What Happened to Local Publishers?

There’s a saying. There’s even a book. “All News is Local.”

This past October I was invited to participate in The Future of Advertising and Publishing conference held at the Harvard Innovation Lab. The event was co-sponsored by the Tow Center for Digital Journalism at Columbia University, the Digital Initiative at Harvard Business School, and the Shorenstein Center on Media, Politics and Public Policy at the Harvard Kennedy School. It was an amazing program with wonderful presenters and discussion about the future intersection of news and advertising. It’s a topic I’ve spent a lot of time thinking about but the day was still filled with surprises.

One of the most surprising things I heard was that so few local reporters are sent to Washington, DC, that almost half of US senators will never be asked a question by a home-town reporter while in the Senate. That’s incredible!

The feeling across the room from whenever the topic was brought up was that local news publishing seemed doomed. Many of the panelists thought subscription models were the only hope at all.

It made no sense to me.

From my experience in digital media monetization, local news and local information (or if you’re an advertiser what you call geo-targeted media) has always performed better from a revenue and value standpoint than most other types of media or methods of targeting. Local media performs at a premium. That premium has also been increasing through the years. So why are local publishers hurting so bad? What went wrong?

Not the Problems

There have been numerous issues that have plagued local but a good place to start is by first understanding what are NOT the problems.

Atypical for much of digital media’s challenges, the problems are not content or scarcity.

Let’s look at NJ.com as an example of local news. It has incredible reporting and journalism. It is fantastic. First rate.

NJ.com owned by Advance, is especially renown for their sports and political coverage. What type of news is more local than Politics and Sports? Nothing. If NJ.com covered your daughter’s rec basketball game you would go search up the story and see if she was mentioned. That’s how local it is. Right to your home and family. A targeting dream.

We seek out local news.

Content is not why local news is in trouble. Content is not the issue.

This is not about scarcity either. There are not many sources of state, county and town level news and information about New Jersey available. NJ.com is the only comprehensive place (at the county level) to provide high school sports coverage statewide. This is a huge traffic driver and an evergreen subject. The same as mentioned earlier is true for politics.

The issue of abundance and content explosion that has dragged down so much of media with digital is not a problem with local.

Scarcity is not why local news is in trouble. Scarcity is not the issue.

So what are problems? The problems are purely digital ones. They are shared with other types of media but are especially acute for local news and publishing because of their legacy and the maturation of their digital support systems.

Technology. Distribution. Monetization.

Technology

Publishers were never technologists. Once the printing press was invented they were basically set for 500 years until the telegraph. When the web hit the people running local papers knew very little about digital. Despite what was going on in e-commerce at the time they were they able to anticipate how the web would be used to carve out verticals. Web vision was an early problem.

What they did see was the digital piece-by-piece dismantling of their revenue. Digital took their jobs section away (Monster/Hot Jobs). Then took their classifieds (eBay). Slowly other local categories (Auto, Movies) became stand-alone web businesses. Natively digital businesses. Big businesses.

The jobs situation was so bad that after HotJobs obliterated one of the mainstays of local news advertising virtually overnight, the “Newspaper Consortium” signed a deal to use HotJobs (by then owned by Yahoo for $436M in 2002 and in classic Yahoo style run into the ground) and pay them for job listings! Not once but TWICE!

I consulted in the trenches with some of the web’s leading publishers back in those days. WPNI (Washington Post Newsweek Interactive), was a crazy mixed venture that didn’t work out but had smart people with a real desire to understand their audience. They just couldn’t execute on changes to improve. CNET, was the most tech savvy publisher of their time. They smartly bought domains names like TV.com and News.com. They were early in e-commerce buying mySimon for $736M at the height of the dotcom bubble. They understood monetization and user experience and targeting news stories to different segments of their visitors. They were unique. They did more than anyone. But even for them execution of changes was really hard. Technology was a big part of the local publisher problem. The CMS was a big part of the technology problem. It wasn’t flexible.

Allow me to get technical for a minute.

Digital publishing works off a CMS (Content Management System). The development of CMS systems for web publishing were not something that had any real standards or protocols associated with them, probably until RSS came along and ultimately spurred a competitor to them all, Twitter.

The closest thing to protocols was probably the LAMP stack. The P being PHP (Hypertext Preprocessor) that became very popular for web development. Facebook was even built using it.

PHP was a server-side script. However the dynamic web that started about twelve years ago and much of tools developed for web monetization, UX and analytics were developed using JavaScript. JS is not server-side like the CMS, it is client side (the browser). This caused issues for publishers, advertisers and most of all consumers that no one could anticipate.

The short of it is that as display advertising was growing fast and the web was becoming more targeted and dynamic, the technologies that served this (literally) were layered on top of the CMS.

There was never technology created for content and monetization to work together fluidly in an integrated code base. Even if there was, dealing with the CMS changes was such a bear for publishers that they probably never would have considered using it. The best that could be done for CMS systems was eventually helping with SEO (Search Engine Optimization) and the dynamic resizing of images. BFD. Not much has changed in this regard.For some publishers moving to Header Bidding of late required a full year of code-rewrites. Technology has been a giant problem for local publishers.

Distribution

Local news was never news that was syndicated. They were customers of syndicators. Digital however brought with it the greatest distribution and free syndication platforms of content ever know to man. First “Search” and then “Social.” Surely local news would get this right.

They didn’t.

Part of the problem was the search indexes themselves. Google (and Inktomi for that matter in the early aughts) had spent the better part of their first 7 years not doing much with local search. It was a hard problem. Google didn’t release Local Business Center until March of 2005 and didn’t truly integrate local results until “Universal Search” was launched. That was in 2007. It was not until the “Venice” update in 2012 that rankings were associated with the geo location of the user. That’s recent history.

