Survey: Independent local online publishers rely heavily on ad revenue
Independent local online news organizations remain highly focused on generating revenue through local ad sales, according to a new survey. Only a handful of the for-profit organizations reported significant revenue from other sources.
The finding about local ad sales is good news-bad news. On the good news side, local publisher report they are increasing their revenues. On the bad news side, reliance on a single source of revenue is risky.
Of 47 sites or groups of sites that detailed their sources of revenue, 44 cited local advertising as a primary revenue source, representing 50 percent or more of their total revenue, and one third cited it as their only significant source of revenue.
An exception was Cary Citizen. The North Carolina outlet, with revenue in the $101,000-$250,000 range, reported its a primary revenue source was web and creative services (60 percent), with the remaining 40 percent direct revenue from Cary Citizen advertising and other sources. Two other sites, with revenues under $50,000, reported primary revenue from events or national advertising.
The survey was conducted in January-February 2014 as part of my database of news start ups, www.micheleslist.org. In a previous post, I detailed survey findings that most sites are growing revenue and a third say they are profitable.
Kenny Katzgrau, a partner in Broadstreet Ads, which provides ad serving to more than 1300 clients, including dozens of independent online news publishers, said the focus on advertising is not surprising.
"Right now, most publishers feel that their core revenue stream is going to be advertising because they are the community bullhorn," Katzgrau said in an email. "Their advantage is they have the eyeballs and advertising is the most obvious way to leverage that."
Among Broadstreet publishers, about 90 percent of the advertising is banner ads, presumably local, and the rest is HTML, presumably Google or network ads. The banners perform several times better than the network ads, Katzgrau said.
With that in mind, Broadstreet developed Selfie, which puts self-serve message widgets on site pages that enable readers (who may be advertisers) to post their promotional messages for a price.
Katzgrau also said he hopes publishers will branch out more in thinking about revenue. Some lack capacity to develop new streams, such as events; others hold back on potential sources such as paid content because they fear encroachment on the journalism.
"The best way to excite a business is to offer something they can't get anywhere else (editable ads, Selfie, social media services, marketing packages. I haven't seen a ton it just yet."
While local advertising is the mainstay, the publishers reported small revenue streams from sources including: Donations (12 sites), national advertising (8), syndication (4), events (3), and business services (4), and web services (4).
Syndication may be a promising revenue source for certain types of sites. CTNewsJunkie, with its niche in Connecticut politics, relies primarily on political advertising, according to business manager Doug Hardy. Hardy projects that CTNewsJunkie will derive about 15 percent of its annual revenue this year from syndication deals with legacy media. The site lists revenue in the range of $101,000-$250,000.
While a few sites report revenue from events, many publishers have reported their organizations lack capacity to stage paid or sponsored events that might generate significant revenue. More often, they host low-key events as a means of community engagement.