Despite sharp decreases in total advertising revenue over the past 10 years, its importance for community newspapers at the local level today can’t be overlooked, or simply disregarded as a meaningless endeavor. While the national ad numbers may pale in comparison to what they once were in the pre-internet world, small businesses remain a valuable and critical piece of a local paper’s overall financial health. As enticing as it may be to point to various social factors such as changes in consumer habits or corporate consolidation as a reason to pursue other sources of revenue, the reality is that there are in fact local ad dollars out there to gain.
It’s just a matter of where to look for them. E&P spoke with newspaper professionals about how they started working with small businesses, what they found, and how others can find the same success.
Small Business, Large Opportunity
The state of small business in America, at least according to some of the national data, paints a slightly more optimistic picture than one would think. In a July report from the National Federation of Independent Business, U.S. small-business confidence rose 1.6 points to 105.2 and remains near its highest level in more than a decade. The index is compiled from a survey that is conducted each month by the NFIB of its members which includes questions pertaining to current job openings and expectations for the economy to improve.
Although national retailers, such as Macy’s and Sears, have been hit hard, with the closure of thousands of stores and loss of jobs; the National Retail Federation notes than more than 98 percent of retailers in America remain small businesses.
Corey Elliott, vice president of research at Borrell Associates, said that information from the U.S. Small Business Administration shows that SMBs are actually on the rise.
“That doesn’t mean big companies like Wal-Mart and Amazon aren’t eating into that growth, but a lot of small businesses such as the home service sector, healthcare, or legal services, are little bit more resilient and not as affected,” Elliott said. “So I believe the state of SMBs in America might not be as dire as a local newspaper may think. The reason why local newspapers may not believe there’s money out there is because they have never seen it.”
Last year, Borrell’s annual SMB local advertising survey revealed that the biggest challenge for a small business is understanding advertising ROI. In order to further explore this topic, Elliott said this year’s survey asked respondents to tell them what their marketing goals were and the best ways they believed they could achieve them.
Forty-three percent of SMBs said informing about a product or service was one of their marketing goals this year. They said social media was the best media platform at helping them achieve those goals. Their second choice belonged to newspapers.
“So there is an opportunity there for local papers to go out and say we are really good at informing our audience about a new product or service,” Elliott said. “If you got something new coming out and it fits with our audience, let’s advertise that.”
Of course, all that is irrelevant if the way in which a local paper approaches a business is incorrect. Over the years, Elliott has found a common mistake newspaper marketing departments make is to throw together a giant number consisting of combined print and digital reach for potential clients in the hope it impresses them.
“It’s just not applicable. A lot of SMBs understand targeting now because of their experience on Facebook or using Google Ad Words,” he said. “You need to spin it around and imagine you’re a small business. Do you want to reach 10,000 people who may or may not come into your door? Or do you want to reach 100 people that you know will?”
For many SMBs, new competitors like Facebook have not only made it exceedingly easy to utilize the platform and place relatively cheap ads on it, but also convinced owners of its perceived value.
According to Elliott, results from their annual survey supported this notion. When asked to choose only one of the two, a third of owners with both a Facebook page and a standalone website said they would prefer to keep their social media page intact. For local owners, the newfound ability to view data stats, likes, mentions and shares on their posts has provided a sense that what they are doing is working.
However, Elliott noted that not all business owners are enthralled by Facebook, and in some cases, are beginning to see a disconnect between their web activity and actual sales derived from it. This tipping point for some small businesses revolves around the gradual realization that likes on a Facebook post doesn’t necessarily equate to more cash in the register.
“They are starting to become a little weary,” he said. “Now I’m not saying that they are going to go screaming back to traditional media, but more local owners are realizing that it isn’t just about likes, shares or whatever they’ve been measuring. Many of them are back to square one and wondering what to do.”
‘Everyone Sells Digital’
As publisher of the Amarillo Globe-News in Texas, Les Simpson has noticed a common theme local advertisers in their market are asking for—help.
“The local business owners know they’ve got to do something but they don’t know what it is. In our area, a lot of them aren’t technologically savvy either,” Simpson said. “That’s where our role comes in. I think developing those relationships with them and serving more in an educational role, rather than a salesperson, is key.”
After years of thriving off larger national accounts from retailers such as Best Buy, Lowes and Sears, Simpson said the Globe-News has made local businesses the focal point of its advertising efforts.
“It’s a pretty simple equation. We’ve got to get more active local accounts as those large advertisers decline,” he said. “We’re going after businesses that historically we didn’t reach out to.”
This new approach involves now selling both print and digital solutions, rather than just products from a rate card. Simpson said the paper has found success in introducing digital services to local businesses through a gradual approach.
“We enter with an efficiently priced package of basic digital services like SEO that we can sell at a very competitive price to try to get them engaged,” he said. “By using that as an entry level tool to help grow their business, we can begin to slowly introduce more expensive, but more effective services such as behavioral targeting.”
Cindy Brown, vice president of sales at the Globe-News, said that as a local publication, their staff maintains a distinct advantage over other national competitors looking for ad dollars from the same small businesses.
“Our SMBs get at least 10 to 15 calls per week from national vendors on how they can solve their digital problems. What makes us stand out is we are local,” she said. “We have more control with our local advertisers. We can be in their store to help them with a solution at any time, especially in this market where they really like that personal touch, that customer service which is so difficult to find nowadays.”
Brown said simplicity resonates most with local merchants in their market. They want to know they are receiving the results they expected and understand how those results are being measured. Before closing a deal, both the rep and the business owner must be clear on those expectations.
