It has been a whirlwind trip thus far in #NYC for the 2014 Local Media Association Innovation Mission (#LMAIM.) I am writing this as I sit on a plane headed to San Francisco for the second half of our trip so I will provide additional insights from #SFO in a later post.

Face to face meetings we have had so far include The Wall Street Journal, The New York Times, Simulmedia, Gatehouse Media, RegionalHelpWanted.com, BuzzFeed, Russmedia and CBS Local Media.

1.  Native is front and center. 

Regardless of the controversy this new ad unit has created, all of the media companies we visited in NYC have some sort of strategy for providing native content. Advertising revenue is shifting, and focus on advertiser ROI is rapidly becoming more important as metrics and engagement continue to dominate headlines in the advertising world. BuzzFeed is clearly a front-runner in the native ad space: “We are the newsroom for our brand partners. We are helping them react to events that make sense to their brand.”  – Matt Trotta, BuzzFeed passionately conveyed during our meeting. “We do not monetize content. Rather we take the data and insights to help the brands.”

But other companies are moving into native with the same zest and vigor. The New York Times has been experimenting with native for some time now. They believe that the “agency world is not yet well equipped to deal with quality native creation.” This gives them a way to clearly differentiate. All of their native content is placed on a subdomain of their website: paidpost.nytimes.com. There is not a landing page, nor is the content available directly via navigation. But the rules of engagement are clear, from labeling, creation, price and down to how many times the content will show up in the newsfeed. It gets SEO lift and based on the Geico sponsored travel quiz I demoed on their site this morning, it appears brands are ready to get involved and support this with their pocketbooks.

Gatehouse and others also have clear plans to develop and sell native. Some strategies involve taking the advertisers content, others are about creating the content as a service. Content quality was also an important topic and resources are being devoted to ensure that this is not viewed as an advertorial play. Concentrating on verticals seems to be a common theme that is yielding good ROI for all parties in the transaction (consumer, brand, media company.)

Native is not a fad. Time to get on board and develop those products in your local market.

2. Innovation does not just equal digital. 

So much investment and focus is on digital and new technology, but we heard from several companies that are “doubling-down” on traditional media. “There is a risk in too quickly diminishing the value of print,” said Kirk Davis, CEO of Gatehouse Media. “Local is a very, very big space.”

Indeed, Gatehouse seems to be putting a great deal of financial backing into traditional media. From the investment in a new Print and Design Center in Austin, funding of surveys for data, and a billion dollars to purchase print and directories businesses, this company is actively working to innovate the core products, rather than throw them out with the bathwater. “Innovation is challenging, ” said Davis, “I do not want to let go of the great business we have now nor do I want to accelerate its demise. Print is valuable.”

CBS Local is also working hard to integrate its radio and digital products and leverage the traditional brand. “It is important to push the core (news) but we also need to provide what consumers want. We have to take content and put it wherever the consumers are,” said Ezra Kucharz, President CBS Local Digital Media, “How do I get a fan arguing with an expert?”

And CBS is doing just that. Great examples includes new video content like the Tailgate Fan or music documentaries on Radio.com. “Take radio and turn it into video,” Kucharz said.

CBS has a very clear focus on profitability and ways to leverage content online. “Social media is the pipes of the internet. It moves people around. We want the traffic on our brand sites not Facebook.”

3. Journalism needs more than display ads to survive.

Probably the most ‘real’ or honest discussion we had came from Kirk Davis again: “There are difficult questions I am asked by our employees when I visit different markets like ‘When am I going to get a raise?’ Well, we are witnessing the liquidation of the newspaper business. In the future, Propel Marketing is going to fund journalism for our company.”

News has been subsidized for years by advertising. Classified verticals are probably the most noteworthy in newspaper’s past, generating profit margins into the 45%+ range. Those high profit margins attracted competitors, who picked apart the revenue hold newspapers enjoyed for 50 years. GateHouse’s Kirk Davis believes that digital services provided by Propel Marketing should eventually fund journalism. Gerold Riedmann, CEO of Russmedia said “Professional journalism can not be financed only by advertising. Something has to change.”

This begs a larger discussion outside of the scope of this blog, but one we as an industry need to address. If journalism  is not sustainable in its current form, what is it’s future? And in the case of GateHouse or other brands, is it fair to the shareholders to invest in this [now] loss-leader called journalism because we always have? It is easy for me to start thumping my chest and link the ideals of ‘the press’ to democracy and the constitution. But is it reasonable to expect a business to provide a service with no return? More on this at a later date…

4. Partnering is key to competing locally. 

Eric Straus provided the group an entrepreneur’s viewpoint. Founder and owner of RegionalHelpWanted.com (for the 2nd time), he provided valuable insight regarding running a business: “We need to get into bed together,” said Straus, “Let’s make a strong local brand primary over the national players.”

His logic is simple, and the success of his business shows that it works. In the markets he operates, local businesses and ‘jobseekers’ turn to regionalhelpwanted first. Rather than have all the local media players compete against each other in a market and have the national brand swoop in and take or continue to enjoy share, instead create a strong single presence that is #1 in that category. A great example of leveraging the strong brand power of traditional media into a vertical that was assumed lost by the local media industry.

5. Disrupt yourself before you are disrupted by a competitor. 

“You should jeopardize the newspaper. Would you want someone else to do it?” said Gerold Riedmann, CEO of Russmedia. “We do not integrate print and digital, and are actively trying to lure money away from print.”

Riedmann referenced disruptive innovation theories developed by Clayton Christensen and disruption in the newspaper industry by Clark Gilbert, President and CEO of the Deseret News and Deseret Digital Media. Utilizing the concepts illustrated, Russmedia developed a strategy that leverages the strengths of each media type separately. Russmedia believes:

1. Mobile traffic will exceed desktop traffic in Austria this year. Mobile is our focus.

2. There will be even greater specialization and fragmentation by digital portals.

3. Geography is becoming less and less important.

4. Keep things separate. Integration never works

5. There is not just one transformation inside the company occurring, but several.

Riedmann has dedicated sales resources for each product. No integrated reps. “We can get way more out of the market by going to the business 7x with separate sales representatives rather than just a single integrated sales person.”

When talking about digital products, his beliefs become even more clear: “I don’t want to explain to a local business what a CPM is. We sell  like a radio station would: we keep it easy and leverage the power of the brand. Targeting keeps CPMs high.”

Russmedia believes that that the way to create value is to ‘dig deeper than Google ever could.’ They create news for the ‘heads down’ generation. It is short, made for mobile, highly share-able (and via WhatsApp), and is highly consumable during periods of ‘short boredom’. But news is just one job to be done. New product development revolves around making life easier for people. So whether it is traffic, weather, gas prices or reviews of restaurants, Riedmann is focusing separate resources to continually disrupt his print hold in the market.

Some final food for thought from the innovators we visited:

“We have been raising prices like crazy, and the market supports it. Print is still very profitable, just less readers.” -Gerold Riedmann

“We don’t want one-truck Bob.” -Ezra Kucharz, CBSLocal Digital

“You can hit an audience of 3 people and expand it infinitely with the power of the social web.” – Jonathon Perelman, Buzzfeed

“Our relationship with Google is passable. They are the gorilla. They are awfully damn big.” -WSJ