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In 2016, will local online news publishers shift from display advertising to other revenue sources?

by: Michele McLellan |

Is this the year we see more revenue diversification among small, local news start ups? I hope so.

As I have said before, heavy reliance on display ads is a vulnerability. My survey of local news sites in 2015 found that 94 percent sell traditional display advertising, including 72 percent for which it is the primary revenue source and 29 percent sell only that. If you rely heavily on one source, what happens if that source falters?  

That's what we are seeing with display advertising. The growing use of ad blockers is just one more sign that people find traditional forms of online advertising annoying, or at least ignorable. What is the value to the advertiser in that? Local mom-and-pop advertisers may be slower than nationals to reject increasingly unpopular or ineffective ad formats, but they are bound to head that direction.

I’ve written about other promising sources such as events, memberships and crowdfunding. These all have some merit and some caveats. Events are labor-intensive and the not all communities have businesses or institutions that are willing to sponsore them (sponsorships, not ticket sales, are the main revenue source for events). Meanwhile, membership can create a good, steady revenue flow but takes years to build the base. Crowdfunding so far looks like it works as a one-off - people will contribute to underwrite coverage of a compelling local topic - but can a site do that more than once a year?

Sponsored content may be a source that is more readily within the reach of small sites that need revenue now.

As a  longtime journalist, I approached sponsored content with quite a bit of skepticism.

But I think traditional news organizations such as The Washington Post and The New York Times have demonstrated that sponsored stories can live alongside traditional editorial content as long as it is accurate, engaging, informative and clearly labeled. It's important to note that the FTC recently issued guidelines designed to make sure native advertising is labeled prominently when it otherwise blends in with other content.

In 2016, I think online publishers should consider whether some type of sponsored content is a fit for their readers and advertisers. The small sites may not have the capacity to produce sophisticated packages that their larger national counterparts do, but simpler forms may work for local advertisers.

Some respected local publishers are already producing sponsored content.

Scott Brodbeck, CEO of Local News Now, offers several sponsorship options on his news sites in the Washington, D.C. area.

One is the opportunity for the sponsor to write a column on a topic related to the sponsor’s business or expertise. Another is a promotional article. A third is an article produced independently by the news organization without sponsor input.

Berkeleyside publishes sponsored posts about local businesses and services, as does Baristanet. The Batavian publishes promotional articles that can be accompanied by a display ad.

Michele McLellan

Michele McLellan is a writer, editor and consultant who works on projects that help strengthen the emerging local news ecosystem,
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