DIGITAL AGENCY: A NEW

REVENUE STREAM FOR

NEWSPAPERS

Enhance relationships

by filling a client need

CLOSE LOOK AT DIGITAL SERVICES

Why digital services are more important

than ever for newspapers

A few lessons learned in Santa Rosa

Rapid evolution of newspaper agencies

The challenge: Building a successful

business model

... THEY’RE ALL TRYING TO REACH DIGITALLY CONNECTED CONSUMERS

27 million SMBs in U.S. share one thing in common

… THEIR CLIENTS ARE

MOVING TO DIGITAL

25,000 local media companies

in the U.S.

1,350 daily newspapers* 4,700 non-daily newspapers* 1,700 local TV stations* 13,000 local radio stations* 4,000+ direct mail & directories

share one thing in common

*BIA Kelsey / NAA

Local Digital Projected to be

$52.7 Billion by 2018

BIA/Kelsey, May 2014

2013-2018 CAGRs

Total Media 3.6%

Traditional Media 0.1%

Online/Digital 13.6%

PRINT AD $$ DROPPING 7-9% ANNUALLY

Newspaper Association of America, April 2014

DIGITAL AD GROWTH STAGNATING

DIGITAL IS A MOVING TARGET…

Mobile traffic surpasses desktop

More 40% of adults own a tablet

SEO shifts from keywords to content

relevance and Social Engagement

Native Ad revenue will double by 2017

Not to mention… DSP’s / contextual targeting

/ retargeting / mobile in-store optimization /

SMS / email marketing / video advertising.

MEDIA / AD CLIENT ECOSYSTEM HAS CHANGED LOCAL DIGITAL AGENCIES GROWING, PROVIDE LINKS TO PURE PLAYS

SEO

Specialists

Lead

Generation

Traditional

Media

Ads

Website

offers

Mobile

Presence

Social

Media

Paid

Search

Ad

Targeting

Newspaper

… AND COMPETITION IS HEATING UP

FROM SOME FAMILIAR PLACES

“Local TV broadcasters shifted into high gear

with digital … driving an all-time high of nearly

$3 billion in new ad revenue.” (TBA)

Broadcast grew digital 15% vs 1.5% for

newspapers

While banners/video were 82% of digital,

broadcast is now selling SEO, reputation,

websites, ad retargeting and email list

management.

Television Bureau of Advertising/ Borrell Assoc.

SMB SURVEY: HOW OFTEN ARE YOU CONTACTED BY

AN INTERNET MARKETING OR SEO COMPANY?

32%

25%

18%

11% 11%

2% 0%

5%

10%

15%

20%

25%

30%

35%

Everyday

2-3X aweek

Everyweek

Rarely EveryMonth

Never

BrightLocal / ChamberOfCommerce.com

75% said they are contacted at least once a week!

LET’S START WITH A DEFINITION

Newspaper Digital Agencies act as online

marketers for local businesses – helping

them with everything from Search Engine

Optimization to building web and mobile

sites, from utilizing social media to ad

retargeting.

PEW RESEARCH 2013

OPPORTUNITIES FOR IN-HOUSE AGENCY

Create new revenue channels

Provide services to new market segments

Retrieve dollars from “pure plays” & local agencies

Drive additional print ad revenue

Support newspaper’s digital newsroom initiatives

....and, most importantly,

Enhance relationship with existing clients

IF YOU USE/WERE TO USE AN INTERNET CONSULTANT,

WHICH OF THESE FACTORS ARE MOST IMPORTANT?

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

BrightLocal / ChamberOfCommerce.com

HOW DOES A NEWSPAPER GAIN ENTRY INTO AGENCY SPACE?

Newspaper has unique,

powerful set of attributes

Reputation / brand identity

2 decades running websites

Unequaled “content” skills

Digital marketing expertise

Large print & digital portfolio

Sales & tech infrastructure

Extensive customer service

experience

AGENCY PUTS NEWSPAPER AT CENTER OF MARKETING ECOSYSTEM

SEO

Services

Lead

Generation

Traditional

Media

Ads

Website

offers

Mobile

Presence

Social

Media

Paid

Search

Ad

Targeting

Newspaper

Agency on

behalf of

client

CASE STUDY:

THE SANTA ROSA

EXPERIMENT

SANTA ROSA’S IN-HOUSE AGENCY

In 2008, PD hired local group for website

development, SEO and paid search

Sudden growth of digital agencies in market

Advertisers talk more about reaching customers

online / partner with “pure play” providers

Partner agency exploited relationship with clients

Secured NYT investment for full-service agency

Threw ourselves into the pool!

IN SUMMER 2011, PD LAUNCHES NEW

AGENCY WITH THESE GOALS ….

Create a unique value proposition

Build digital business plans for clients

Capture new revenue AND profitability

Balance staff vs. outsourced services

Establish benchmarks, metrics & tracking

Create client ROI on digital investment

Packages, pricing that produce customer value

Target right clients – $2M to $20M in revenue

56,000-circ daily’s start-up investment

Set up Agency as separate department

Remodeled office with hi-res monitors & demo rooms

5 new employees, 3 transferred from other depts.

