Mobile is the Killer App for Newspapers
Local newspapers are imploding for a lot of reasons, but those reasons have nothing to do with the quality of the product or the value of local news as an advertising medium.
The Chicago Trib, the Seattle PI, the SF Chronicle are shutting down because (a) their balance sheets are a disaster, (b) the product they are offering isn't suited for how advertisers want to reach people right now, (c) their cost structures - debt service, printing, etc. - can't be supported by the online advertising they do get.
But this doesn't mean that local news isn't valued. Ask any group of people what they think of local newspapers and they might shrug their shoulders. Ask them if they are interested in news about their community and they'll say they like it. Speaking from a sample size of n=1 I can tell you that I value having good reporters covering the state capital, city hall, the school board, the local sports teams, and the local restaurant and arts scene.
What is interesting is that the price of reporting is a really small part of a newspaper's overall costs. You can look it up. Reporter and editor salaries are usually less than 15% of a paper's costs.
So, if you have a low-cost model for having professionals gather the news - and can augment that with a robust local community of bloggers - then you have an interesting product.
Now, what is the revenue model.
According to an analysis by the Kelsey group mobile advertising will see a CAGR of 80% over the next 5 years. Mobile local search will increase from $20 million to $1.3 billion for a CAGR of $1.3 billion.
Cut those numbers in half and you still have a big number.
Other findings from the Kelsey Group report, Going Mobile: The Mobile Local Media Opportunity, include:
And according to Comscore, 42 million people used their mobile devices in October 2008 to access news and information content on the Internet, an increase of 57 percent from October 2007.
As smart phones proliferate, the demand for local search is going to rise as well. And local search IS search. A local news source - properly marketed with the right connection to the community to attract eyeballs - could quite arguably capture the lion's share of mobile search.
Yes, this assumes that you can get people to use their phones to surf a local news source. Yeah, I know. But if you can pull that off, and if you can stitch a few dozen local news sources together so you can sell national advertising campaigns, then you have reconstructed a media empire. In 10 years we will look back and see that, while News Corp and Gannett have ceased to exist, new media companies rose to take their place.
A lot of people like to use the metaphor of "people selling buggy whips" to describe what dead tree newspapers are currently doing. Perhaps. But just because people stopped riding in buggies when the automobile came along didn't mean that the need to travel disappeared.
The need for high quality, local news and information is as strong as ever. A local news source with some marketing muscle behind it could capture that market. More importantly, the need for a trusted local news source to advertise in is not going away either. If you a local business where do you want to advertise, Craiglist, Google or next to a trusted, branded, local newspaper reporter?
The only real mystery is (a) when does mobile/portable device penetration grow to the point that reach is sufficient for decent sized ad campaigns, (b) the identities of the business people with the smarts and access to cash to launch the next great media company.
The Chicago Trib, the Seattle PI, the SF Chronicle are shutting down because (a) their balance sheets are a disaster, (b) the product they are offering isn't suited for how advertisers want to reach people right now, (c) their cost structures - debt service, printing, etc. - can't be supported by the online advertising they do get.
But this doesn't mean that local news isn't valued. Ask any group of people what they think of local newspapers and they might shrug their shoulders. Ask them if they are interested in news about their community and they'll say they like it. Speaking from a sample size of n=1 I can tell you that I value having good reporters covering the state capital, city hall, the school board, the local sports teams, and the local restaurant and arts scene.
What is interesting is that the price of reporting is a really small part of a newspaper's overall costs. You can look it up. Reporter and editor salaries are usually less than 15% of a paper's costs.
So, if you have a low-cost model for having professionals gather the news - and can augment that with a robust local community of bloggers - then you have an interesting product.
Now, what is the revenue model.
According to an analysis by the Kelsey group mobile advertising will see a CAGR of 80% over the next 5 years. Mobile local search will increase from $20 million to $1.3 billion for a CAGR of $1.3 billion.
Cut those numbers in half and you still have a big number.
Other findings from the Kelsey Group report, Going Mobile: The Mobile Local Media Opportunity, include:
* The percentage of mobile searches that have local intent will increase from 28% in 2008 to 35% in 2013.
* Currently there are 54.5 million mobile internet users in the U.S., representing 25% of online users.
* Approximately 15% of iPhone applications are local.
And according to Comscore, 42 million people used their mobile devices in October 2008 to access news and information content on the Internet, an increase of 57 percent from October 2007.
As smart phones proliferate, the demand for local search is going to rise as well. And local search IS search. A local news source - properly marketed with the right connection to the community to attract eyeballs - could quite arguably capture the lion's share of mobile search.
Yes, this assumes that you can get people to use their phones to surf a local news source. Yeah, I know. But if you can pull that off, and if you can stitch a few dozen local news sources together so you can sell national advertising campaigns, then you have reconstructed a media empire. In 10 years we will look back and see that, while News Corp and Gannett have ceased to exist, new media companies rose to take their place.
A lot of people like to use the metaphor of "people selling buggy whips" to describe what dead tree newspapers are currently doing. Perhaps. But just because people stopped riding in buggies when the automobile came along didn't mean that the need to travel disappeared.
The need for high quality, local news and information is as strong as ever. A local news source with some marketing muscle behind it could capture that market. More importantly, the need for a trusted local news source to advertise in is not going away either. If you a local business where do you want to advertise, Craiglist, Google or next to a trusted, branded, local newspaper reporter?
The only real mystery is (a) when does mobile/portable device penetration grow to the point that reach is sufficient for decent sized ad campaigns, (b) the identities of the business people with the smarts and access to cash to launch the next great media company.
0 Responses to "Mobile is the Killer App for Newspapers"
Post a Comment