Publishers have a fundamental advantage when it comes to “local” and, by and large, they’re letting it slip through their fingers by adopting new tactics in a haphazard way. There seem to be new “it” business models for local media introduced daily — yet most are not systematic, not pragmatic or simply fail to appreciate the fundamental capabilities of local publishers, their value proposition and the economics at play at the local level.
Local publishers’ core sustainable advantage is their potential to leverage economies of scope. Of course, the “how” may vary based on their market, their internal competencies, and historical performance.
Presuming a publisher’s legacy/core business is built around a relevant product, they possess three incredibly valuable assets – local brand affinity due to relevance, readers (though we prefer the term “audience”), and paying advertisers. Each of these are incredibly valuable and very difficult for others to build from scratch.
Local brand affinity is built through blood, sweat, and tears over years of diligently and relevantly serving the community. The brand feels like it’s “one of us” because it’s created by “one of us.” You can’t fake it or buy it: it’s authentic. This isn’t to say a new publication can’t grab hold and become well adopted quickly — but starting from nothing takes work and longevity speaks volumes.
The value of readers sounds obvious, but beyond having an audience for which local business want to reach, there are other subtle-yet-profound additional benefits. There are a significant number of readers who are also local business owners, and these people are effectively new prospects who have implicitly opted-in to the publishers message (in print) despite not yet being a paid advertiser. Put another way, if a local publication has dozens of advertisers they likely have hundreds or thousands of readers who own or run local businesses. Therefore, it stands to reason that these business owners have local brand affinity for the publication and simply need the right “solution” to convert them into a paying customer.
A legacy base of advertisers is valuable because a publication can (and should be able to) ask “would you like fries with that?” At Locable, we refer to this as the “dessert” sales approach, where we teach publishers and their sales team to identify the problem their advertiser or prospect is trying to solve, and then solve it for them – this could be advertising, or marketing services, or even web design. The key is solving real problems and, if possible, providing value that no one else can because of said audience and brand affinity resulting from a trusted relationship built over many issues.
This is the essence of economies of scope for local publishers. Readers can be converted into advertisers (or paying customers of some sort) — and advertisers can and will buy more, provided publishers offer additional value.
One brand that really illustrates how this dynamic works is Starbucks. They’re clearly a coffee company… that sells food, and tea, and mugs, and coffeemakers (wait, doesn’t that cannibalize in-store sales?), music (music?) and free wifi. Ultimately, what Starbucks sells is experience. They’ve long sought to be the “third place” in their customer’s lives, between home and work. The products they sell help them deliver this experience and drive their profitability in the process.
As a local publisher, you shouldn’t think about “what thing” you should do to make money — but rather “what experience am I delivering and how can I extend that experience thoughtfully?” When you do it right, it’s easy. Sure there is some work to it — just as Starbucks has to identify appropriate music, source it, and sell. But the customer is in the store and the music is by the register and customers thank them for it – it doesn’t get much easier than that. That’s what leveraging economies of scope can do for any local publication.
Learn from Starbucks and realize that reselling isn’t necessarily a bad thing, the music and mugs and coffeemakers are all made by someone else but Starbucks sells them. Sure, some are Starbucks branded but the point is if you can make money from what someone else is doing and you make your customers happy in the process that is a win.
Should you embrace native advertising or media services? Should you sell and run social promotions or sell sponsorships on your growing email list? The answer to all is yes. Many publishers have long subsidized their business with custom publishing or marketing services such as developing branding or marketing collateral because, well, they could. If something adds value for readers, adds value for advertisers and strengthens your other efforts then you should be doing it today.
Here are a few things you, as a publisher, can do next (inspired in part by Blue Ocean Strategy):
Start by reviewing any requests you or your sales reps have received from advertisers for assistance or guidance, use the 5-Whys approach to determine their true objective e.g. they want more web traffic but what they really want is more people to visit their website and then come into their store
Examine the experience you’re currently delivering and identify complementary offerings (for readers and advertisers and sponsors)
Look at your internal capabilities and strengths from personnel to equipment (are you also an industrial printer) to existing activities such as local events you currently run
Review your current offerings to determine if there is anything that should be reduced or eliminated altogether due to poor strategic fit but don’t mistake lower margins for poor strategic fit
With these steps completed you can map opportunities in your market to you company’s capabilities while overlying costs and revenue expectations
Brian Ostrovsky is the CEO of Locable, a local publisher network creating “Main Street for the 21st Century” by enhancing local publishers’ ability to become more profitable by creating additional value for readers and local businesses through technology, training, and scale. Brian writes regularly at Locable’s Blog discussing trends and opportunities in “local.”