Howard’s Five Rules of Hyperlocal Advertising

You can read about hyperlocal content strategies on dozens of web sites, but nobody ever talks about hyperlocal advertising strategies.

Content is cool. Revenue is an after thought.

Many people seem to assume that if you build a local web site that attracts readers, any old advertising you happen to throw on a couple of ad slots will some how magically generate enough revenue to pay for the enterprise.

Truth is, if your advertising strategy isn’t as well conceived as your content strategy, your hyperlocal dreams will never become reality.

Here are my five rules of hyperlocal advertising:

Rule #1 of hyperlocal advertising: Local is relevant. In general, it’s all the relevant you need. Google has taught us that contextual, relevant advertising works best on the web, but if you run a local news site, your target audience is very well defined: You appeal to people who are interested in information related to your community.  When you display ads for local dry cleaners and neighborhood eatries, you are providing contextual advertising. You don’t need articles about spot removal for your dry cleaner display ad to display. It’s automatically related to any local story you run. The fact that both your articles and your ads are local is all of the relevance you need. You don’t need fancy algorithms and cookie tracking to serve highly targeted ads to your core audience.

Rule #2 of hyperlocal advertising: Advertising is content. Local readers read local ads. They are very interested in what the local sales and specials are, what events are taking place at what restaurants and what new businesses are about to open around the corner.  The more informational your ads, the more they will engage local readers.  If you’re able to provide a smorgasbord of local, relevant ads, people will visit your site just to look for local businesses to patronize.

Rule #3 of hyperlocal advertising: The more local content (the more local ads) the better. It’s important that your display ads act like a directory of the best local businesses in your coverage area. In order to achieve the goal of becoming a destination point for people to find out what local businesses are offering, you need to serve up a ton of local ads.  Further, you diminish your local focus by placing ad network ads on your site.  It should be your goal to keep all non-local ads off your site, including national chains.  Your advertisers, all small, local business owners like yourself, will appreciate your efforts to put local businesses first in your revenue strategy.  You can generate a lot more money with a local-only strategy than you ever could hope for from ad networks.

Rule #4 of hyperlocal advertising: Small, local business owners need to feel their ads are part of a site where lots of local people go. This is the main rule related to local editorial content — the reason most journalists start local news sites.  In order for your site to be a must-be advertising spot for local business owners, it must be the news site that generates all of the buzz and conversation in your community. You need people talking about your content so that business owners hear their customers talking about your stories. If you’re not hearing from readers, "I’m addicted to (your site)," then you’re not creating enough buzz to sell lots of ads.  You can line up all the metrics you like, but if you don’t have buzz, you won’t sell ads. Once you have buzz, metrics don’t matter.

Rule #5 of hyperlocal advertising: Keep it simple. Flat rates, no rotation, no CPM pricing. Mark Potts said it at Block by Block, but I’ve heard it before: "Small, local business owners can’t even spell ‘CPM.’" In all my years of dealing with local advertising, every time I spoke with an advertiser I found they either didn’t like or were confused by banner rotation.  Nothing pisses off an advertiser more than to visit your site, reload your homage page a dozen times and never see his ad. You need to ensure that every time your customers visit your site, they see their ads.  Next, price your ads in an easy to understand format, which usually means monthly rates with no respect to number of impressions served.

Bonus rule: Break any one of rules one thru five and you greatly diminish your chances of local advertising success.

For-proft, non-profit and ???

There were moments at #BXB2010 in Chicago on Friday when it felt like a religious war was about to break out. At any minute I expected somebody to yell "PC" and somebody to answer "Mac! Damit!"

The clear divide in the room was over how to fund journalism.  On one side there were the advertising-supported sites, and on the other, the donation-supported sites.

Some of the divide was expressed verbally — one participant got up and stated flatly that advertising is evil — and some of it appeared in the #bxb2010 Twitter stream.

My reaction at first was extreme irritation with the non-profit side of the room, but then I realized — there was also an incredible energy in the room.  Here we had assembled some 40 or so independent publishers who were all putting their careers on the line to pursue a market some industry pundits, even today, dismiss as an digital-non-start: Local media.  

A doff of my fedora to anybody willing to invest their resources and time into community journalism.  It is truly doing God’s work.

This is what led to my little speech about the local community being the foundation of democracy.  I tried to not make my remarks about non-profit vs. for-profit, but I did want to send a message to the non-profits: In your zeal to avoid the stench of commercialism, don’t forget the important role small businesses play in your community.

That said, I do think there is a problem with thinking the grant-funded, foundation-funded, donation-funded, non-profit model of journalism is somehow more pristine, more sacred and less likely to compromise journalistic standards.

