue if you’re sell-through rate of your O&O assets is less than sell out. Plus, I have found that despite the best training they lack the true expertise to deliver it at scale where the profits are.

  • Oleksandr

    WHO LAYS THE GOLDEN EGGS?
    (The concept of newspaper media of the 21st century)

    Summary.

    I suggest to all
    of you for the discussion, for reflection and for strengthening your own
    position in the business of my thesis project for the restructuring of the
    print media on the concept of the 21st century.

    PRINTED
    NEWSPAPER MEDIA – IS THE PINNACLE OF THE GOLD BUSINESS, IT’S THE GOLD BUSINESS TERRITORY
    .

    1. Print media in
    the 21st century are a new concept that is different from the concept of the
    20th century.
    2 .
    The concept of print media of the 21st century is diametrically opposed to the
    concept of the print media of the 20th century.
    3
    . Print media of the 21st century are at least a dozen of advantages over the
    internet .
    4 . Business print media of the 21st century is the gold business .
    5 . Business print media of the 21st century is the ” ostrich
    “, which lays only the golden egg. 6. The concept of
    the print media of the 21st century after its introduction (with the help of my
    project) multiplies the demand for print media several times.

    There is interest in implementing this project, dear Sirs, owners and publishers of printed media and investors? Interested investors can I send a
    detailed justification of this extended project. With best Regards.

    IN THE EXPANDED,
    FULL AND DETAILED FORMAT.
    Dear ladies and gentlemen! Dear owners and publishers of printed media and
    investors!

    I am sending you this letter to inform you
    about the trends in the print media.
    Perhaps theses of this letter will affect your views on the business,
    its direction of motion. Could be. Maybe there will be new ways and mechanisms
    for the implementation of your projects. I’ll be very happy. Perhaps you will
    give me advice or tell the letter to its partners. Over all, I thank you and
    wish you happiness. Happiness for me is a fun heart. I wish you great
    happiness. This letter is about the
    future of print media, the concept of the print media of the 21st century. Today’s time clamoring to fundamentally change the
    role of print media in the world. Today,
    newspaper print media require new (specifically designed) methods of
    operation. This will enable more efficient use of the
    printed newspaper media to solve life’s problems. Not only contribute to (as the fourth
    authority), but also to create new,
    functional, socially just and useful, the framework for public and social
    authorities. Otherwise, they will go bankrupt. This process has already begun in
    the print media. To avoid this, many
    print media (even very large) go to work in the internet, but it has a very big
    mistake. Print media are losing their face completely. Because, online media
    and print media, it is very different areas of information. Superficially
    similar, but different inside. Now is
    the time to convert the print media on their internal content, to make the
    business of print media is much more efficient, much more successful. It’s time
    to expand the areas of business print media.
    Time calls us to hurry up. Because inactivity is killing the business.
    Time owned business. Time creates a business. Time is killing business. Time is
    a lively business category. Business print media has a fundamental, unsinkable
    advantage. This business is not affected by any economic crisis or natural
    disasters. On the contrary, all these factors have a positive impact on the
    business of print media. Business Print Media is the gold business today! Do not believe those who explains all of their
    losses in the business of print media, the advent of the Internet. The internet
    is progress. The Internet is not a hindrance print media. Progress does not
    hinder progress. The Internet is in itself. He lives by its own laws. Print media does not have to
    “learn” the internet. It’s foreign territory for the print media. Be
    printed media on the web – is absurd. This is not a judgment of wisdom. This is
    a movement from one extreme to another. There is no vision. There is no wisdom.
    Print media need and have their own solutions. They now require a transition to
    a higher and qualitatively new level. Nature of business – always moving
    forward. Today is the era of change of the concept of print media. This phase
    of the new content and new flows of information in print media. Today, it makes
    no sense to wait and think twice or thrice. Today we need to actively introduce
    new technologies. Time goes by. Loss of time – Loss of finance and business
    print media. Now is the best time to act! Go its separate way. What is the point of
    going through a strange way? Internet – a new way, not for print media created.
    What is the purpose of going on a road that has no value for you? What is the
    cost of such a road? Today is the time to get away from this road. The main
    thing – to focus in the right direction in his direction. Any “financial spells and
    medicines”, and promotional gifts through online print media will not
    help. Waste of financial resources, intelligence, energy and time. Today, the
    whole business of print media to yesterday’s thinking is moving in the cemetery
    of history. Trying to hide the newspapers, magazines and on the internet? This
    is the greatest intellectual error, if not more – professional blindness. Newspapers in the next 25-30 years, have
    numerous advantages over the internet before . At least a dozen advantages.
    Internet is full of information, but the Internet is not the print media . The
    Internet is in itself. Do not try to climb to the territory of the internet
    with the problems of print media. Internet does not want and will not
    understand you. Internet has no problems of print media . There are other laws
    , other content , and other tools . Other territory . Goals and objectives of the print media are
    changing. Also changing professional orientation specialists print media. Business internet technology are completely
    opposite business technology print media. The main thing that connects them ,
    there is the word ” information”. Now the main thing is – how to get
    rid of the stereotypes of the past and move on to a new platform, a new concept
    of operation of the business of print media. What is transition? What will
    change? In what order? What resources and mechanisms required to activate? What
    are the principles? What are the priorities? What are the technologies of all
    these mechanisms? All this and much more I have in my project to restructure
    the print media on the concept of the 21 th century, to multiply the demand for
    print media several times. As a minimum. It requires wisdom , faith and trust.
    A similar letter is addressed throughout the year to various print media. There
    was no response . Why is this so? What is it? What complexes in the mind ?
    Disbelief ? They are afraid of risk? Distrust ? Consider it a very risky
    business ? What’s the risk? Lose your finances ? So today , many large
    companies print media spend huge amounts of money on advertising to attract
    subscribers. And it’s all to no avail. How absurd to interest readers gifts !
    This ” love” unreliable , misleading . We must believe that the
    business of print media is the gold business . And without any gifts. Print
    media is the ” ostrich “, which daily lays only the golden egg. Please help me understand this, if you do not
    complicate, if for you it’s not a problem. In any case, thank you very, very
    much for what you’ve read this letter. Perhaps this letter will direct you to
    any interesting ideas for you in your work. I will be very happy even for that,
    I could send you to new ideas in your business. I wish you good health and new
    algorithms to work. A very big thank you to all of you for your attention. With best regards and God’s blessings to all of you ,Aleksandr Solodilov.
    (Linkedin,
    Aleksandr Solodilov)

  • gordonborrell

    Funny: Publisher emailed me last night and said, “have you actually met a person who’s making a DIME of profit on it? If so, I’d dearly love to meet that person.” This morning, another publisher wrote me that their digital agency was profitable, and that a digital agency “maybe a bad idea for others, but not for us.”




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