Why Sacramento Press Hit the Wall – And How It Hopes to Survive

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46113_10151343978839509_1938362891_aOn the surface, The Sacramento Press has looked for the past few years like a hyperlocal news site that was doing all the right things to achieve sustainability. But last month co-founder Ben Ilfeld announced that the nearly five-year-old website whose mission is “to tell stories and have conversations” was struggling to survive. Staff has been cut from 25 employees to just one — editor-in-chief Jared Goyette smaller and cheaper office space has been found, and editorial processes have shifted so that most content now comes from community contributors, according to the the Modesto (Calif.) Bee.

Longer-term options, Ilfeld says, are either the entrance of a new owner, going nonprofit, or becoming a co-op. To find out what happened and what may be next, I put these questions to Goyette.

Sac Press has a reputation for publishing stories, both from staff and community contributors, that engender rich and spirited conversations about what makes Sacramento, particularly the “Midtown Grid,” a special place. You’ve raised the question whether you have to widen your editorial lens to cover the region and the state? Does that mean that a focus on “hyperlocal” news may, ultimately, be a dead end?
Part of the problem with the term “hyperlocal” is that it’s not well defined. I think we can still keep the tone of reaching deep to find the unique character of this city, but also broaden our lens beyond just the central city or Midtown. The more specific a story gets, the more you can show the unique character of the subject, the more people can relate to it, and the more universal it becomes. What ties the stories together is not the specific neighborhood, but the approach, or the voice and perspective of the publication.

We can keep our identity as a central city site while looking at broader state and regional issues. We approach issues from a central city perspective, but we can use that or point of view to look at broader questions that affect central city residents and people across the region.

On the business side, the Sac Press’s strategy has been to work with merchants as partners. You don’t begin and end with a pitch to sell an ad. Did this strategy not yield enough revenue outside of advertising — through marketing services and the like — to make up for decline in traditional ad sales?
Helping to develop our products for the business side, what I saw is that when you working with small businesses: there is only so much they can spend, and they have a lot of other options on where they can put their budget, from Google and Facebook to other local sites and publications. This creates downward pressure on prices. At the same time, marketing services like social media have significant overhead in staff time and coordination. If clients aren’t spending much per contract, it can be difficult to package in much service without cutting into an already tight margin. And the market for social media services has changed rapidly since Sac Press launched four years ago — everyone is doing it, and while there are plenty of pseudo-“gurus,” there are also real specialists out there. Our competitive advantage dissipated overtime.

[Sac Press co-founder Ilfeld elaborated in the next two paragraphs]

Spinning off Agency M [which manages Sac Press’s social media accounts] and SLOAN [the regional, 60-plus-member Sacramento Local Online Ad Network] as separate companies was precipitated by two things. The first is about talent. We started out with some amazing talent who just had a knack for social media work. It’s hard work because you have to emulate the true voice of your clients maybe 20 or 30 of them. That’s as much art as skill. We had some very good people who did that, but we lost some and never found that superstar again.

The second is about margins. Both SLOAN and Agency M were really great for our partners and high value products. However, the margins were thin — at best we were making 30% on them in the last year and most of the time, just breaking even. Ultimately, it made more sense to cut them. They are growing faster than ever as independent operations. Plus, we do have a small revenue sharing deal with them that still generates a small amount of passive revenue for The Sacramento Press.

On the ad side, does it look like display messaging just doesn’t work on the hyperlocal level? Is the audience too small to be effective?
We’re now looking at developing an audience extension product by re-targeting ads to our readers on other sites so we can reach them on our site and also serve ads to them as they travel around the web. We’ve also found some success with sponsored posts and native advertising, which is more engaging when done well, and significantly more effective on mobile than banner/display.

I think it’s important to note that “ROI” is not the only factor driving decisions in advertising at the neighborhood level. I think businesses choose to advertise on local independent sites both for the exposure and to support a site or journalist they believe in.

What about your comparatively-smaller-but-more-engaged audience. Can’t it be even more effective than the bigger-but-less-engaged audience of sites with a bigger reach?
Yes, it’s true that having a smaller, more engaged audience is a resource, but you have to find a way to have that more engaged audience actually engage with your clients. If you have a very engaged audience that is largely ignoring your banner ads, it doesn’t help your bottom line that they are so engaged. The trick is to find ways to pull off the audience engagement with clients in ways that don’t annoy readers.

You had a community meeting to look at next steps for Sac Press – here, here and here. What came out of that session that looks promising?
The message we got from readers is that the want both professional journalism and edited community contributors, or what we call “citizen journalists.” The mix of professional and community contributed content is what has made The Sacramento Press unique. We’re a platform for stories that don’t get told elsewhere, an incubator for writers and a place where stories start to “bubble up” before they get picked up by larger outlets. Our comment section is the best in town, and people value it as a place where they can go for good discussion on local issues without having to worry about trolls and hyper political ideologues.

I think that the community contributor program is key to our mission and what people value about Sac Press, but it’s also inherently not a traffic driver or a revenue maker, nor should it be. A program to train, nurture and support volunteer writers is about community service and needs to be supported either by highly profitably sectors of the company (in the way things like classifieds used to support foreign bureaus at big newspapers) or via a membership or nonprofit model. While the company itself is up for sale, I’ve put together a small group of contributors and readers to look into other ways to support our community contributor program. The hope is that the work we do will be useful even if someone buys the company.

On the revenue side, is the basic issue the need to have multiple streams, so if ad sales fall off, there are other legs of the stool to depend on, like subscriptions, sponsorships, et cetera?
Yes, more than ever, sites need to have other streams of revenue beyond display advertising.

Finally, what has this crisis told you about the future of community news – not only in Sacramento but elsewhere?
My overall sense if that the corporate chain model like Patch is not sustainable, and the small independents with one-woman or -man crews do outstanding work, but don’t necessarily provide a model that can be replicated, as they tend to be run by extraordinarily dedicated people.

I believe we have to think bigger if we’re going to address the real societal problem, which is the decline in quality of local journalism. Simply put, we can’t depend on either grants or online advertising to support local news. Reader revenue and big sponsors or donors should be part of the picture. I hope we can find a hybrid approach at Sac Press that allows us to keep our client base – we have more than 40 clients and a significant revenue stream – while also finding nonprofit relationships to support our community work. There is no one answer. If I find it, I’ll be sure to let everyone know.

Tom Grubisich authors The New News column for Street Fight. He is editorial director of LocalAmerica, which is partnering with InstantAtlas to develop sites that will present how communities rate in livability. Local America is featured on the Reynolds Journalism Institute’s Pivot Point site.