Local newspapers continue to fly blind, relying on the instinctive judgement of the newsroom to develop their digital products. But with an innate suspicion of the business of marketing, the newsroom has always kept itself isolated from the market it serves. These days, more and more newspapers are at last hiring product and revenue development specialists. They must give them the tools they need to understand more deeply the local market they serve and identify the niche media opportunities within it. The luxury of taking a shotgun approach to product development ended when the Internet blew up the print monopoly. A zip code is no longer a market.    

The owner of a restaurant in the little town of Maine where I live has obviously decided that his customers must be so ugly, they don’t want to look at each other while they’re eating. The lighting is dim enough for you to just make out that your dining companion is a person rather than a lobster – at least you can’t see any of their skin problems or dandruff. The only reason you don’t crash into tables while you’re hunting for the men’s room is that everyone is using the flashlight setting on their phones to read the menu.

Me, I like to see what I’m doing and where I am going. So, if I was still fulltime in the news media business, I’d be half-potted by now. You can count the people who seem to know where they’re going on one hand. For the others, it seems to be a shell game. Or a time-warp.

I’ll keep on saying it: Any media business depends for its survival on the utility and appeal of the product it takes to market. Self-evident, you would think. Yet daily newspapers continue to lose overall audience – print and digital – in their local markets at the rate of 5% – 10% a year and the product hasn’t changed at all. It’s the same old bundle, just watered-down now, and ineffectual.

The collapse is not the fault of the internet, circulation was falling long before the Netscape IPO in ‘95. Nor is it Google’s fault. Nor Facebook’s. Greedy owners, be they private equity or just plain private, are not to blame either, though their unwillingness to invest in product development and cultural overhaul makes them an easy mark. No, it’s the product itself that’s not doing the trick. And the last time I checked, the product is owned by the very people squawking loudest about news deserts – those places no longed served by a newspaper: Editors and their newsrooms. When the monopoly was blown open and they were finally exposed, it turned out that nobody really liked their stuff but them.

If you flout your innumeracy, have never learned how to fight, really fight for audiences and confuse the notion of product quality on the Internet with a tedious replica of what is not working in print, how can you expect to make a successful transition to digital?

You think this is unfair? Well, consider this example of a daily newspaper product component that got stuck in time; the classifieds did not change in format for 75 years. Classifieds product developmentHow about this, then? For decades, newspaper front pages all looked the same – you could switch out the mastheads market to market and nobody could tell the difference. The same AP wire copy flowed in, went through the same sausage factory, and came out the other end looking, no surprise, the same. Product innovation? Color printing, new front-end software, that was innovation.

When, suddenly, everything was just one click away, readers morphed easily into users – and fled. It was a wake-up call. Slowly, way too slowly, daily newspapers came to understand that their standing and relevance was not as they had always imagined, so they at last focused on the one differentiator they had left – local news and information.

Despite pious claims to the contrary, the business of covering the local market had long been neglected and under-resourced. Metropolitan dailies flew over the top of suburbs and neighborhoods, consigning them to weeklies and direct mailers. In the end only 15% at most of the daily newspaper was comprised of original reporting. But if you visit their websites now, you will see that local content has been dialed up and extra-local content, like national and international news, has been rightfully ceded to national legacy players like the Times, or WaPo or the pure-plays like Vox or Axios:

Dallas Morning News

Minneapolis St. Paul Star Tribune

Arizona Republic

But even with the pivot to local news, performance is abysmal. On engagement, retention, conversion and even audience profile, the numbers are bad. Perhaps the differentiating value of local news is not as powerful as newspapers assume, perhaps local constitutes just a sliver of interest in the consumer’s mind. The logic trail on that business insight is not pretty. Or, perhaps the way daily newspapers are going about the business of providing digital local news is flawed. It’s got to be one or the other. The numbers don’t lie.

Instead of engaging in cynical acceptance or, on the other hand, happy self-delusion, what if we figured out a different path forward? What if newspapers changed their approach to the way they develop local products? What if they took a leap forward into 21st century product innovation?  What then?

“If we can’t tolerate a possible consequence, remote though it may be, we steer clear of planting its seeds.” Warren Buffett

Specifically, what if they gathered and applied consumer data to fashion new local niche products that were so relevant to market need they led to lower acquisition costs, lower churn and higher engagement? Many say one of the reasons for the catastrophic collapse of newspapers is their willingness to hand over their content to digital distributors. But the bigger reason is their naive willingness to hand over the customer relationship as well. It guaranteed they would thereafter be blind to what kind of news products and digital services their former subscriber-customers were craving.

Okay. First things first. To do this, newspapers would have to first accept the deceptively simple idea that a market is not a zip code.

A legacy local newspaper brand has a natural market. Actually, we call it “a sphere of influence.” It’s a defined operating area left over from the days of monopoly print, when the market was defined essentially by how far the trucks could get by sunrise. Today that legacy brand still stands for something in its particular operating area – and let’s hope what it stands for is not so redolent of the past that the brand cannot be updated. What if, in the digital age, we stopped thinking of the people who happen to live within the market as a single mass audience and viewed them instead through the fractionated lens of demographic, psychographic and digital usage data?   

The market may be bounded geographically, but within those boundaries live widely different people, different from one to the other as you are to me, different in age, ethnic background, education, life stage, income level, family structure, work path, social connection, lifestyle, motivations, political leanings, spiritual beliefs, aspirations, interests – and different too in the way they use, consume and engage with digital media.

A local market is the agglutination of all the different people who live inside it. Your neighbors are not like you at all, are they?

