VIDEO: Local News as a Loss Leader?

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TT3_1078As local businesses shift their marketing spend away from advertising, local media companies are scrambling to subsidize their news operations. During a panel at Street Fight Summit West earlier this month, Eric Bright, VP of e-commerce at Deseret Digital Media; Mike Orren, president at Speakeasy; and Sean McDonnell, SVP of sales at Propel Marketing discussed an emerging agency model for local publishers, and debated whether digital marketing services like SEO and website building could help make up for lost revenue.

For Deseret Digital, the company’s digital marketing products already account for half of its revenue. And Bright, who joined the firm in August 2011 as a newcomer to the media world, does not see that changing soon: “We’re already getting to that point where our vision is that we’ll subsidize news going forward — because it’s an important part of our organization, but it’s really difficult to monetize that,” said Bright.

A big component in the reselling strategy for the legacy players is in leveraging the strong brand, which these media companies have built both among consumers and advertisers within their communities, to cut through the noise in the local marketing space. Orren says that the Dallas Morning News’ brand awareness has been critical in getting Speakeasy, the publisher’s marketing venture, off the ground.

“Being a known entity and tied to the [Dallas] Morning News just makes that an easier conversation than if we were one of a dozen start ups out there saying ‘Hey, hire us instead of hiring a person,’” Orren said.

Each panel member emphasized, however, that the transition faced obstacles. Both Orren and McDonnell said their new businesses won’t fully make up for lost advertising, and are seen more as small bets instead of a replacement for self-supporting news.

McDonnell said another difficulty was the increased pressure on expense management against reinvestment due to falling revenues. As a result, many organizations are less willing to invest in unfamiliar areas, since their losses are short-term and they want familiar, short-term solutions.

Orren said this is true with their clients as well, who want ROIs that are faster with tangible benefits to their businesses.

“I think we’re getting past the point of people getting excited about likes and engagement and they want the phone to ring or, more importantly, they want people in the door,” Orren said.

Street Fight Summit 2013 is coming soon to NYC. Find out what’s happening and how you can get a seat at Street Fight’s flagship event here.

Max Antonucci is an editorial intern at Street Fight.