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Aug. 7, 2014, 11:16 a.m.
Business Models
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Turning a profit in the Netherlands: How a Dutch hyperlocal network has grown

Hyperlocal network Dichtbij has 44 local sites throughout the country, and brought in about €10 million in revenue last year.

While lots of U.S. media companies are still struggling to figure out how to make hyperlocal news financially viable, in the Netherlands, a four-year-old network of hyperlocal sites began turning a profit earlier this year. And now its corporate parent is turning to its traffic to help boost struggling newspapers.

Dichtbij is owned by Telegraaf Media Group, one of the largest media companies in the Netherlands, and it has 44 local sites throughout the country. (We first wrote about the Patch-like network back in 2012.) In its latest annual report, TMG reported that Dichtbij’s revenue increased by €2.4 million ($3.2 million) in 2013, up 32 percent. Dichtbij brought in about €10 million ($13.5 million) last year, still slightly lower than expenditures, but the report cited “significant improvement in comparison to 2012.” Dichtbij says it has about 4.5 million monthly visits to its sites.

“The profitability really came through in the last quarter of last year, and we’ve been able to subsequently maintain that into 2014 — so we are profitable year-to-date right now,” Dichtbij director David Beentjes told me.

On July 1, TMG announced it was consolidating Dichtbij with its struggling local and regional newspaper publishers to create a new brand: Holland Media Combinatie. While the publications will remain editorially independent, more than 100 jobs were eliminated as TMG looks to cut costs and reduce redundancies. And TMG hopes the large audience for Dichtbij’s content will draw readers to its paid daily and free weekly newspapers, in print and online. Dichtbij content is free online, while the other sites have paywalls, Klein said.

“We want to use the massive traffic of Dichtbij as an anchor to lead the traffic to our newspapers in print, but also to our several websites,” said Tim Klein, the director of HMC.

Beentjes attributes a number of factors to the profitability at Dichtbij, which means “close by” in Dutch. Chief among them, a practice of signing multiyear contracts with advertisers that don’t generate revenue until a few years into the deal — for instance, a “three-year contract that isn’t revenue generating right away, but the revenue jumps up along the way when you deliver the value to the customer.”

At the start, Dichtbij was focused on just attracting as many advertisers as possible and signing them to long-term deals, so now, a few years later, many of those deals are starting to mature and generate more revenue, Beentjes said. Dichtbij has also trimmed its sales staff and it has instructed its sales staff to be more targeted in its pursuit of larger advertisers.

Founded in 2010, Dichtbij has taken a less-than traditional approach toward advertising and revenue generation. There’s native advertising, for instance: Advertisers can pay for stories written by certain Dichtbij editorial staffers who specialize in working with brands.

But as Dichtbij joins HMC, Klein said the company needed to make sure it kept its editorial brands separate. While Dichtbij and its weekly newspapers sell native, readers of the daily local newspapers are used to the separation between the editorial and advertising staffs.

“If we start putting advertorials in the newspapers…we’re going to lose subscribers. That’s a risk, and that’s why we find it highly important to separate it by content, free and independent in the original newspapers,” he said.

Aside from new business models, Dichtbij is also in the process of revamping its website and developing a tablet app. It released its first mobile app last year.

Dichtbij has about 30 full-time editorial employees, Beentjes said. Since there are not full-time reporters for each site, staffers will sometimes manage more than one site if they are in neighboring areas. In addition to traditional news stories, the sites are heavily reliant on aggregated and user-generated content as well. “User-generated content is one of the most important sources of content for Dichtbij because otherwise we wouldn’t be able to be profitable if we had to produce all that content ourselves,” Beentjes said.

While its full-time reporters will cover breaking news, Beentjes said Dichtbij relies most heavily on user-generated content on some of its section pages, like business or automotive. But Beentjes said he sees opportunities for growth in the various theme pages. They could be a place to feature content from other TMG properties, or even produce further branded content as Dichtbij could work with specific industries to produce relevant content.

“We think we can really grow there as well, compared to now, and that brings along a lot of business models from industry-specific business,” he said. “If, for instance, you have a health platform, and you have a theme around dental health…you can bring in two insurance companies that sponsor that platform for awhile, and they have the ability to bring forward a specialist who can do chat sessions with the local public when they have questions about their dental health, for instance. That’s just one of the examples we’re thinking of.”

Dichtbij also offers companies social media consulting services, where it will work with companies to develop and maintain their presences on social media, mainly Twitter and Facebook. It has separate staffers dedicated to manning the social accounts.

Still, Beentjes recognizes that the market is changing, and he expects Dichtbij to continue to try and develop new business models, especially as it joins forces with the other TMG properties.

“The traditional display market is not really growing anymore in revenue, so we have to develop new ones,” Beentjes said.

Photo by John Morgan used under a Creative Commons license.

POSTED     Aug. 7, 2014, 11:16 a.m.
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