Hyperlocal sites rethink approach to local online advertising

Some publishers are remixing their local online advertising formulas to better please their small business customers. That’s the case at DavidsonNews.net in North Carolina and CTNewsJunkie in Connecticut.

A report by Borrell Associates predicts local online advertising will grow to nearly $20 billion in 2012.  The report, Benchmarking Local Online Media: 2011, surveyed  5,756 local online operations and made market- level advertising projections for 2012. It says:

 “If the digital growth spurt continues through 2013, online media will hold the largest share of local advertising, toppling newspapers for the first time in history….”

“Who’s winning? It’s clearly companies that are offering commerce-related content – or more specifically, companies that are more interested in finding consumers who are ready to buy something. Of the top 15 companies making money from local online advertising last year, all but 3 had a commerce-centric focus.”

 Local online advertising will grow to nearly $20 billion in 2012

Gordon Borrell, founder of the media consulting firm, is bullish on local online advertising but bearish on advertising for hyperlocal news sites. He believes banner advertising is too limited an approach for a hyperlocal news site and advocates instead that a site behave more like a local advertising agency. That’s more in line with what the local advertiser needs, he said.

“Their job is really to help save Main Street,” he said. “I would applaud them if they became much more of a marketing partner with a local business. That is much more what is needed.”

Bonnie Appel, Vice President of Media for Brushfire Inc, Cedar Knolls, N. J., agrees that a local site needs to reach beyond banner advertising to get the attention of a small business customer.

“If you are a hyperlocal news site and you are talking with a hyperlocal business, you have to get them in with something bigger than a banner ad,” she said.

This could be any number of ways to get the attention of the customer. Appel suggests that the site work several channels to get the attention of the audience. These could include advertorials, sponsored content or  a directory.

The approaches suggested by Borrell and Appel  have been featured in this blog and are already under way at many news sites. These include social media education and management; special events; online directories; general education; and assistance getting the business online.

Meanwhile at DavidsonNews.net, Boraks has some of that under way, but his current focus is revamping the site’s approach to advertisers.

“Last year we started CorneliusNews.net. On the original DavidsonNews.net page you could buy the front page, the inside page, the health and fitness page – we thought that we could sell ads against those positions but we found most advertisers wanted to be on the front page,” Boraks said.

“We had four dozen ad slots across the site and about as many prices. It just got so complicated, “ he said.

Local small businesses not accustomed to digital

Boraks said his competition is regional magazines and weekly newspapers so his sites are battling against print. Without a highly developed market for impression pricing, it was challenging to make the case to small businesses who really knew nothing about the web.

They decided to simplify their approach so they could compete better.

“We felt that it made more sense to run all our ads against all our pages. We have great traffic across our whole site. We have great monthly visitors. We felt we were doing best service to all of our advertisers by giving them full access to our full run – to use an old print term.”

They priced the ads by setting a total revenue figure based on operational expenses.

“We took our total monthly expenses and backed into our pricing that way.  If we sell 60% of ads on the site then we are at break even.  Everything above that is profit and below that we are in the red a little bit,” Boraks said.

Between the two sites DavidsonNews.net gets 50,000 to 60,000 unique monthly visitors.  “Our 50,000 is comparable to the numbers they claim. The weeklies print 25,000 copies and claim  they get 100,000 views. I disagree with the four multiplier,” he said.  “We can measure our readers and they can’t.”

In addition, Boraks says that they have introduced a new deliverable to their advertisers:  a guaranteed minimum 30,000 impressions per ad.

Brushfire’s Appel agrees with the accountability aspect of this strategy.

“The internet is accountable,” she said. “So guarantying a number of impressions is something you need to do.”

Boraks says that bringing in 80 advertisers would pretty much sell out the site. But then again, operating this way means that they can can ad pages or additional sites if needed.  “If we sell all the ads on the site, we would be bringing in more than $200,000.”

Boraks credits much of the idea to Lyndsay Kibiloski, who was DavidsonNews.net’s first ad designer and now wears many hats including operations manager. The site has a full-time staff of 3 with 7 part-timers.

A few months into the new approach, it’s so far so good.

At CTNewsJunkie.com, Doug Hardy, publisher, said he’s working on the 3.0 version of ad rates.

“The trick is just to get people to start buying at your base rate,”  he said in a post on the BlockbyBlock Facebook Resource page.

We’re now offering site takeover and also a 300×600 banner option,” he wrote.  “Further, instead of multiple banners in our email blasts, now we’re going with an exclusivity thing — 1 advertiser per email blast, and options for buying 1 day or 1 week or 2 weeks. We want to close fewer deals for larger sums.”

Hardy suggested starting at a cost per mille (CPM=cost per thousand views) of $15 for a 300×250 banner as your largest option. The site staggers the rates downward for smaller banners. He said CTNewsJunkie also offers staggered rates for longer ad campaigns – say offering the full rate for between one to three months, and then cutting the rates by 20% of the advertiser commits to an ad for three to six months.

Hardy suggested an idea that sounds similar to Boraks’.

“Offer flat rates for ‘run of site’ deals. This is key when dealing with old-media-centered people,’ “he wrote. “ ‘Why isn’t my ad showing on your site? I paid for it?” They have a hard time understanding that they only paid enough for a 50% share of voice, etc.”

Hardy said that using a run-of-site approach, you set a ceiling of impressions that is a high percentage of your total and leave the banner up all the time.

“They like this when they think they’re getting a lot of impressions free. Closes the deal,” Hardy wrote.

The danger in this approach is that if you see a big spike in traffic, the advertiser will get a great deal and your site will fail to earn revenue on a lot of impressions.

“Eventually, this is bad if you run out of positions to sell,” he wrote. “There’s also the possibility that people won’t pay the price for all of your impressions if you stick rigidly to your CPM and charge clients for all of your traffic. You might price yourself out of the marketplace.”

“But that’s where the negotiation comes in – as your audience grows, you absolutely have to fight the pressure from advertisers to keep your rates flat from year to year,” he wrote. “It’s B.S. and unfair to expect you to do that when you’ve doubled or trebled your audience. But above all – you have to close deals or you’re out of business. So it’s a moving target.”

Sally Duros is a social journalist working toward the next generation of successful, credible online newsrooms. Connect with her on  and on twitter at saduros.

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