By Jed Williams
Chief Innovation Officer, Local Media Association
On an Innovation Mission visit to UNC Chapel Hill last month, Penny Abernathy, the Media-Journalism School’s Knight Chair in Digital Media Economics, put forward an idea that continues to resonate. It centers around the idea of “key customer franchises” – that 2-3 highly-engaged audience segments may likely constitute 80-90 percent of a local media company’s revenue and profit.
This is supported by recent research findings from Ken Doctor and Piano, which suggest that fifty percent of a site’s traffic, on average, comes from only 7 percent of its monthly unique visitors. For some media brands, the number may be even lower.
Consider that ratio for a moment, and the implications, opportunities and challenges that it carries. Many of these aren’t new, but are painted in bold strokes here.
Namely, that the days of mass and scale may be numbered, or at least are fundamentally changing. With that, many local media’s audience development and business models will be changing with them. “Vertical is the new horizontal.” “Niche is the new mass.”
Given this shift, and the vital importance of customer franchises and “power users,” a host of critical questions bubble up:
- Who are your most important, and most valuable customers? How do you identify them, and how do you track and document their behaviors? What KPIs are most important with them?
- What does a target customer want and need from you? To borrow from Clayton Christensen and Clark Gilbert, what jobs are they looking to do, and how are you uniquely positioned to help them do them?
- If you are creating value for these franchises by empowering them to accomplish their important jobs, what are the many ways that your brand in turn can reap value from these relationships?
- What is the lifetime value of these most important customers? We know they are valuable…how valuable?
- How can we efficiently find more of them?
There are at least a dozen more granular, tactical questions behind these, but at a macro level, these are the brain teasers that local media must be asking to become more educated about flat reach versus meaningful engagement…and the many ways that meaningful engagement with brand loyalists can translate into a healthier, more diverse business model
For clarity and inspiration, I often look to digital-native publishers, who approach both audience-building and business strategy with completely fresh eyes, and in the case of the smartest ones, with data-driven, mathematical rigor. Here are two of my favorite examples:
- The Hustle: A daily e-mail newsletter for millennial professionals, The Hustle connects with its audience with a consistent, authentic content voice, and measures the value of that audience down to the dollar. It has granular data on its typical subscriber, can clearly calculate the lifetime value of an email subscriber (today monetized primarily through live events and native brand sponsorships), and has built a robust “ambassador program” to keep the flywheel of new email acquisition spinning.
- NerdWallet: A great example of a content vertical that helps its users get a specific job done. NerdWallet employs a newsroom of journalists who write SEO-rich content that helps consumers make informed personal finance decisions. For example, which credit card to choose, or how to save money during tax season. This vertical content focus has enabled NerdWallet to build a large, trusted audience and get paid when it is able to credibly match consumer needs to products that solve their problems.
Pure plays aren’t the only ones worth watching. Look at what Cox Media Group is doing both with niche verticals (the Diehards sports network is a fun place to start) and “right-to-win” content franchises that carry massive sponsorship potential (check out all the unique content that the Atlanta Journal-Constitution builds around the upcoming Masters golf tournament).
WRAL-TV is experiencing audience and revenue growth with its technology vertical, WRAL TechWire, which it recently freed from a previous paywall to expand reach and create more high-impact sponsorship opportunities.
Moving forward, expect LMA to put great emphasis on helping local media companies better understand who their key customer franchises are, how to serve them more delightfully, and how to measure the engagement and value that they can provide across all platforms.
In fact, our upcoming regional Innovation Mission this summer in San Francisco, will have a laser focus on audience engagement and consumer revenue models. We’ll meet with the leadership team at NerdWallet, and likely with other successful verticals such as Business Insider and Bloomberg. We’ll hear from a couple of major platforms on how they map, measure and monetize engagement, and how they can help media companies do the same. And we’ll visit two progressive traditional media companies – Hearst/San Francisco Chronicle and Advance Local – that are innovating on their products and business models, with engaged customers at the center.