In newspapers' race for digital revenue, being small is no excuse not to run fast.
Many community newspapers, typically dailies and weeklies running south of the 50,000-circulation mark, have been as aggressive in their pursuit of digital dollars as their much better resourced peers in larger markets. Like many big city dailies, they're throwing up paywalls around their content and launching lucrative vertical sites and video production businesses.
Some are getting creative with their digital display units. And many are even starting digital marketing agencies geared at the small- and medium-sized businesses that are their lifeblood. After all, many have already felt incursive pressure into those relationships from hyperlocal pureplay sites and Internet Yellow Pages companies eager to scoop the same SMBs into their digital nets.
Along the way, they are struggling with the same transitional turbulence that afflicts larger papers, namely legacy salespeople slow to shift and a digital learning curve among clients as well.
But even in communities seemingly too small to warrant digital aggression, where broadband access itself may be a challenge, some papers aren't waiting for their advertisers — or even their consumers — to get fully savvy. "If we're behind the consumers, then somebody's going to fill that gap," says Terry Ward, chief operating officer for the KPC Media Group Brand Connections , which owns 19 papers in northeastern Indiana. "We have to stay ahead of where the typical consumer is in our market."
Community papers have largely been spared the pulverizing economic blows that struck larger newspapers in the recession and have steadily jabbed the industry since. In fact, media analyst Gordon Borrell, CEO of Borrell Associates, recalls a recent Southern Newspaper Publishers Association conference in which he came into a room where "everyone was high-fiving each other" over a relatively strong year.
"Most of them would consider themselves to be doing pretty good, and the smaller the market, the better they are," says Edward Van Horn, executive director of the SNPA, which has about 500 members, typically under the 30,000-circulation range.
Van Horn adds that the corks haven't exactly been popped from the champagne bottles, though. "Since the recession, there's been a lot of cost-cutting, rethinking and innovation. They see a new normal and a new comfort zone," he says.
Nancy Lane, executive director of the Local Media Association, which represents papers largely falling into the 10,000-60,000-circulation range, says about 10% of her membership has held to a print-centric approach with their business, resisting pressure to diversify their revenue streams through digital channels.
But most members, she says, have shifted into a different mode. "I don't see them sitting back and saying we're just going to focus on print because that's where 90% of our business is coming from," she says. "They get it that they need to transition, too."
For those that have been making the transition, the digital dollars have been slower to flow than at larger papers, largely because they started adapting later than the metro dailies. Data from Borrell Associates tracking weekly papers at the 90,000-circulation mark and under finds a median online ad revenue of just $11,946 in 2012. Among papers in the 30,000-50,000-circulation range, the average 2012 online ad revenue was $136,750. Papers in the 5,000-circulation and down range brought in an average of $12,352.
Some community papers have been creative about their digital ad inventory to ameliorate that, though. Ben Shaw, chief digital officer at the 162-year-old, family-owned Shaw Media in Dixon, Ill., tried a different model at his company's 10 dailies and 25 weeklies, which take in 8%-9% of the company's overall revenue in digital.
"We decided to artificially limit our inventory," Shaw says. "There was no newspaper bible that said we have to have five ads on our websites, so we went down to two big box ads. We got rid of the problem of not having enough sell-through and by creating that demand, we were able to manage our rates and revenue."
If the display revenue is otherwise less-than-impressive, other digital streams are proving useful. Paywalls, which media analyst Ken Doctor recently estimated now encircle 41% of papers across the country, have been one tool in growing use.
Of her own members, Lane says, "If they don't have one, they're considering it and they're watching."
Publisher Allan Burke of The Emmons County Record in Linton, N.D., says his paywall, which he erected when moving to the Our-Hometown content management system, has helped him capture revenue from the many readers who follow his 3,100-circulation weekly from far beyond the community.
"It is a profitable area when you count the online subscriptions," Burke says of his overall digital revenue, which also includes display ads and an e-store selling small run books from the region.