“If not, the campaign may be successful in your eyes, but not theirs. So agreeing upon realistic expectations is key,” she said. “Continue to bring results and analytics to the SMBs to show them how their campaign is performing. That is where you can make changes or adjustments if needed, not after running the same thing for twelve months and realizing it.”
For a community paper, the concept of creating an in-house digital advertising agency may seem far-fetched given the limited resources they typically operate under. However, JoAnn Sciarrino, professor of digital advertising and marketing at the University of North Carolina, said the idea isn’t an improbable task.
Sciarrino worked with The Whiteville (N.C.) News Reporter, a Pulitzer Prize-winning twice-weekly paper with a print circulation of 10,000, for more than year to develop their own digital marketing agency. The digital services were sold by the paper’s existing four-person ad sales team with the help of a brand new digital strategist.
A number of lessons emerged from her work with the News Reporter, which continues to operate its digital agency as NR Digital Media, such as the importance of adopting a digital-first mindset, developing sales reps into a consultative role and creating an “everyone sells digital” culture.
Sciarrino emphasized that a smaller paper looking to do the same should avoid diving in head first into the digital world.
“My research has progressed into trying to figure out what types of media organizations can best take advantage of offering digital services and which ones eventually should but don’t have the resources at the moment to do so,” she said. “I’m also in the process of releasing new research that includes a matrix guide to give a local media company a better idea of the types of digital activities they should be doing and in what order.”
According to Sciarrino, various factors like the size of a paper’s market, access to resources and how media savvy their audience is all come into play when considering getting into digital services.
“Local media organizations need to go back to analyzing their audiences,” Sciarrino said. “Pretend like it’s the first time and really separate that audience into meaningful homogenous groups. Because you know what? A paper may end up designing a new content product out of that audience analysis they never thought of before that businesses would love to advertise in.”
Finding Profit in Print
While more small to medium sized publications dip their toes into offering more digital services, some newspaper groups such as the Sun Coast Media Group in Florida have found that print still resonates strongly with local advertisers in their markets. The company publishes daily community newspapers in southwestern and central Florida, as well as a number of weekly publications.
Sun Coast Media Group president David Dunn-Rankin said the organization expects 7 to 8 percent in growth of local territory business every year, with the print product as the focal point for advertisers. Over time, he said the media group believes it can grow local territory business fast enough to offset the decline in national accounts and classified section.
“You can always point to some store that just moved into town or a corporation that bought another store in our area, but that is nothing new—it has been going on forever. I don’t see that as a material impact on our business,” he said. “I’m actually very bullish on the local merchant business. We have something of huge value to them that many of them know and appreciate. There is a huge untapped market for it.”
By offering zoned editions of the Sun, Rankin noted that they are able to offer more affordable price points for their local advertisers which include businesses in the medical field and home services. The company divides each zone by the local high school district.
“The average local business can afford $100 to $150 a week in print advertising. Basically every single one of them can. But if you zone too big you have to charge too much, and you bill them for circulation that doesn’t ring their register,” Dunn-Rankin said. “So there’s a price point that every newspaper needs to select that works best for their customers budgets.”
Mike Ruiz, the company’s advertising director, said they encourage their salespeople to be active in the community and join civic organizations and non-profit groups.
“It brings a level of trust that we not only deliver the news but we also care about our community,” he said. “It’s been our mentality to do so for many years and we’re now harvesting all of those efforts.”
Of the company’s more than two dozen sales reps, only two are for national or major accounts, Ruiz said.
“You have no idea how many calls we’re getting from national clients saying they are planning to cut this or that,” he said. “The local businesses are where the growth will be moving forward.”
A similar philosophy around print rings true for Southern Newspapers Inc., which publishes 16 community papers in Texas and Alabama. Although the company recognizes digital as being a component to the advertising puzzle, it has in recent years devoted a greater amount of time and energy to the development of alternative print products such as lifestyle magazines and monthly newspapers that have attracted new readers and advertisers alike.
“What we find is that local advertisers want to be in relevant and compelling content,” said Leonard Woolsey, president and publisher of the Galveston County Daily News in Texas. “These new print products have allowed us to really change our entire revenue model around helping small local businesses grow and survive in today’s world.”
Despite losing much of their real estate advertisers a few years ago, Woolsey said the glossy magazines have brought back many local realtors into the picture.
“A lot of realtors use them to send out to potential clients inquiring about property. They put them in their rental homes or carry copies with them when they are driving people to look at houses,” he said. “It’s become an important part of their marketing message because we created an audience for them that didn’t exist before.”
While Coast Monthly is the prime magazine title in Galveston, the company has been able to replicate the model in other markets and seen success.
“We’ve had much more success creating and developing higher margins on that ad revenue using print products than I think most of our colleagues in the industry have made by pursuing digital dollars,” said Dolph Tillotson, president of Southern Newspapers Inc. “Some local advertisers were cutting their budgets and looking for other alternatives but the strategy we are employing now has helped us to keep a lot of those dollars we either never had or were beginning to lose.”
Another highly beneficial approach Tillotson finds with local customers relates back to the company’s strong belief in having local publishers in place at their papers.
“I think that our industry has made a colossal mistake by undermining the strength of local leadership of small town newspapers. So many of the larger newspaper groups have gone to group publishing systems,” he said. “Readers and businesses in those communities no longer know who the boss is. There isn’t a name or face identified as the leader of that property.”
In the last fiscal year, gross revenue for the company increased 2.5 percent, and most of that was driven by local ad sales, said Tillotson.
“We are existing in a world that is a lot more challenging than it was a few decades ago, but our company remains a great business with good margins,” he said. “We just need to keep understanding that we are unique and of value to the community. There is still a lot of money to be made in small town America.”