Home' Local Media Today : February 2013 Contents 14 | LOCAL MEDIA TODAY | February 2013
2. Local Transactions
Our traditional business model is built mainly on advertising — an ever-smaller piece
of the local commerce pie. Meanwhile, billions of dollars change hands in consumer-
to-business transactions in local markets. Advertising is just a small derivative of this
How can media businesses get a piece of that bigger action? Five years ago,
in the Newspaper Next 2.0 report, I recommended that newspaper companies
should attempt to become the Amazon.coms of their communities. In our Morris
brainstorming session last month, we saw this as still a viable possibility.
National retailers are doing more and more of this, inviting consumers to buy
their items on the stores’ websites and pick them up in the local stores. But very few
local businesses are set up to do this.
However, we have business relationships with hundreds or thousands of these
local businesses, and credit-card accounts with tens or hundreds of thousands of
local consumers. And we have more digital know-how than most of these businesses.
We’ll be exploring the idea of providing a white-label platform on which local
businesses can offer their products and/or services, sell them directly online, and
either provide delivery or in-store pickup. The sales might be processed through the
credit-card accounts we already have with many of these customers.
Our role would be similar to the one Amazon has with thousands of online sellers.
We would provide the shopping cart, process the transaction and collect a small
percentage of the sale. And we might include (as an upsell or not) online marketing
support — whether through advertising, landing pages, a marketplace or some other
This differs from No. 1 because the goods and services would be sold under the
local businesses’ brands — not ours.
This operation, like No. 1, would be a business of its own kind, with very different
activities and functions from those of a newspaper. It would need its own team,
separate from the core business, to make it successful.
We’ll be going into research mode on this possibility in Q1. It’s a fairly close
cousin to the previous business model, so presumably it might be built on the same
3. Super-Serve Our Customer Base
This is a more extreme version of No. 1, derived from Nusbaum’s insight about the
untapped capacity of our core customer base. Our subscribers are older than average.
We worry about that, and rightly so. But they are also relatively wealthy people who
find themselves with new needs and wants as they advance in age.
Many are near or well into retirement, which creates both challenges and
opportunities for them. Our brainstorming group visualized that we might be able
to expand our brand or add a sister brand that would become a trusted source of
lifestyle solutions, such as healthcare, home care, home maintenance and repair,
leisure and travel, legal and financial services and so on.
Outside the media industry, many smart people are creating or expanding
businesses to target the burgeoning needs of the huge Baby Boom segment. Why
shouldn’t we consider it, too, since our businesses are already well known and
generally trusted in this segment of our communities?
Closest to our traditional role as news providers would be a new practice of
vetting and endorsing products and services. But it’s hard to see any revenue stream
there. Instead, we might vet and co-brand selected products and services from local
providers, as a separate function from our traditional news operations. Or we might
go a step further by offering products and services under our own brands, fulfilled
by contracted providers we have vetted and approved. Sears, The Home Depot and
others do this with repair and installation services.
This entire business would need to be kept a safe distance from our core business,
leaving the editorial objectivity of our news departments untouched.
4. Back-End Business Services
Small businesses often lack solutions for the back-end necessities of running a
business. We could broker those services.
This is another potential business suggested in the Newspaper Next 2.0 report.
The report pointed out that many small business operators went into business to do
something they love, only to discover that the nitty-gritty requirements of running a
business are a constant distraction.
Our new all-digital sales division, Main Street Digital, will be reaching many new
SMBs that our core sales teams don’t currently serve. And they will be providing a
range of business services going beyond advertising into promotion, reputation
management and other services.
It’s not too great a stretch to imagine that we might also offer other non-advertising
services through these relationships. These might include accounting, payroll, legal,
financial, human resources, IT services and support. We wouldn’t necessarily need to
provide the services; this could be done through contract relationships with qualified
experts in these fields.
5. Acquire Other Types of Businesses
The previous models are not proven. Here’s a less risky alternative: Diversify our
revenue streams by acquiring other types of successful businesses in our markets.
There’s no guarantee that the drastic changes occurring in the media business
will provide any sure way to replace fully the advertising and subscription revenues
we once took for granted. So now, while our cash flows still remain strong, we
could diversify by buying stable, profitable, non-media businesses with solid future
earnings potential. (By the way, this is a distinctly different strategy from acquiring
sexy startups that may or may never make money.)
The idea would be to target business segments that are largely sheltered from the
digital disruptions we’re experiencing in our core business, that have shown more
stability in recessions than advertising, and that have organic growth potential.
Synergies with our core business would be a plus but might not be a requirement.
Our local-market knowledge and connections could help us to identify good
prospective acquisitions and negotiate attractive prices with owners who want to
sell to people they can trust.
This strategy has been used successfully at many levels of our industry. The
Washington Post Co. enjoyed years of strong earnings from Kaplan, Inc., its
educational services division. Woodward Communications, owner of the Telegraph
Herald in Dubuque, IA, and several radio stations, acquired two ad agencies that
have contributed good earnings. And the Monroe Publishing Co., where I serve as
chairman of the board, has just closed on the purchase of a well-established local
B2B printing and office services company.
At Morris, we may or may not ultimately decide to pursue all five of these possible
business directions. But given the likely future of our industry, they’re definitely
worth exploring. And we’ll be doing that.
I’d be very interested to know — what alternative businesses is your media
company exploring? Please email me — email@example.com — if you have
ideas to share.
Five game-changers for the
local media business model
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