Outsourced selected services: designers, freelancers, PPC

New compensation plan

PACKAGED PLANS,

PLUS CUSTOM

Support for sales:

Templates for

proposals/contracts

4-level training for

digital specialists &

sales team

Target SMBs for best

bet for new revenue

Full range of packages

with set pricing &

services

PDmediaLAB Home of the North Bay’s Premier Interactive Media Lab PART OF THE PRESS DEMOCRAT MEDIA COMPANY

WEB DEVELOPMENT PACKAGES

PDmed iaLAB Home of the North Bay’s Premier Interactive Media Lab PART OF THE PRESS DEMOCRAT MEDIA COMPANY

SEORates_2012_020612

CLIENTS WANT A PLAN, NOT A SALES PITCH

Fill business need for

client, not just sell

advertising

Digital Specialists are

critical players

Digital Specialists don’t

sell products:

Identify client’s needs

Create digital plan

Help define success,

metrics & benchmarks

ONE AGENCY’S

PROOF OF CONCEPT*

At end of first year:

63 clients signed to annual

contracts

$600K in contract revenue

$350K in new print-online ads

$780/month average spend

Average increased in year 2

Profitable after 10 months

Renewal rate in excess of 70%

*PEW Research 2013

MOST CHALLENGING COMPONENTS …

Keeping focus on sales leads, pipeline management

Close ratio was higher than 50% in year one, but diminished without new products & targeted prospects

Keeping “customers” on schedule

Avoiding expense creep with small businesses

New product development

Aligning customer expectations with realities of digital marketing

THAT WAS THEN, THIS IS NOW …

Digital revenue opportunities are

so large and culturally differentiated from the

norm that they require an "all in approach" –

sometimes with separate teams and additional

staff.

- Local Media Insider/Borrell 2013

THE BUSINESS LANDSCAPE HAS CHANGED

Competition grows:

YP, ReachLocal,

Radio, Broadcast

White-label:

fulfillment, sales and

training designed for

media partners

New industry brands:

LocalEdge (Hearst)

G/O Digital (Gannett)

Propel (Gatehouse)

Local Solutions (Cox)

508 Digital (Belo)

BUILDING A

SUSTAINABLE

BUSINESS MODEL

With more competition and digital

options, how will newspapers stay

competitive in agency space?

Papers starting agencies

Investment vs. organic growth

One sales team or two?

In-house vs. outsourced services?

Low-end or premium provider?

Papers with established agencies

Customer service vs. process efficiency

New product development

Acquiring digital talent

Grow market strength and revenue

KEY DECISIONS AND CHALLENGES FOR FOR A

SUCCESSFUL NEWSPAPER AGENCY

COMPOSITE CASE STUDY

1. Management wants to launch agency, but unsure

print reps are ready to sell

2. Paper creates separate team of digital reps, give

print reps 1x referral bonus to provide leads

3. Traditional reps fear loss of print $, so play

minimally or not at all.

4. No consequences if rep is hitting print goal

5. Even managers (not properly goaled) are

distracted by shifting priorities, special sections

and effort marginalized.

MEANWHILE, IN THE DIGITAL ROOM…

6. Digital reps are on their own – cold calling like

other digital sales team in & out of market

7. Most customers are SMBs who don’t buy print,

while established clients with digital needs go

someplace else

8. Newspaper’s key assets – relationships and trust

– go untapped.

9. Faced with revenue pressures, digital reps given

90 days to hit goals – leading to churn

10.Best digital reps won’t even go near newspapers

… SOLUTION REQUIRES UPGRADES

Adjust sales structure, comp, Rules of Engagement

that incent digital growth … w/o print loss

Needs Analysis of ALL accounts in first 90 days.

Specialist meets monthly with each rep, identifies

existing accounts that represent qualified leads.

Every rep has active target list, updated as prospects

move thru the pipeline

Sale Managers given Digital Revenue goals!!!!

Hire digital reps as revenue grows, including some

focused on new digital business and prospects outside

your immediate market.

GETTING THE FORMULA RIGHT

Option #1 – Train & incent

all reps to sell digital

Option #2 – Make sure

comp plans for print &

digital reps are in sync

At least 1 digital sales

specialist for 5-6 reps

One account manager for

every 50 agency clients

Referral bonuses don't work

Print reps get individual &

team digital services goal

Portion of total payout is

based on digital sales.

Pay digital specialist salary +

commission on entire team

digital performance

Pay them to sell + coach

team on how to sell digital

Structure Compensation

… THE PUSH FOR MARKETING SERVICES

AND CONTENT MARKETING NEEDS TO MOVE

FROM EXPERIMENTAL TO FULL THROTTLE.

EASY TO SAY, HARD TO DO.

KEN DOCTOR, AUG 2014

BRUCE KYSE

GUARANTEE DIGITAL

BRUCE@GUARANTEEDIGITAL.COM

707-239-0218