Local progress continued to be touch-and-go for Google (and hence Publishers, though Google was/is MUCH more concerned about pleasing advertisers) until September of 2016 when Google seemed to finally prime the results for our mobile future with the “Possum” update. That update added a large amount of geo-aware intelligence to the algorithm.

As far as Social, local news is built for social. Most people’s Facebook friends graph would be enable you to pretty quickly understand where that person lived. Local news should be the most social forms of news. Its success should have been spurred the past decade due to Social. But it didn’t do anything. Why not?

While Twitter and News are like white on rice, Facebook and News have had a love hate relationship since News Feed was launched in 2006 to large protest by Facebook users. Facebook themselves had a very hard time figuring out local (who remembers “Nearby”). As Facebook rose in popularity a number of new local services like Yelp and Foursquare also gained users. Local news however never seemed to be something Facebook cared about despite the fact that their users, and the population in general care a great deal about local news and follow it. And then of course the 2016 election hit Facebook.

What makes so much of this hard to fathom is the advertiser base for Google and Facebook are predominately small business. Who advertises in local publishing? Small business. How has this not been figured out yet? It smells like a massive growth area. That leads us to our last problem.

Monetization:

Let’s go back to our local news example site NJ.com. A few weeks ago I tweeted about my user experience on NJ.com.

Screen Shot 2018-01-23 at 4.35.03 PM.png

The user experience on NJ.com is one of the worst you will encounter on the web. The home page took almost 12 seconds to load. That’s on desktop over FIOS. In 2018.

The UX is poor because of monetization. It’s that simple. Yeah the old adage, you and I are not the customers of local news, we are the product. But this is a dangerous game to play.

Here’s what’s going on and it’s a great primer for most of local news and to a greater extent digital publishing in general.

Screen Shot 2018-01-23 at 12.26.56 PM.png

 

If you want to see the other 22 ad trackers here they are:

 

Screen Shot 2018-01-23 at 12.27.35 PM.png

Screen Shot 2018-01-23 at 12.27.49 PM.png

Screen Shot 2018-01-23 at 12.28.04 PM.png

If that wasn’t enough, content recommendations also walk the fine line between monetization and user experience. Most local news publishers have crossed it.

Local sites were some of the first to adopt Outbrain and Taboola and they are some of the sites that abuse it the most. Here’s a page I visited today about the Giants. Yeah, content recommendation are moving up in the world where site navigation used to be. I’ll give them that the internal links are all contextually relevant but the other three are embarrassing. Tough times indeed.

Even the house ad makes me shed a tear.

Screen Shot 2018-01-23 at 12.33.23 PM.png

One of the monetization problems for local news pubs is that display advertising has always tried to be geared towards big brands.Local news is not a place big brands historically want to be. Display can’t escape the idea of high the CPM brands pay since digital publishing outside of Google and Facebook is built on CPM. The CPM price model has held back publisher monetization. I talked about this on a podcast recently.

CNET was one pub who had it right very early with transactional revenue models. Ziff-Davis still kills with them.  But with the disappearance of Ad Sense from pubs local publishers can’t connect with the 4M SMB advertisers on Google anymore. Google of course wants those advertisers to stay on Search where the content is O&O and not in display where it’s not. So this has been a tough nut to crack. I recently started a nice Twitter thread with two people who understand this dichotomy well and have been involved in ad tech for a very long time.

It’s interesting the thread ends about a huge local publisher. I didn’t intend for that to happen on first tweet.

Screen Shot 2018-01-23 at 1.13.15 PM.png

Getting the local ad demand seems to be a struggle for local publishers and local buyers. But it’s also a massive opportunity. In fact, there are more digital companies focusing on location and offline sales (the foundation of local retail) than ever before. I think this problem can get figured out over the next few years. Will it come in time? I hope.

Where Do We Go?

 Through all of digital’s struggles local TV news has fared well and it’s a good primer on the opportunity ahead.  Though viewership is down along with the rest of linear TV, in 2016 with the election, ad revenue was nearly $21 billion, up double digits from 2015. The amount of TV news is at a record high.

As far as valuations and M&A, changes in regulation last year and the coming rollout of ATSC 3.0 have kept the local TV market humming. 204 local TV stations were purchased over the past two years with Meredith and Sinclair among the top buyers. There was also Nexstar ‘s $4.6B acquisition of Media General and their 171 local stations. This is not dumb money. There seems to be a there, there for local media.

So we might conclude digital local news fell victim to digital circumstances, mostly out of their control. TV had no equivalent. This is important.

Change in circumstances can come to digital. I really believe it doesn’t have to be the lowest common denominator for local and it doesn’t have to be subscription. One thing is certain. Digital technology, distribution and monetization changes rapidly. New players emerge. New standards and protocols are created. There is always opportunity in digital media. With the pace of change and massive disruption being driven by consumer media consumption habits and preferences, there is as much opportunity as ever.

The biggest thing local news has going for it is what I mentioned earlier. It’s something that will never change. People seek it out local news. People want it. People consume it. I still read that NJ.com article on the Yankees even though the page took 12 seconds to load, I had to reload it once since it froze and with every new ad call I lost my scroll position. I still read it.

Local news is a very, very valuable product. That type of value doesn’t disappear. It’s permanent. In digital it’s the closest thing to Search itself because seeking local news is a behavior.  It may not survive it’s current incarnation but it will find new forms of technology, distribution and monetization and be reborn to prosper at some point in the future.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s