‘Legacies’ Open Door to ‘Pure Plays’ With Local Media Consortium

“Legacy” publishers — newspapers and broadcast stations — took a huge hit in audience and revenue as local news migrated to the digital space, where “pure-play” competitors abound and advertisers have more choices about how and where to place their messages.

To try and reclaim the billions of dollars of revenue they were losing, many newspaper publishers partnered with Yahoo in 2006 to create a digital information network they hoped would help them recapture both users and advertisers. But the Yahoo Newspaper Consortium needed a webbier structure — plus smaller members weren’t that happy with the revenue the network was generating for them — so in 2013 the partners widened their network to include the other half of legacy publishing (local broadcasters) and even extended a welcome to independent digital pure plays. The new Local Media Consortium brought in Google to use its DoubleClick Ad Exchange technology to capitalize on the rapid expansion of programmatic advertising, which matches the advertiser with a tailored mix of scaled consumers, and also puts a firmer floor under CPMs that is missing from the race-to-the-bottom pricing of traditional real-time bidding.

LMC has grown to 50 publishers, whose products include 800 newspapers and 200 broadcast stations across the U.S., although some of the biggest legacy media brands — Gannett, Advance and Tribune — haven’t joined up. Here, Rusty Coats, executive director, talks about where LMC is after its first year and where it’s headed.

What does the Local Media Consortium do that the individual publishing companies can’t do themselves?
It enables local news publishers and broadcasters to leverage its scale to increase revenue, build more efficiency into relationships with service providers, share best practices and create opportunities to invest together. Through the LMC, local publications offering high-quality content have been able to come together in new ways to help national brands reach a very desirable audience in a cost-effective manner, and to help companies that want to do business with local media an easier way to reach multiple companies at once. Scale matters.

You know community news from a double perspective. You’ve trained the publishers-editors of the pure plays in local digital news and now you’re executive director of their competitors — the legacies. If the LMC succeeds, how will that effect independent sites that operate in most of the same market spaces?
I believe there’s room for both in the news ecosystem. That’s why the Executive Committee changed the charter of the Consortium. Originally, as the Newspaper Consortium, it cut out broadcasters, local magazines and digital startups serving their communities. It was exclusive to newspapers. The Local Media Consortium’s aim is to reflect “local media” in all its evolving iterations, not to create hard fences around who’s in and who’s out. Our shorthand for membership is: “If you pay local journalists to create local content and pay local sales reps to provide solutions to local businesses, you can be a member.” In that scenario, independent publishers may be members of the LMC. In fact, that’s already happened. One of our members is the Alaska Dispatch [the formerly online-only site owned by Alice Rogoff, the wife of billionaire philanthropist and Carlyle Equity Group founder David M. Rubenstein], which last spring bought the Anchorage Daily News from McClatchy, which is also a member.

The LMC’s reach now extends to 450 million+ unique visitors and 4 billion monthly pageviews. Are most inventory sells toward that high end, or do they tend to be aimed at smaller audience numbers that don’t necessarily reach across the country?
It’s a wide range, of course, depending on the needs of the buyer — and the type of buyer. Some buyers want specific geographic areas, some want regions, some want national coverage. LMC members have strong local sales teams that focus on providing solutions in-market — also often targeted by interest, demographics and geography — so that ads appear to the right user at the right time. On the national and super-regional fronts, it’s important to offer options. Buyers are very sophisticated and demand choices. As with all advertising, the more targeted it is, the more expensive it is.

Legacy publishers – print and broadcasting – have made deep cuts in their local news coverage over the past decade. As that trend continues, how can LMC sell advertisers on what it promotes as its “quality content”?
The quality of content remains very high among our members, and we’re proud of what they offer to their communities. Large brands already are rewarding that quality in our exchange by increasing the CPMs of their buys, simply because our content delivers results in brand-safe environments. Let’s face it: If you’re a major brand — say, Honda or Disney or Procter & Gamble — and you’re buying geo-targeted advertising at scale across huge swaths of the country, where else are you going to find digital users of whom the majority are college educated homeowners with a median income north of $70,000? Or have a large enough base to offer demographic or interest targets?

Has the retooled LMC had any success in capitalizing on the growth in programmatic advertising from national merchants and other businesses?
Absolutely. We have seen huge successes with national brands on the programmatic side, and we’re just getting started. As viewability becomes more important, we see a lot of upside for our members as we work with them on placement, IAB-supported sizes and shared best practices regarding how local media companies embrace the programmatic world. Some members are very sophisticated in this arena and some are new to it. We see the opportunity – with some effort, of course – to increasing revenues across our membership by millions of dollars a month, just by executing programmatically more effectively.

The cost per thousand of national advertising has traditionally been low. Is programmatic changing that? For example, are LMC members getting CPMs in the $5+ range?
I won’t talk about what kinds of CPMs our members are getting specifically. With 55 member companies, it’s going to range, but it ranges higher than you’re implying. The goal of bringing more expertise, efficiency and alignment to programmatic/national buys is to destroy the word remnant from our vocabulary and to move low, non-locally sold ad CPMs north. Our mantra is to attack the middle. If we move bottom-level CPMs higher toward the middle, we do two things: We increase our base CPM, raising sea level, while removing the lower-middle CPM opportunities from local sales teams. In effect, local sale teams will have a higher standard to meet. That creates greater opportunity to move even farther north in CPMs for local, because the lower — perhaps easier — ad sale is no longer available. And as we move toward a more focused approach on the LMC Exchange, we will naturally start closing back doors to resellers that have built middleman businesses by taking $5 from a buyer and providing $1 to a publisher or broadcaster.

What exactly does Yahoo bring to the table in this relaunched partnership?
We are in the process of rolling Yahoo-related native ad abilities to our members. We see this as a large opportunity. Yahoo’s embrace of personalization and the infinite stream of content shifts the conversation on display-adjacency advertising — and is a best practice many digital publishers should explore. Mobile has fundamentally changed how we consume content. We have moved from a section-based frame – based on newspaper sectioning and broadcast blocks and dayparts – to a river of news that is personalized to your interest and scrolls as long as you’re still engaged. The “bottom-of-page” terminology will disappear in this framework, and in-stream becomes the central focus. I believe that the shift to native advertising – and native commerce, which is next on the horizon – will be as transformative to local media sales teams as the shift from digital sponsorships to CPM-based sales.

You’ve got a year’s experience under your belt with LMC. Based on what’s happened in that time, are you adding any features or doing other tweaking to better meet your objectives?
We’re in the midst of working with a variety of companies to provide new services and products to our members. That includes partnerships like the one we just announced with Tout, an online video content platform. We’re looking forward to working with companies on analytics, new products in traditional classifieds categories, big data and in several other areas. Our goal is to continually poll our members for their digital opportunities and pain points, prioritize them across the membership, and then create a road map to addressing them. Local media companies are unique and serve their markets based on the needs of their markets, not based on a one-size-fits-all mandate. That’s why our metaphor for the LMC is “Battlestar Galactica,” not the Borg.

Tom Grubisich (@TomGrubisich) writes “The New News” column for Street Fight. He is editorial director of the in-development hyperlocal news network Local America that rates communities on their performance across a broad spectrum of livability — Local America Charleston launched earlier this year.