Why media networks matter for local publishers
August 1st, 2008 — Arul Sundaram
Interesting article in the WSJ today discussing the inability of newspaper advertising to keep pace online (subscription required). Not in absolute dollars, but certainly in share. They cite some compelling stats, mostly from Borrell:
Over the past two years, the number of local salespeople peddling online ads for newspapers has ballooned to 15,500 from 5,900
One thing they touch on, but don’t really spend much time digging into, is the value of participating in a network:
A lot of newspaper companies have teamed up with Internet players like Yahoo on a variety of cross-selling and ad-technology initiatives to get more local ads.
From what we’ve seen at IB, there is a real reason for local publishers to seek out networks. Much of the stuff Mark Potts recommends in his take on the Journal story requires a partner who can bring scale to their investments in technology, sales tools, etc. But, if a publisher finds the right partner, they can outperform the market.
How do we know that networks drive revenue? We had Borrell Associates run a custom cut of the data they used to produce their May study, “What Local Media Websites Earn”. What we found was that sites that belonged to our hosted network make 36% more revenue per TV household than their non-IB TV station site competitors. That’s a weird metric, you might say. And you’re right if you are thinking of an Internet site that wants to attract the web audience at large. The TV household metric, however, becomes very relevant when targeting a local audience. For local sites, revenue is driven by their ability to have greater reach within their local DMA and then their ability to sell against that reach. As a good network, IB provides the tools for reach and revenue.
Specifically, the Borrell report showed:
Essentially, these findings validate what IB has been seeing all along. Our national advertising business is strong: creating $15 RPMs from our national inventory, while other targeted networks generate $5 RPMs. (Note: RPM = Revenue per thousand. It’s the sum of all revenue (regardless of CPC, CPM, CPA, etc.) that is generated off of 1,000 pageviews). We recently launched the IB Local Network in comScore which puts us around the top 40th ad network each month. We’re adding new local publishers to that network each month and are excited about new opportunities across the board.
As a user, you get a simple main column of top stories that appears to be accurately detecting duplicates and suggesting relateds. A right sidebar highlights news from local sources, presumably by detecting my IP. It got my state right, but all eight stories are from the same source: the local CBS TV station. It’s odd, because while some major local publications are being left out of the index entirely, several others are in — and just not listed as local.
This 
