Local Ad Networks Bring Home the Bacon

Community sites team up to hire sales staff and share ad revenue

When Washington, D.C. local news site TBD.com launched in August, it got a fair amount of attention for the blog network with which it shares content and, potentially, advertising. When it launched, the TBD network had about 120 blogs participating; it’s now up to 193. But a handful of communities across the country are experimenting with blog networks on a smaller scale, cities like Sacramento, California and Richmond, Virginia. The successful networks share a few key ingredients: money to invest up front in a full-time sales staff, loyal and local advertisers, and strict ad design standards.

The Richmond Ad Network formed organically over the course of a few years, but has recently delivered some real results in the past few months since it hired a full-time ad salesperson. The network’s roots go back to 2005 and 2006, when Scott Pharr and Ross Catrow launched RVA Blogs, an aggregator of about a hundred local blogs in Richmond. At that time, one of the most popular local sites was Church Hill People’s News, a neighborhood news site edited part-time by sixth-grade teacher John Murden. Murden put out a call to other independent journalists who might want to start their own sites in other Richmond neighborhoods, and made his site’s code base available to anyone who wanted it. Pharr and Catrow, seeing the resulting expansion of news sites, then decided to build a spinoff to RVA Blogs in 2008, called RVA News. (The news site has since eclipsed the blog site in traffic, and has begun to add original content from freelancers as well.)

Meanwhile, the individual sites were experimenting with selling ads in various ad hoc ways. Catrow says some of the sites were selling their own individual banner ads, “but not very successfully. And they were selling them at such a ridiculously low rate, it was so cheap that it didn’t even feel worth the time.” Site publishers didn’t have the time or energy to be sales people as well as journalists and editors, nor did they necessarily have the experience and skill necessary to close valuable deals with advertisers.

“Usually the two personalities aren’t the same,” says Catrow. “A journalist-publisher person is not an ad person, except in rare situations. Sales is a job that really requires you to be a ‘sales person.’ And if you’re not a sales person, you’re going to be bad at it.”

The first thing site owners usually try is Google Ad Sense. But for sites just starting out without a lot of readers, Ad Sense will usually only bring in pennies. For the Richmond sites, Catrow says, the automated ad programs turned out to be either extremely low-return, or ugly, or both. “You can sign up for ad systems, but you’ll get random things like ‘Bad Teeth?’ or ‘Got a Fat Stomach?’” says Catrow. “Those things just devalue your product.”

For all of these reasons, Pharr and Catrow decided to hire a full time ad sales person. They were able to pay a salary for the first six months with the profits from another business venture in design and marketing, after which the salesperson would work on commission. Lauren Eubank started working for the Richmond Ad Network last year, and after a few months, she was already making enough to pay herself from ad commissions alone.

Eubank sells one main product, a banner ad that appears on all fourteen sites in the network: twelve independent sites, plus the two blog and news aggregators. She takes her commission from that, and then whatever is left over is divided up among the site owners in proportion to their site traffic each month. When she sells smaller ad buys, to appear only on single sites, the owners of those sites get all the profit. Catrow says all of the sites in the network are making at least “a little bit of money, and some are making $500 a month.” Murden, whose site still gets the most hits, told Bill Densmore in a recent interview that he was already making up to $1000 a month from ads.

Because of the sites’ previous “bad teeth” experiences, Catrow and Pharr say it is important that they keep their design standards high. They only accept static banner ads, simple squares and rectangles, and won’t allow any ads with Flash or animation, even though those would bring in more profit. “That’s definitely a challenge, because it would be easier to sell Flash ads,” says Catrow. “But we’re just not going to do it.” Pharr adds that the animated ads that fly across the screen or peel down “annoy us too, so why would we want to annoy our readers? We want people to click on the ad because it’s relevant to them.”

As for the advertisers, the structure tends to works better for local businesses than it would for national ones. The Richmond Ad Network has had some national advertisers, like American Apparel, for instance (though Catrow says they had to specify ‘no weirdness,’ because their ads are often very weird). But in general, Catrow and Pharr agree, “You get more bang for your buck if you’re a local advertiser.”

Ben Ilfeld, COO of the Sacramento Press, realized when other local sites started asking for help from the Press’s sales staff that an ad network could be mutually beneficial to everyone, and the Sacramento Local Online Ad Network (SLOAN) was born. SLOAN launched with twelve news sites and has since grown to fifty. Four sales people work full time selling ads for the network. Like Eubank, the centralized staff does all the cold calling, processes all the invoices, keeps track of payments, and schedules all the ads, so the site owners don’t have to.

