Revenue was, naturally, very much on the minds of the 12 publishers, broadcasters, and other news media executives who took part in the Local Media Association’s June 2018 San Francisco Innovation Mission. But Jed Williams, LMA’s chief innovation officer, who guided the tour, which visited eight innovation-focused enterprises of different shapes, sizes, and business models, told me:
“I don’t want to mislead and say we didn’t talk about revenue, because we certainly did. But the trip was really designed to take a deeper look at audience engagement, on a number of levels. Namely, how can local media companies create unique content experiences and build useful products for specific audience segments that foster adoption and loyalty? If they do that—if they find new sources of value—this will translate into revenue.”
The three-day Innovation Mission included executives from such companies as Graham Media Group, GateHouse Media, Meredith, Deseret Digital Media, Swift Communications, WEHCO Media, and Record-Journal Media.
The following is what the group learned as it went deep into audience engagement.
Located on Market Street in San Francisco’s Financial District, NerdWallet is a nine-year-old private company that offers financial advice with an array of tools to average consumers who mainly come to the site through search. “We break down complexity and help consumers make personal finance decisions with confidence,” VP of Content Maggie Leung told the group.
“What was especially compelling to attendees,” said LMA’s Williams, “was that NerdWallet and its staff are completely focused on one vertical: personal finance. Their business model is predominantly sponsored products and sponsored placements by brands that are clearly marked. If NerdWallet helps a user to make a decision around a brand or product, they’re going to get paid on that lead. But they’re also careful to point out that the sponsorships don’t affect their editorial judgment. Their responsibility is to their users and helping them make a decision, and that decision may ultimately be to not buy the product.”
At NerdWallet, the newsroom is not a “cost center,” as it is in traditional operations. “NerdWallet has flipped that and turned their editorial staff into revenue generators,” Williams said. “Changing the notion of what the newsroom is, without altering the principles under which it operates, is a big idea. It transforms it into a direct growth driver for the enterprise. It aligns editorial with the business model, rather than being at odds with it.”
Williams said the news media executives on the tour were saying after their visit to NerdWallet, “Wait a minute, you can actually use content and build a healthy business or at least part of a business around content as a revenue center?” Which, Williams says, is quite true for NerdWallet. It has built a $100+ million business generated around content that helps people solve daily problems regarding their finances.
Seven-year-old Nuzzel is a private company, located in San Francisco, whose algorithm-based app is designed to satisfy the demanding and omnivorous news-consuming habits of busy professionals.
“Nuzzel can give you, the consumer, a data experience that is smart and will get smarter over time and is a lot more efficient than trying to manually curate news sites,” Williams said. “The technology applies to more than just news consumers. They have a product called Media Intelligence where, if I’m a salesperson at a media company or even in the newsroom, I can use the signals and data from Nuzzel to track and have substantial intelligence in a particular topic or category.”
Williams continued: “One tour member really keyed in on Nuzzel’s new product, NuzzelRank, which algorithmically ranks authoritative content resources. Rather than using a human approach, Nuzzel takes a 100% technology-algorithmic approach and uses the signals to determine authority ranking.”
Hoodline, a four-year-old subsidiary of Pixel Labs, is a SF-based portal that mines an array of data sets to report news from neighborhoods in San Francisco, Oakland, and the rest of the Bay Area, with its eye on national expansion.
Williams explains Hoodline’s mission:
“One of the interesting things that emerged on this trip was the different ways to approach content. We visited a couple of places—NerdWallet and The Information—where the focus was on unique content to solve particular problems. At the other end of the spectrum are companies that scale the content that they develop through technology—namely artificial intelligence and machine learning—so you can produce much more of it, with targeting, and distribute it more widely. Hoodline is at this end of the spectrum.
“They have relationships with all sorts of data producers, like Yelp and EventBrite. They can take that data and use AI to create stories, such as, what are recent restaurant openings, recent closings, or what are the most popular restaurants in a particular neighborhood? The same applies for home closings and sales, job listings, and event listings, as Hoodline does here. Any area where there are large data sets that are local in nature and can be locally targeted—you can create compelling stories told through data.
“Most of the news media companies I talk with struggle to find the content sources and with the costs required for hyperlocal coverage. Hoodline is coming in and saying, ‘We can fill the gap here.’ You’ve got newspapers and broadcasters with staffs that are getting smaller. This makes it harder to cover individual neighborhoods. And yet you still want to be the trusted, comprehensive local provider. How do you do that with a smaller staff in a big urban center? Hoodline potentially becomes part of the answer. You can still dedicate your main editorial resources to major news beats, but Hoodline or a service like it can create content for you at a hyperlocal level, filling in the coverage gaps.