I firmly believe the opposite is true, and here’s why:

  • You can’t escape the stench of money or making a sales pitch to somebody somewhere, somehow.
  • Don’t assume you’re going to do any better getting readers to contribute than you will do selling subscriptions.  Chances are, they won’t.
  • You’ve still got to sell yourself.  Are you ready to do PBS-style pledge drives? Who’s going to make the telemarketing calls?  Money will not just magically appear because you declare yourself a non-profit.  No matter how much people love your journalism, only a small percentage will ever click the PayPal "donate" button.   So, to get donations, you must make sales calls. There’s essentially no difference between selling an ad to a business and selling a person on making a donation, so why is selling an ad evil, but begging for a donation isn’t?
  • Since you’re unlikely to garner a broad spectrum of donors and build a diverse donor base, you’re going to have to rely on a few key funders. 
  • Any large funder who gives you money is going to expect a return.  Either they back your coverage as it is, and you better not change; or, they see a branding benefit to being a major sponsor, which carries its on weight on the credibility scale; or, they have an agenda.  It might be that they simply want a good watchdog of government, but it might also be that they need you to get firmly behind public transportation because the donor’s real source of the money is a company that builds light rail systems.  Some grants are explicit, in fact, about their issue-promotion goals.  In one way or another, you’re selling your soul.
  • Even if there is no obvious expectations at the time you take the money, such expectations — even expressed subtly later — might emerge.  Or the source of money may be quite neutral for a long time, but then a pet issue comes up, and now you better bend to the donor’s will.
  • Some donors simply come with baggage.  What if you’re in a community where a large casino operation is based?  They come to you and offer to fund half your operations.  You may not see a conflict because they’re based outside of your exact coverage area, but a lot of people are vehemently opposed to gambling and will believe you are a compromised news source because of the gaming tie. 
  • You will have to have a board of directors.  This board of directors is likely to be drawn from your community.  Because part of the job of the board is to help draw donations and reassure donors, they will need to be leading citizens. Leading citizens always have other interests — whether they be tied to the political world or the business world, they will bring their own baggage.  And some of them will not understand why you don’t bend your coverage to their personal needs.
  • There’s simply only so much charity money available.  Big corporations only need so many tax write-offs, and foundations are besieged by competing charities.  Grubbing for money will get harder and harder as more non-profit news orgs emerge.  No source of revenue is a bottomless well.

In summation, I don’t see how being a non-profit shields a journalist from conflicts of interest, ethical dilemmas or even outright advocacy on the behalf of key donors.

Now, we’ve all heard the stories of publishers ordering articles pulled to suit a particular advertiser, but in my experience, the publishers that cower in such circumstances are facing a much bigger issue than journalistic credibility. They’re main concern is corporate credibility, which is all about cash flow and profit margins.  Nobody at Corporate ever looks at the journalism awards in your foyer or the community kudos for demonstrating an ethical spine. Corporate wants to know one thing: Are you meeting your numbers.

When you’re a independent news organization, the only numbers you need concern yourself with, truly, are paying the landlord and the grocer.

Since your source of revenue in the advertising model is an incredibility diverse group of small business owners, and each of these individual owners account for only a fraction of your overall revenue, you’re not facing much pressure at all from any one source of income. 

There isn’t any one advertiser who could pull his ads from my site in a huff and threaten my business.  As I point out above, that may not necessarily be the case for a foundation-supported, grant-supported non-profit news site.  In the non-profit model, one major donor jumps ship, and the ship might sink overnight.

In the history of The Batavian, not a single advertiser has tried to influence my coverage. 

Of course, I get requests, "can you write something up on my 5th anniversary?" or "can you see something about the Lion’s Club fundraiser?" but these are legitimate soft features or light community coverage anyway.  I do try to fit them in, honestly, if I can, and when I can’t, I find advertisers understand. 

That’s a far cry from the kind of ethical dilemma’s the non-profit crowd seems to believe that for-profit owners might face.

The fact is, the idea that advertisers are constantly meddling in coverage is a myth. The truth is, the small business owner has much bigger worries than how you’re covering the next election, or whether you’re making life hard on the mayor.  He wants to know first and foremost: are you helping to add a few more ting-a-lings to the ring of his cash register.

So, my bottom line: I believe that advertising supported journalism — especially for the small, independent operation — is the purest, cleanest, best way to fund local reporting.

Right now.

Terry Heaton has recently written a doomsday piece about the future — or lack of it — of advertising.

For nearly as long as I’ve been involved in online publishing, people have been predicting the death of advertising.  And death may yet come.

But it’s not hear yet.

And we have a lot of aspiring independent publishers trying to figure out how to fund their dreams.

We can’t lose sight of the fact that, for at least right now, advertising works.  When done right and done well, it works very well.

Also at #bxb2010 there was a lot of chatter about finding new revenue models, in part because of a distaste for advertising and in part because some people have bought into the idea that advertising has no future.

The problem for local publishers, though, is they have no future as publishers if they can’t pay today’s bills.  They have no time for the rest of us to cast about for some creative, disruptive, forward-thinking way of funding journalism.

And that’s the meaning of the headline on this post: "For-proft, non-profit and ???."

Right now, all we know is either grub for donations or sell ads.  Anything else is just a big, fat question mark.  If you want to be in business now, question marks don’t pay rent. They don’t buy cameras, and they don’t even supply note pads.

The vital issue for the aspiring publisher is: Revenue now.

If the aspiring publisher believes the way to go is try and gather enough donations to at least keep a cabinet full of raman, well, God’s speed and God bless.

But there’s also no need to be scared of being a dirty capitalist, selling ads and trying to grow a profitable business.  It’s a place to start.  Only time will tell if it creates the next generation of media moguls or a whole new class of burned out half-wits scraping by on the public dole.

(Note:  There are other business and editorial advantages to advertising, but that will have to wait for another post at another time.)