Four Success Stories Show How Innovation Pays

March 11, 2013 • Media Economics • by

A new study by the Pew Research Center tracks how four regional newspapers in the United States have been able to boost online revenue and record overall growth despite industry-wide trends to the contrary. Mark Jurkowitz and Amy Mitchell investigate the ways in which reforming business models and tailoring services to the needs of local audiences allowed four success stories to breathe new life into an ailing industry. The strength behind the success at the Santa Rosa Press Democrat, the Naples Daily News, the Deseret News and the Columbia Daily Herald, has been the application of market specific strategies to restructure digital, print and administrative spheres, and create new sources of income. Dedication to online ventures, which have been notoriously difficult to monetize, has been a significant gamble to promote growth on the part of some of these directors. One such initiative was the launch of a separate but parallel enterprise in the form of a digital agency, another involved the creation of an online platform for ticket sales, coupons and a digital marketplace. At other papers, faith in the regeneration of the print medium was at the core of action plans, and others still took a more introspective approach, overhauling sales outlooks or narrowing editorial focus. In each of the cases explored by the study, strong leadership has been instrumental in galvanizing plans to restructure business models while asserting a continued commitment to quality service.

The California-based Santa Rosa Press Democrat (circulation of 53,300) pursued the digital agency model as a means of increasing their digital revenue. The paper’s “Media Lab” project, an online service for digital marketing consultation, offers services for local merchants ranging from Web development to reputation management, search engine optimization and email marketing. According to the Pew report, the Media Lab leans on the trust that the newspaper’s brand has established in its 155 years in the community, while it simultaneously maintains a “start-up feel.” The project is managed as an entity completely separate from the paper, but it works with the Santa Rosa to draw in clientele with the potential to become more profitable in the future. Income generated from this project amounts to one-quarter of the newspaper’s total digital revenue, a figure estimated to rise to 60 percent by the end of this year. The Naples Daily News, Florida, (circulation of 44,900) is embedded in what can be considered a print-friendly environment, enabling the paper to maintain a firmer grasp on its traditional revenue streams. The Pew report follows the paper’s plan to optimize advertising with the complete restructuring of their sales model and team. Geographically-based sales territories were remodeled around business specific categories important to the community, such as health and wellness, transportation, finance and fashion, thus moving from a generalist to a more specialist approach to sales. The newspaper’s publisher, Dave Neill, told the Pew Research Center, “The retooling of our advertising is 70 percent of our success.” He also stressed that “Any media organization needs to be customized for the market, the local community,” saying, “we have redesigned our business to fit the market.” With such changes, the Daily News reported revenue growth in 2011 and recorded higher profit margins in all four quarters of 2012 compared to those of the previous year.

Salt Lake City’s Deseret News, (circulation of 91,600) is owned by the Mormon Church, and reoriented their editorial identity as part of their plan to increase profitability.  The report tracks how they moved from broader, general interest coverage to six narrowly focused topic areas which better cater to the interests of their religious and value-based readership, a move which increased their circulation by 20,000 within a six-month period in 2012. On the digital side, the newspaper created “Deseret Digital Media,” an online platform that circulates news, encourages reader discussion, promotes products and offers various digital marketing services. This digital endeavor is managed by a team separate from the traditional paper, with president Clark Gilbert stressing that digital and legacy businesses are different and therefore require separate management. They have since seen digital revenue grow at an average rate of 44 percent since 2010, which currently accounts for a quarter of the company’s total revenue, and is predicted to rise to 50 percent over the next three years. The Columbia Daily Herald of Tennessee (circulation of 12,700) has been vigorously pursuing a number of new sources of income after losing $300,000 in revenue when the recession forced its advertisers out of business. Some of the many ideas introduced in 2012 include a digital agency, a metered paywall, an online coupon and ticket selling service, and niche editorial products such as a monthly health magazine and men’s lifestyle magazine. The Pew Center study reports that the relatively small paper has seen a subsequent increase in online revenue rising from one percent of their total income to six percent since 2011, with publisher Mark Palmer expecting this to grow to 15 percent by the end of 2013.

Print media has suffered from shrinking advertising income since the second half of the last decade, with local newspapers finding digital dollars but not enough to offset their overall losses. The Pew Research study demonstrates how four regional papers have grappled with their audiences’ migration online and not only implemented innovative digital projects, but also reformed the print and administrative sides of their business to expand profit margins. The Santa Rosa Press Democrat, the Naples Daily News, the Deseret News and the Columbia Daily Herald have combined strong leadership, an openness to innovation and reform, and dedication to a quality service to successfully increase revenue in an industry plagued by losses and extensive cost-cutting measures. Through a variety of different approaches – each tailored to the specific needs, interests and habits of the paper’s readership – these success stories provide insight into the way print media, and local print media in particular, is successfully evolving and adapting to the challenges of the digital era.

Photo credits: Ignas Kukenys / Flickr CC

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