Just as the site owners don’t have the time or the necessary experience to devote to sales calls, the advertisers don’t have the time or the patience to strike fifty different deals with fifty different sites, either. The advertisers had money to spend, and the desire to reach out to smaller audiences, but it had to be easy. “They needed one point of contact, one set of creative, and one rigorously audited report,” Ilfeld says.

Likewise, it had to be easy for the site owners to sign up with the network. And, more importantly, it had to be free. “One key part of this is, there’s no buy-in,” says Ilfeld. “You can be part of the network for free, and you can leave at any time. It’s just got to be as easy as Google Ad Sense, or even easier. It has to be simple, and it has to be free. Because nobody has money to start with, that’s the whole point.”

Currently, the four salespeople working full time on network sales get paid directly from the ad commissions, and the site owners split what remains, just as the Richmond sites do. Ilfeld and the other SLOAN management team don’t get profit from the ad sales per se, but they use the connections to those clients to try to sell them other marketing services event promotion, street team marketing, and web development.

Like the Richmond Ad Network, SLOAN has already seen results. For instance, the biggest site in the network, Sacramento Magazine, still sells its own ads for its print version, but had not previously sold ads specifically for its website other than signing up for Google Ad Sense. Ilfeld says that Google probably gave them about $12 a month, whereas the first month they were a part of SLOAN, they collected at least ten times that.

“The way I put it to people is, if you’re a small- or medium-sized publisher, we’re probably not going to make your house payment, but we’ll probably make your car payment,” says Ilfeld. “That could be enough money to hire a part-time ad sales person yourself. So you can kind of double down, and use the money that’s coming out of the ad network to sell more premium ads.”

So the bigger question is, could this work on a bigger scale? What about a national ad network? Jason Pramas, editor and publisher of local news site Open Media Boston, is just as dissatisfied with existing options for ad networks as the Richmond and Sacramento guys were. (“We tried [Rubicon], but when they started throwing up porn on our site we had to stop; that’s not what we’re about,” says Pramas.) Google Ad Sense and other by-the-click systems didn’t work for him, either, because of the low rate of return. He, too, tried to hire sales staff, but since he didn’t have any money to pay them, he couldn’t attract very experienced or motivated job candidates.

So, Pramas says, it’s occurred to him that like-minded and similarly-sized sites across the country could join together into a national ad network—like the Richmond or Sacramento networks, but on a larger scale. “We could bundle the equivalent of circulation,” he says, and the more sites involved, the more they could charge for the ads they sold.

When asked for advice about starting up an ad network, Catrow, Pharr and Ilfeld all agreed that it’s essential to get someone (or several people) with good experience, working full-time. And that takes a little start-up money, which, luckily, both the Richmond and Sacramento teams had because of side business ventures in design and marketing.

“What people need isn’t necessarily the ‘network’ itself; what they need is a great salesperson,” says Ilfeld. “So if you start up a network and you don’t really have the money for investing in a great salesperson, it’s destined to fail.”

Catrow and Pharr do not agree, however, that a national ad network could gain much traction. Catrow says that the biggest factor for success in the Richmond Ad Network is the fact that they have someone on the ground working closely in the community, especially in a market like theirs. “You have to have someone who can call a store a hundred times, go over there and meet with them, get turned down seventy times, and then keep meeting with them, and see them at parties…. Richmond is such a small town that you see the same people everywhere, and you never stop working,” he says. “It would be easier for us to sell to the same client than a national ad group would, because we can always go down the street and hang out with them.”

Pramas says he has been talking to Ilfeld and a few other community site owners he met at a conference this summer about the possibility of striking a deal with them to attract advertisers together. Ilfeld seems to think that a local advertising network is best, but that several regional groups could scale the model, maybe building “a network of networks.” Though he hasn’t announced it yet, Ilfeld has his sights set on the Bay Area as the next place to expand the SLOAN model. If advertisers want to reach fifty local sites in Sacramento, it makes sense that, depending on the advertisers, they might want the option of reaching another few dozen in Oakland, Berkeley and San Francisco.

The important thing, though, is that this expansion has to come from the publishers wanting to get involved and join together into a group with common goals. As Ilfeld says, you can’t impose a business alliance from the outside: “It has to be a little more organic.”

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Lauren Kirchner is a freelance writer covering digital security for CJR. Find her on Twitter at @lkirchner