“Hoodline is also creating a new product to deal with all the ad noise and irrelevant content that users dislike with services like Outbrain and Taboola. Hoodline sees its new product as a better version of this kind of content. It will be hyperlocal. The content that would be replaced is not an ideal user experience, but it is producing recurring revenue. The brutal reality is that there will have to be a replacement for that revenue. Hoodline understands it will have to close that gap.”
San Francisco Chronicle
The Hearst publishing empire was founded in 1887 when 23-year-old William Randolph Hearst was given ownership of a minor paper in San Francisco, the Examiner, by his father, a local baron who owned gold and copper mines across the West and in Latin America. Two years out of Harvard, Hearst refashioned the Examiner into what he promoted as the “Monarch of the Dailies.” But more than a century later and decades after its founder’s death, the Hearst company, in 2000, acquired the morning Chronicle and sold off its long-ailing afternoon Examiner, which has since gone through a succession of owners. The Chronicle had its own legacy-based problems when Hearst bought it, but, with four times the print circulation of the Examiner, it was a gamble with a bigger upside.
However, the Chronicle was beset with mushrooming legacy costs in the new millennium that reached $50 million losses annually in the late years of the aught decade. Under orders from Hearst corporate, the paper imposed deep, structural cost cutting that required and received union support. With newly won stability when the financial bleeding stopped and under new leadership, the Chronicle set about creating a culture of editorial excellence the paper never really had even in its pre-Hearst years. The demonstrated success of the turnaround on editorial content, keyed to rapidly emerging Web usership, set the stage for a long-term strategy to build digital subscriptions based on the old-fashioned proposition of value, updated with new “customer-journey” marketing.
Williams explains how that strategy has evolved in its current phase:
“The Chronicle has invested heavily in newsletters and their strategy to move people through the ‘funnel’ of the ‘customer journey’ to get them registered, to create a known identity, to create a relationship with them and ultimately move them closer to becoming a paying digital subscriber. They have moved from four or five newsletters to 20. Some of them are daily briefings, but others are about specific subjects like politics. Whatever the subject, behind it is high-value editorial content.
“The Chronicle’s director of subscription sales and retention, John Rockwell, says they’re getting about 200 new leads on digital subscriptions per day from their newsletters. Newsletters are in the middle of the conversion funnel. Whether they come to you directly on your site or from search or social, the key is to move them from an unknown to a known relationship—essentially, get them registered. And newsletters are one of the most effective ways to do that. Now it’s person-based, not cookie-based, marketing, and you can message to your newly identified users with content offers and move them closer to a subscription. With your first-party information, you can build a composite profile about who that human being is, and what their interests, needs, and motivations are. That’s what Hearst is doing at the Chronicle.”
Williams on the Innovation Mission’s visit to Mountain Valley in Silicon Valley:
“We spent a lot of time with the Google News Consumer Insights team. Google has done a lot of work in determining who your audience is. It has built a benchmarking platform—NCI—that shows a publisher or broadcaster how they rank with other providers in terms of audience behavior by segment.
“They will take Google Analytics data and break it out to identify who are casual readers and who are loyal readers, and from there benchmark how many visits each category of reader makes to your site over a given time and how much time they spend in a session, and then compare these cohorts against the behavior of others in the industry.
“NCI is also able to see the relative value of audience segments coming from different sources—from social versus search versus email versus direct. There is a lot more here that Google can and will do. Publishers and other news providers, like those on the Innovation Mission tour, are really thirsty to understand how to define their loyal readers and analyze what they’re doing on their sites—how often they’re coming, how many pages they are viewing, how much time they’re spending in a given session. Based on that data, are the results good, bad, or in the middle, and how do they size up with other industry segments? Then, how can that intelligence inform content and product strategies?
“One Innovation Mission attendee said after the tour: ‘Google’s NCI presentation suggested that they are moving in a direction that will make them far more useful for us than some other analytics partners, even if the product isn’t necessarily the promised land yet.'”
Summing Up the SF Innovation Mission
Williams on connecting the dots between audience and revenue:
“There is such an industry push to diversify revenue, and so much of that is focused on developing and expanding direct-to-consumer revenue streams. But without real value creation for users, it’s just grasping at straws. That’s why this Innovation Mission focused so clearly on building deeper audience intelligence that allows local media companies to develop stronger value propositions for specific segments. From this, all kinds of interesting revenue possibilities emerge.”