Heavy on Voice and Attitude
Business models for local media will change. They already are. However, this isn’t a hammer-for-every-nail subject. What works for one may not work for another. Plus, broadcast TV and radio don’t have the same challenges to their core businesses as newspapers.
However, whether you’re a corporate TV station in a top 25 market or an independent newspaper publisher in a smaller town, a few things are consistently clear: a) revenue diversification is imperative; b) display advertising is not the primary path forward, though advertising can and will remain a piece of the puzzle for many; c) users must come first (not ads) in order to build communities of interest that attract loyal audiences.
All of these lessons were on display during a presentation by Spirited Media CEO Jim Brady on the recent Innovation Mission in Washington, D.C.
Consumers Are Your Lifeblood (Display Ads Aren’t!)
Brady laid out the model that has enabled Spirited Media to create a burgeoning network of city news sites that are “all local, all the time,” geared for youngers audiences with helpful content and personalized experiences, and on a pathway to profitability within 18-24 months in new markets.
Now in Philadelphia (Billy Penn), Pittsburgh (The Incline) and Denver (Denverite), Spirited Media prides itself on not being “the fifth guy covering the press conference.” Rather, Brady is concerned with the sites developing into a daily habit for readers. That entails taking original slants on content, curating heavily, and aggressively distributing across social platforms (namely Facebook), all in the quest to “be a connector” for the audience.
Spirited Media has knocked down user barriers to entry. No paywalls. Gone are clunky and intrusive display ads. Absent are commoditized stories that don’t play to the target demographics. In their place are helpful and fun content “heavy on voice and attitude” (mayoral candidate emojis, for instance), orchestrated by a team where everyone is involved in owning the voice of the site, rather than a siloed Chief Digital Officer or Social Media Manager.
Live Events: The Pillar of the Business Model
The Spirited business model mirrors the content strategy: big on experiences and personalization, light on distractions and noise, with events as the pillar.
In 2016, Spirited sites produced more than 50 events. That number will more than double this year, with 120 estimated. Events will represent close to 65 percent of total revenue in 2017 and will remain the fulcrum of the model, even as additional streams are rolled out.
One of the best examples of a quintessential Spirited event – scrappy and experiential – is their “Who’s Next” series celebrating local business leaders. It’s not exactly a new concept, but one that the company is well positioned to succeed with.
In Philadelphia, for example, Billy Penn produces “Who’s Next” across a wide spectrum of categories and industries (lawyers and entrepreneurs, just to name two). It takes nominations across city neighborhoods, sells exclusive title and food/drink sponsors, and hosts the events in its offices to keep costs down. The typical draw is around 150 attendees, free of charge, although The Incline in Pittsburgh is testing a paid model. It’s not uncommon to bank $7,000 from one event, and the series is easily repeatable every month. Plus, there are softer benefits: the nominees become brand ambassadors and ultimately even sources for their stories.
The sites produce far more than just “Who’s Next”, though, and remain nimble to design events that are tailored to the unique features of the city. Movie nights and game-watching parties are common, easy, and a readymade way to gather attendee data to start an e-mail newsletter relationship. A favorite example: when the pope was in Philadelphia, Billy Penn found a local bar – the Pub on Passyunk East, or POPE for short – to host a beer tasting of themes beverages (“Holy Water,” for example).
A Diverse Revenue Strategy
Events, while foundational, aren’t the only leg of the revenue stool. In fact, that’s precisely the point in a diversified revenue model – multiple streams mitigate risk and open up new opportunities for consumer and advertiser connections. The Spirited sites do run ads, though with much lighter load than often seen elsewhere, and with a focus on native over display. Brady predicts that increased site traffic will raise total revenues from advertising this year, but its relative portion of the overall revenue pie shouldn’t change much.
In the fourth quarter, Spirited Media will test a subscription model centered on VIP experiences and special access, without a paywall. For perhaps $100-$150 annually, a Billy Penn member in Philadelphia might receive a package that includes admittance to several of the site’s events, plus VIP access to a Q&A with the mayor or a tour of the Philadelphia Eagles locker room. Brady also has his eye on merchandise as a fourth leg of the stool. Ultimately, he envisions a revenue model comprised of 40% events, 30% ads, 25% membership, and 5% merchandise. The breakout mirrors other emerging digital pure plays, such as Axios and Barstool Sports, that depend less on display and strive for a multi-legged revenue stool.
In order to build even deeper customer relationships – and thus deliver more personalized experiences (events, targeted content with high-quality ads) – Brady knows that Spirited needs to become more thoughtful about its database strategy, rather than simply “doing it by feel.” Data acquisition and activation strategies would power more targeted newsletter campaigns, and A/B site testing could suggest different reader engagement trends.