So what if we can identify a number of vertical markets within the horizontal one, with sufficient people of common attachment within those segments to justify the development of a particular new media product to serve them, and them alone? Not the same bundle of local content for everybody, that is so mass media, but a network of vertical local products that customers can pick and choose from?

I’ve been banging on about this for years, here, and here.  It means that newspaper companies will have to accept a business scaled smaller, with lower overall  gross revenues but with audience growth and improved profit margins. It also means that newspapers will have to rapidly adopt not just a new mindset, but new technology, too: 

Newspapers and pure-play digital media companies spend an awful lot of time anguishing over Content Management Systems. Is Chorus the best CMS? they ask. How about the Washington Post’s Arc CMS? They’re putting the cart before the horse, looking for a silver bullet in the wrong place. They should be spending their time looking for the best customer management system, the CDM also known as a CDP, or customer data platform – that will allow them to ingest information and combine existent data in an all-inclusive, scalable and timely way, so that they can efficiently build a 360-view of the individuals that together comprise their market. CMS selection should follow, not lead the process.

Typically when I talk to newspaper people about this sort of thing, they reflexively think of an interest such as sports, and start thinking of people who might like say, a niche product on the local football team or high school sports or the local whatever team. That’s because the history of newspapers is to think about products from the newsroom out, not the market in. Newspapers are built on monopoly market position remember, not product and marketing innovation. Only newspapers continue to think of sports fans as one homogeneous demographic.

Database marketers call the technique of examining a market from a combination of angles “cross-hatching.”  Every time we’ve led a cross-hatching process, everybody is surprised at the product directions uncovered – and also at the mistakes in positioning, content selection, channel selection and presentation they have made in the past.

Now, please don’t jump up and down and start yelling about privacy. The data you need is superficial compared to what else we might find. It’s readily and publicly available. In many cases, consumers volunteer it anyway, if they trust you. They know what the trade-off is, and how a platform’s use of the data they have generated in the course of their daily digital lives can result in better, faster, more convenient service. I wrote about that here: The horse has bolted  If this intrigues you, go here to see what Google knows about you: https://adssettings.google.com/authenticated  Hurry back, though…

And don’t start yelling about cost, either. Data acquisition itself is not costly anymore, the cost today lies in the manipulation of the data, and that depends on the CDM technology you lease or purchase, and on the usual decision-making around the pros and cons of building expertise in-house or renting it.

As for the added expense of new product development, there’s a way to cut costs by approaching that differently, too. If we’re going to build and sell a local network of niche products, we’re going to have to radically update our newsroom process to support the production of high-quality niche programming through the principle of decentralized expertise. Otherwise the economics don’t work.

The traditional news desk set-up will give way to an editorial structure designed to support the new product development process. Newsrooms will increasingly rely on external expertise, producing less internally and relying more on a network of trusted freelancers. I am not arguing here for a shift to a gig-based scheme producing cheap content. I am advocating a fundamental change in roles, wherein a lead producer responsible for a vertical market works with in-house specialized writers and certified part-timers to produce content vetted by a small core of select editors.

Producers will not come from within the newspaper business. They can’t, editors and journalists have everyone buffaloed, aided and abetted by J-schools that are still graduating students who face the prospect of working for sinking newspaper ships operating with antiquated editorial structures and management dominated by aging old men. What if they could start graduating students with a wholly new set of ideas and techniques based on this re-definition of local news, and an economic framework for operating within it? Whoa! Now we really are getting ahead of ourselves…

So, if I was one of those newly appointed newspaper product or revenue development leaders, the first thing I would do, the very first, is an audit of the customer data I had lying around in-house. Then I’d start talking to CDM companies about how I might go about augmenting that data with external sources. I’d get finer and finer snapshots of the market until I could see where the commonalities actually were and what audience segments looked like having the most promise, from both an audience and  revenue perspective.

Thirdly, I’d trial a couple of new media products, focusing hard on channel selection and adapting presentation accordingly. I would make sure to follow contemporary product development process too, with quick up – and quick ramp or quick down depending on the take rate. I would be agnostic about revenue source, subscription or advertising. But one thing is certain. Advertising sales is a whole lot easier when you can overlay rich customer profiles to demonstrate the match between a company’s prospects and your own customers.     

You see, it’s a different game now. And the marketplace winner in the tricky game of local media will be the company that best embraces data-driven product development. Throwing a lot of mud against the wall and hoping some of it sticks is no way forward.

It’s the age of the rifle. Not the shotgun. 

Posted by Peter M. Winter

Peter is a traditional media veteran and a digital media pioneer. He is an active angel investor and occasional consultant. He advises established companies on cultural regeneration and also consults to digital start-ups, helping them incorporate management process without sacrificing speed. He holds five technology patents. Peter is an award-winning public speaker and writer. His new book, "The Cannibal in the Room," will be published soon — it is the ultimate insider account of the battle to find a digital future for newspapers when the Internet came to town. He blogs on media and leadership here at blastofwinter.com and publishes his unconventional ideas about management on his LinkedIn page: https://www.linkedin.com/in/peter-winter-92b69033/ His collection of short stories can be found at medium.com/peter-winters-life-of-fiction

One Comment

  1. […] Having defined the precise audience you intend to serve, you must then identify where you are most likely to find them and how best to reach them, so you can expose them to your product. Be open-minded. Hint: the combination of zip code + specific interest is very helpful here. You have the data and you know how to apply it, right? You know how important this is because you read this post before on BlastofWinter: How well do you know your market? […]



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 )

Twitter picture

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

Facebook photo

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

Connecting to %s