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Jan. 11, 2017, 9:56 a.m.
Business Models

D.C. publisher Local News Now closed two sites last year, but it’s still bullish on advertising

“For now, even though it’s not perfect, advertising is paying the bills and until there is a better solution we’re going to stick with it.”

2016 wasn’t the best year for Local News Now, a network of hyperlocal sites in the Washington, D.C. area.

In July, it closed Hill Now, its site covering the Capitol Hill neighborhood, and merged its coverage with another one of its sites, Borderstan, which focused on a handful of neighborhoods near Dupont Circle. Then, in December, with revenue flagging, the company also shut down Borderstan, which was run by two full-time employees and averaged 85,000 unique visitors per month.

“We were not generating enough advertising revenue to pay for the brand of journalism we were creating,” Local News Now founder Scott Brodbeck told me.

The company still operates two hyperlocal sites in D.C.’s Virginia suburbs — ARLnow in Arlington and Reston Now in Reston. The company has five full-time employees, including Brodbeck. One of the former Borderstan staffers has joined ARLnow; the other has left the company.

Local News Now is blessed with unusually fertile ground for a local news site; the D.C. metro area has the highest median income of any in America, and its suburbs are even richer. (Arlington County has the sixth highest median household income of any county in the United States. Fairfax County, which includes Reston, ranks even higher, third.)

Local News Now exceeded $500,000 in revenue for the first time in 2016. “The sites in Virginia are solidly profitable and the company itself is profitable,” Brodbeck said. ARLnow averages 250,000 unique visitors per month and Reston Now has 70,000 uniques.

Brodbeck and I discussed the thinking behind the decision to shutter the two D.C. sites, what’s next for Local News Now, and why he thinks digital advertising can still be a sustainable revenue source for hyperlocal outlets. Here’s a condensed version of our conversation, edited for length and clarity.

Joseph Lichterman: Can you give me an overview of the decisions you made last year regarding Hill Now and Borderstan? Why was the time right to shut them down?

Scott Brodbeck: The sites weren’t working for us from a revenue standpoint. We weren’t generating enough advertising revenue to pay for the brand of journalism we were creating. We don’t have investors or anything, so we need to make tough decisions when it becomes clear that a site is not making money and is not anywhere close to being profitable.

Lichterman: So both sites weren’t profitable?

Brodbeck: They were generating revenue. We did have advertisers, and we very much appreciated the business, but it wasn’t generating enough, and the direction of the revenue was not sufficient to think that we would be able to cover our expenses — personnel expenses, salaries — anytime soon.

Lichterman: So you’re focusing on the Virginia sites now?

Brodbeck: It was a pretty big disappointment for us that things didn’t work out in the District, but our two Virginia sites are doing quite well. We just brought on a new editor for Reston Now, who is doing very well. He started January 2. He came to us from a daily newspaper where he was the editor. ARLnow, which is our flagship, is continuing to rock and roll.

These sites are both profitable. They’re both going in a great direction. They have big readerships. We’re going to be doing more in 2017 with these sites. We’re going to do more with multimedia and video. We’re going to invest a bit more into some of the reporting, and find other ways to make readers and our advertising clients happy.

Lichterman: Why do you think this model worked in Reston and Arlington, but not in the District?

Brodbeck: I should also note that we had a site in Bethesda, Maryland, that we then sold to Bethesda Magazine, so I’d classify that as a fairly successful exit. We’ve done good things with three sites. The result with the sites in D.C was definitely disappointing, but we learned a lot.

In D.C, we’re in a bigger city. Our brand is community journalism; what we were doing in D.C. was neighborhood-level journalism. There were lots of readers who appreciated that, but we didn’t find much of a market for advertisers who wanted to reach that audience. The advertisers we have in Arlington and Reston are very focused on reaching audiences in Arlington and Reston, respectively. We do have some advertisers in both areas who are trying to reach readers in multiple places, but by and large, they are very focused on these specific geographies. There was a little less of that in D.C. We didn’t find advertisers who wanted to advertise in the specific neighborhoods that we were in to the degree that we needed to fund the reporting.

Lichterman: It’s interesting that there’s so much variability even within the same metro area.

