Borrell: Too Many Local Newspapers Remain Stuck in Their Newsroom ‘Church’

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Content is king. But newspapers especially should heed the lament of Shakespeare’s King Henry IV: “Uneasy lies the head that wears a crown.”

Those words echo through Borrell’s recently published update to its “Benchmarking Local Media Digital Revenue.” The most telling revenue numbers in the report are how Facebook, whose news content is much less trusted by Internet users, according to a BuzzFeed-commissioned survey, far outperforms newspapers as well as broadcasters, cablers and other local media operations.

Facebook collected $13.6 billion in local digital ad spending in the U.S. in 2016, according to the report — more than all local media’s digital revenues put together — $12 billion.

The report says Facebook, Google and other global pureplays will continue to dominate digital ad revenue that comes from merchants and other businesses at the community level. But it says local media organizations – particularly newspapers and other news publishers — not only can survive but prosper, if they’re enterprising.

It singled out the Washington Post, whose digital ad revenue in 2016 soared 45% to $130 million.

“They’ve developed a sophisticated set of marketing opportunities for local and national businesses that go beyond an ad in the paper or a banner ad on a website,” CEO Gordon Borrell told Street Fight. “They’ve evolved from a newspaper company into a true ‘media’ company that takes very seriously its role in helping advertisers sell things.”

“They’ve got a ‘brand studio’ where they’ll develop what is essentially native advertising content. All content is developed and paid for by the advertiser.”

“They have a full slate of services that has them placing ads on other sites across the region (and nation) in an ‘audience-extension’ network.  Think of it as a newspaper offering a ‘Total Market Coverage’ program whereby an advertiser can place an ad in the paper and then reach the other 60% of homes that don’t get the newspaper by mailing ads to households.”

Borrell also cited A. H. Belo Corp.’s Dallas Morning News, which, as its once-revenue-rich print product has shrunk, has, through its DMNmedia, created a succession of companies largely devoted to digital marketing, like Speakeasy, CrowdSource and Vertical Nerve Media.

This column has looked at how Speakeasy was the driver for more than $40 million in DMN revenue that didn’t originate within the walls of newspaper operations. For Belo overall, marketing-related services now account for more than 36% of company revenue, even though the corporate pillars are two North Texas newspapers – the Dallas Morning News and the Denton Record-Chronicle.

But, as the Borrell “Benchmarking” report’s numbers show, most newspaper companies, despite various self-proclaimed initiatives, haven’t been able to move boldly enough beyond their print past. Local newspapers account for only 8% of total local digital ad revenue, according to the report. In 2016, the 1,029 daily newspapers tracked by the report grew their digital ad revenue by a paltry 5%.

Chart courtesy Borrell Associates’ “Benchmarking Local Media Digital Revenue”

Borrell, who started his media career as a reporter and editor at the Virginian-Pilot in Norfolk, appreciates good journalism, but he emphasizes, “I want to be absolutely clear that great content doesn’t lead to riches. It takes much more.”

“Advertisers don’t want to be around news readers,” he said. “They want to be around very specific types of individuals. If general news content can extract from its audience very specific data – for example, the reader is a male between the ages of 18 and 30 and who plays video games, and can be served up a video game ad, yes, that will work.”

So what should newspaper publishers do? I asked Borrell. “Collaborate with advertisers. There has to be a great deal more collaboration. Journalists have to come out of the newsroom ‘church’ and meet the people and understand what’s going on in the entire media ecosystem.”

Maybe newspapers will learn to overcome adversity just as King Henry IV did. He outwitted his rivals and reconciled with his son, Prince Hal. He remained king until he died and his crown passed peacefully to his son.

It’s too soon to know what will happen to newspapers in the current competition for billions of dollars in local digital ad revenue. As the new numbers in the Borrell “Benchmarking” report show, the local drama is still unfolding.

Tom GrubisichTom Grubisich (@TomGrubisich) writes “The New News” column for Street Fight. He is editorial director of hyperlocal news network Local America, and is also working on a book about the history, present, and future of Charleston, S.C.