St. Louis Beacon: Revenue Beyond the Banner Ad

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The St. Louis Beacon was founded in 2007 by a group of veteran St. Louis Post-Dispatch reporters who perceived a serious lack of in-depth reporting about the communities they lived in. After building up the site, they snagged a couple of grants and partnerships that made the project viable. But, like many local news sites started by high-minded journalists, the Beacon was initially only about the journalism. “They didn’t have anybody on staff who was thinking about business models or technology strategy, or any of that sort of stuff,” says Nicole Hollway, the site’s general manager, who came on board in 2008.

Street Fight spoke with Hollway recently about the Beacon’s evolving business model, which relies less on traditional ad sales and more on creative sponsorships, events, and promotions.

How did you first approach the project of creating a business model for the Beacon?
People were constantly asking “What’s your business model and what’s the business model for the type of organization you are?” We kept saying “There isn’t one. It hasn’t happened. It doesn’t exist yet.” They were like “Well, what about banner ads and what about obituaries and what about classifieds?” But that’s about scale and we’re not scale. We knew we’d have to do different things. …

So we put together this five-year plan for The Beacon to go from relying mostly on philanthropy to relying mostly on earned revenue. The challenge was taking this organization that, at that time, was maybe 12 or 13 editorial staffers and three business-side — we had this editorial thrust that we weren’t going to be willing to change, but we needed to find a way to build up the other side of the business, which we all agreed was just as important.

The goal for the plan was to solidify about $5 million [in philanthropic donations] to start, and that by year five we don’t actually draw on that at all — that we’re fully operational. … The majority of the money that we’re hoping to get up front really goes into infrastructure. A good deal of money is going towards building not a new Web site, but what we call a new online platform for the business that will include a Web site and be a publishing platform.

One of the unique and important things about The Beacon is we realized that the Web site was not what we were. We started using the term an “engagement community” and “engagement engine.” We say that journalism lies in its partnership and technology. Those things are the way in which we engage the community and use journalism. But none of those exist without the journalism, but all those things are equally important.

Tell me about your non-traditional approach to ad sales and sponsorships.
Our whole philosophy behind ad sales is that we will not be successful in this market at traditional Web ad sales. We can’t compete. We don’t have the traffic. The behavior in this market is that it’s a value ad for print or TV and the things that other people are willing to do to get clicks and interactions up are nothing that fit with our mission at all. So, if that is the box we are in which right now we are saying it is, that’s not a place we can compete.

I think there will be times when people will want to be next to our content, but I don’t think it’s enough to sustain the organization alone. I’d love to be wrong.

So, we’ve been looking towards engagement opportunity advertising or promotion, and I’ve started calling it “spadvertising.” It’s sort of this mix between sponsorship and advertising where we become — both in our news delivery and in our messaging — experts in communicating with the community. We’re experts at knowing what they want to know, what they want to know more about, what their passion is about, and how to get it to them, and the ability to translate that for a sponsor and advertiser.

Say there’s a high-end pet shop opening. We might go to that pet shop and say: “We’ve got 300 people in our database who we know care about the environment, and have pets that they are passionate about. We don’t want to sell your banner ad — we’ll give you one. What we would like to do is have a reception at your space with our people the night before you open to the public, and offer you a chance to get some feedback from them and introduce your store and we’ll charge you X amount per a head to do that. We’ll put it on with you.”

What are some of the main issues and concerns of the businesses you’re approaching?
Everyone I talk to is disappointed with the results of Web and banner advertising. They are looking for more traditional results or digital versions of those traditional results. They want people in the store.

Another revenue stream we’ve been talking about is doing social and digital media consulting with smaller or medium-sized businesses. Helping stores really know how to communicate to people, deliver messages — which mediums are best, which mediums can be left aside — based on what you’re trying to do. Packaging that expertise to support digital media communications on behalf of (or giving strategy to) small businesses.

The things that make The Beacon possible may not necessarily be tied directly to content creation.

What are some of the things that small businesses are lacking when they approach online marketing?
I see people get overwhelmed and not really think about: “Okay, what is it I’m trying to do and what are my priorities?” It’s about understanding these seven options available to me, which buy can I leave on the table for now and which two are going to give me measurable outcomes I can learn something from?

The Beacon itself is a journalistic enterprise, but it seems like your revenue model isn’t really based around that journalism.
The things that make The Beacon possible may not necessarily be tied directly to content creation. So, the thing that we are here to do — to focus on news that matters, cover things that aren’t being covered, let other people cover things that they are covering so we have resources to cover more different stuff and a different angle — I don’t necessarily believe that those things directly translate into revenue opportunities.

So, that expertise, the approach, philosophy, passion, and mission, the honesty and straightforwardness that are cultivated through the delivery and reporting of that news; we have the opportunity to apply that same trust and relationship to other opportunities in the community, to other needs and other niches that aren’t being filled.

My business manager is so pragmatic, he said, “If we have an idea for a niche that’s not being sold to make lots and lots of money — I mean the amount of money that we need to make to sustain The Beacon, why aren’t we doing it for The Beacon? Why don’t we go do that?” I sort of joke and I sort of don’t, but The Beacon mission at its core is to make St. Louis better and stick around to keep doing it.

So, if we can all agree on number one — if all the people here believe that St. Louis can be a better region, and we buy the content we’re creating and we’re reporting, and the actions that we’re creating at our events and our partnerships are doing and helping that happen then anything we can do to help that keep going is worth doing to keep that going.

I think that there’s a level of trust and integrity that we built with the community that makes some of these business opportunities and gives us an advantage in some of those business opportunities that we wouldn’t have if we didn’t have The Beacon as part of that picture. I think there will be times when people will want to be next to our content, but I don’t think it’s enough to sustain the organization alone. I’d love to be wrong.

This interview has been edited for length and clarity.