New Local Newspaper Revenue Model: Text Message Marketing

March 28, 2010

I’ll admit it, I don’t read the newspaper in the same way that most people do. Just like everything else in life, I look at it through a “business filter.” I try to think of ways to make it more profitable, to monetize it. Some people might say this is a flaw (my wife certainly does), but considering the dire straights that the newspaper industry is currently in, this is exactly the type of thinking we need right now. And in the end, all that I am trying to do is think of new ways to keep local journalism alive, the importance of which we can all agree on.

So here goes another idea. Feel free to leave your feedback, positive, negative, or otherwise!

First, let’s quickly consider how newspapers make money today. A local business pays the newspaper to carry an advertisement, often times with a coupon. Let’s make up a local merchant, say “Julies Pizza” for our example. The pizza shop owner might offer ten percent off on a mushroom and four cheese pizza at lunch time on Tuesdays. Perhaps business is slow during this hour, so the pizza shop owner decides to encourage customers to come in with this coupon. But this is very indirect. Most people who receive a daily newspaper may not even see the coupon, and many of those who do may not be interested. Finally, even if someone takes the time to cut out the ten percent off coupon, it may get lost in their wallet, never generating any revenue for the pizza shop owner. Just yesterday I found a coupon in my car that my wife had told me to use last week (I’m trusting that none of you will tell her about this).

The point is that this system is very inefficient. It doesn’t deliver much value to the merchant for each coupon that she pays to have in the paper, and thereby decreases the amount of money she is willing to pay for it. In the end, it’s not just bad for the merchant, its bad for the newspaper.

Here’s my proposal:

The local newspaper sets up an online edition which acts as a sort of community hub. Users can access this hub for free, the only catch is that they have to give some of their personal information such as their email addresses and perhaps their phone numbers. Each user can then also opt in to receive special information about promotions by local merchants. Local merchants (such as Julie the pizza shop owner) pay some sort of subscription fee to the newspaper in order to be included on this promotions list.

Now here’s where it gets interesting: the local news hub then sends information to the subscribers in real time. So if Julie is having a special on Tuesday between 12 and 2 on mushroom and four cheese pizza, the news hub sends a text message to all of the subscribers who checked “Juilie’s Pizza” on their list of merchants to receive special offers from. The text contained in the message can either be written by the merchant, or by the news hub (for a small extra fee of course), and the users will receive it at 11 o’clock, right as they are trying to decide where to eat. They won’t have any time to forget the coupon or loose it in their wallets or purses; they’ll get the information that they need, right at the moment that they need it.

On top of this, the merchants will have the opportunity to change their offers at a moments notice in order to adapt to circumstances. Let’s say that Julie the pizza shop owner wakes up Wednesday morning to see that it’s pouring outside. She already knows that business is going to be slow today so she logs onto her account with the local news hub and inputs a “Rainy Day Special” to be texted to all of her subscribers: “Come in to Julie’s Pizza today with your umbrella and receive a free appetizer of your choice with your meal!” If she’s not too computer savvy, she can give the news hub a call, and they’ll input this information for her.

This would be impossible with the current model. Julie would have no way to know one week in advance as she is writing her ad for the newspaper that it is going to be raining sausage and peperoni next Wednesday. The new system allows her to adapt in real time to business circumstances, and give her customers information that they can actually use. This ultimately creates far more value for the merchant, making it something that she will actually want to pay for. As more merchants catch onto this far more efficient marketing model, it will provide a way for the newspaper (turned newshub) to monetize its pre-existing community base.

Think Outside the Newsstand,

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Civic Edition: Text message marketing for local newspapers | Editors' Blog
March 30, 2010 at 8:09 am

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