Brodbeck: Arlington is literally right across the river from D.C. It surprised me as well. But it is what it is; we gave it the best we could in terms of trying to make it work, and it didn’t.

We’re going to back to the drawing board a bit in terms of what we want to do next. We know we want to keep improving what we’re doing in Arlington and Reston. At this point, launching another owned-and-operated site is not really being considered, but we are considering maybe working with other online local publishers who could use some of our expertise and resources on the tech and sales side, executing on advertising and sponsored content campaigns.

We’ve been ahead of the curve on, for instance, going HTTPS for our hosting, doing sponsored content before it was popular. There are other publishers who could benefit from that.

Lichterman: What were some of the lessons you learned from your experience with the D.C. sites?

Brodbeck: One takeaway — that a lot of other people know — is that expanding in local is hard. There’s a phrase that LION, the group that I’m a member of, says: “Local doesn’t scale.” I think that phrase is largely true. In this case, we’ve been able to scale successfully to two sites, but with each successive site, it does get harder.

The other lesson is that every market is different. Maybe not every market is right for the kind of journalism we’re doing. We want to be doing local news where we have full-time paid employees with benefits who are earning a living reporting the news. I believe in a high-quality future for local journalism.

I know that there are others out there who want to figure out how to produce local content with as little investment as possible. I believe that readers are not going to pay enough attention to low-quality content to make it worth anyone’s while. We want to be producing local news that everyone in the community would want to read. When I look at my unique visitor numbers in Arlington and in Reston, it’s pretty darn close to, if not at times higher than, the population of those areas. Having that high market penetration speaks to us doing something right.

Lichterman: Looking at community journalism as a whole, do you think advertising is a sustainable long-term solution for supporting this kind of reporting?

Brodbeck: That’s very topical, with the changes at Medium. It certainly sounds like Ev Williams doesn’t think so. Online advertising as a way to support journalism, especially local journalism, is not perfect by any stretch of the imagination.

We are making attempts to diversify revenue. We’ve been doing some events, looking into the possibility of a subscriber revenue component, but we haven’t pulled the trigger on anything yet. I think a variety of revenue streams is important. For now, even though it’s not perfect, advertising is paying the bills, and until there is a better solution we’re going to stick with it. But being nimble is very important. You don’t have to chase every trend, and we make a point not to, but keeping on top of what readers want and how they get their news and what advertisers want and how to best get their message to readers is something you absolutely have to do.

Lichterman: In terms of the advertising you’re running now, what’s the breakdown between banner ads and native ads?

Brodbeck: It’s almost 50/50 at this point in terms of revenue between banner ads and the couple varieties of sponsored content that we run. We’re delivering on both, but we get really good feedback on the sponsored content from advertisers. I continue to believe that that’s going to be a growth area for us, and that as long as we’re very transparent with how we do it and are finding a way to work with advertisers to add value to readers, to give them content that’s relevant and interesting to them, that’s going to be something that will work well.

We’re uniquely positioned in local when it comes to sponsored content. When sponsored content is truly local, it’s automatically relevant to someone who lives in a given community. I’m less bullish on some of the national sponsored content efforts, like a large corporation writing a post on a website out there. When you get down here to a granular, more niche level, people actually read the sponsored content we’re writing because it’s of interest to them. We’re definitely continuing with it.

I would argue that the same applies to banner advertising. It gets a bad rap as not particularly effective. I’m sympathetic to that on a more national level. It seems like the biggest thing is programmatic and targeting. How do we target specific users? That is a very inexact science. On Twitter not too long ago, I was going off about how the ads I see on the web, Facebook excluded, if they’re targeting to me, I have no idea how they’re doing the targeting.

On local, it basically is targeted. It’s automatically geotargeted. If we have an advertiser who is in Arlington and trying to reach people in Arlington: Guess what? We reach people who live and work in Arlington exclusively. I think relevance is important in advertising, and local is automatically relevant to connecting local advertisers to local readers. I think that display advertising is going to continue, though I hope we continue to find other ways to connect our clients with our readers.

Photo of Dupont Circle by m01229 used under a Creative Commons license.

POSTED     Jan. 11, 2017, 9:56 a.m.
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