News Innovators on the Frontline: Sun Valley Online

Posted on 10. Aug, 2009 by in Hyperlocal

Sun Valley Online, a news site covering the ski town of Ketchum, Idaho, launched in 2004. Dave Chase came on board as a business partner in 2006 after spending a number of years at Microsoft and working on various other media/technology projects. He is also a principal at the newly minted local news infrastructure company, GrowthSpur. As Chase describes it, SVO follows a “pro-am” model, will take submissions from citizen journalists, drawing upon its readership for insights on subjects like riparian habitats and endurance sports. The discussion that follows was edited from a series of emails.

Sun Valley Online bannerWhat have you done to build your advertiser roster?
Establishing thought leadership around Internet marketing has been pivotal. I wrote about what we did on OJR. I have given a lot of seminars that have had anywhere from 7 to 75 attendees who are small business owners. In a nutshell, we believe that if we are top of mind when a business owner thinks about Internet marketing, we are going to get our unfair share of the market. A fairly recent example was a restaurant owner who gave us a call out of the blue to do a Twitter campaign for him even though we have no formal offering. I’ve also written a few related pieces on this topic that blend some of what we have done on our website with what my consulting firm has done on behalf of others.

Partnering with various non-profits has been a key part of our strategy for both building our audience and building our advertiser base. We have had a matching program with some non-profits to add value to their sponsorships. For example, we partnered with the local Rotary so that they could say to their potential sponsors that for let’s say a $2500 sponsorship that we’d do a match. That is, for every dollar they spent with us, we’d double it in value up to $2500. I wouldn’t say this approach has been a barn burner but it has helped us land some new/big advertisers.

Of course, good ol’ shoe leather sales has been a big factor as well. There’s no substitute for that early on in one of these ventures.

So, how much hand-holding do you end up doing with your advertisers?
A ton. For most of our advertisers, this is the first ever Internet advertising they have done. One bright spot of the downturn is that it has caused some advertisers to question every dollar they are spending. As I have often said, as online-only play, our biggest competition is inertia…they have always spent the bulk of their ad budgets in newspapers and yellow pages. Since we lost 100% of the deals we didn’t compete in, just the fact that we are in the consideration set is a big win.

There has been a lot of discussion about the self-serve ad model as a way of serving the so-called hyperlocal advertiser. My belief is the self-serve ad model is like many things in tech — overestimated in the short term and underestimated in the long term. My consulting firm has worked with one of the leaders in the self-serve ad space. Though I can’t go into the specifics, I can unequivocally tell you that the self-serve ad model isn’t yet the “next Google Adwords” by any stretch of the imagination. What I am more bullish on is what I call the “publisher assist model” using those same tools to serve local advertisers better, faster, cheaper.

Sounds like you’d advise local publishers to pair self-serve with another revenue opportunity that seems available–training advertisers. Is that what you mean by “publisher assist model”?
My hunch is that there are three stages to full self-serve advertising adoption.
1. Publishers use the “self serve” tools strictly as a way to produce online display ads more efficiently as many of us have been doing one-off ad creation for small advertisers who don’t have their own resource to do this.
2. Publishers spend time to familiarize and train small advertisers as a co-pilot of sorts.
3. Many, not all, advertisers begin to use the self-serve ad tools as they take advantage of price incentives when using self-serve and they also appreciate the quick turnaround of using self-serve ad tools (e.g., they have a special for the day and don’t want to go through the publisher for quicker turnaround items).

What is the obstacle you’d most like to get over?
Scaling up our ad sales and account management. After having seen hundreds of millions hemorhaged in the local Internet sector, I vowed that I would go to the other end of the continuum and only bootstrap my local venture. That forced discipline would enable me to create a sustainable and scalable model. The irony for me is that I haven’t put in place many of the things I put in place for my consulting clients in terms of more sophisticated sales infrastructures as I have put our limited profits back into other areas of the business.

I am in the formative stage of setting up an industry group of local online-only publishers. I have seen industry associations work very well in other areas so I want to pull together a group that can compare notes, share best practices, etc. If it makes sense, we might formalize the group.

Do you think the local online news model will get past enforced discipline and begin to expand more rapidly?
While fiscal discipline is always a good idea, I have no doubt that as soon as there are some successes that prove they can scale beyond a single site, we’ll see money flowing rapidly into the category. That is, there are now several isolated successes where individual sites such as ours have gotten profitable. However, from an investor standpoint, they might consider it an anomaly since there’s so many tales of failure in the local arena. Once there’s a broader set of successes particularly if they emanate out of a common model, investors will support it. The good news is that local information is consumed more than ever. I’d never underestimate the ability of entrepreneurs to meet the needs of a category of businesses.

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