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April 29, 2017

What Are They Thinking? Cox’s Dawg Nation Itches the Local Niche

Mike Joseph, executive vice president of the Cox Media Group, needs a big nutcracker.

”We can win local,” he recently told a newspaper conference. “But national is a different story.” (Here he was referring to the quickening loss of national advertising dollars.) “So I got 58 million dollars I got to cut out of the business to maintain profits. That’s going to be hard.”

Joseph can’t pull a $58 million nut out of the pantry, though, so he’s opting for smaller acorns. That first acorn barks – loudly. It’s Dawg Nation. Dawg Nation covers University of Georgia sports. Cox launched it a month ago, as college football season – near religion in Georgia – revved up. A separate website and mobile browser product, Dawg Nation is prototypical for Joseph, one of about a half dozen niche sites he intends to launch by the end of 2016. It’s a major new regional strategy to be watched.

The business strategy – importantly – banks on content expansion.

 

First published at Politico Media

Follow Newsonomics on Twitter @kdoctor

 

“It’s richer content,” said Joseph. “If anybody was going to go to the site right now, you’d notice that it’s much deeper, much richer specifics around—it could be news of the day, it could be recruiting, because that’s pretty hot right now. It could be about game day highlights and whatnot. It’s a lot richer, a lot more focused in on that topic.”

Further, Cox’s initiative becomes part of a larger niche-exploiting movement that we see taking shape, in fits and starts, across much news publishing, national and local.

Niche is a funny, over-used word. It’s come to represent all things non-general, the very antithesis of what daily newspapers long built their audiences and businesses upon. General news is what built the 20%-plus profit margins of newspapers chains and titles for decade. They built their success on an analog of the old model for show-biz success: “A little song, a little dance, a little seltzer down your pants.” For newspapers, though, it was national and “foreign” news, local news, sports, community happenings, and later expanded business news and lifestyle and entertainment features.

Now everyone’s embracing niches from regional newspaper companies like Cox, Boston Globe (Crux, Stat) and Tribune (“What are they thinking: Austin Buetner’s California turnaround plan”) to the New York Times (Cooking +) and Wall Street Journal (targeted products) to the merry assortment of vertical Vox Media sites.

I’d included “Itch the Niche” as one of my 10 Newsonomics principles, way back in 2010, and have been somewhat surprised by their relatively slow adoption. Now, though, as mass audience has been usurped by Google and Facebook, the formerly mass publishers strive to corral more definable, more ad-targetable audiences. So niching becomes a major trend today.

Mike Joseph moved into his current position overseeing Cox’s four major newspapers – the Atlanta Journal Constitution, the Palm Beach Post, the Austin American Statesman and the Dayton Daily News – after a stint as publisher of the AJC. While Cox’s pioneering roots were in newspapers, back in Dayton in 1898, today those newspapers represent a small percentage of the company’s revenues and profits. Cox Communications ranks as the U.S.’s sixth largest cable operation, and Cox Enterprises, the parent of both, also owns major automotive businesses, including the leading digital auto buying site, AutoTrader, as well as 14 TV stations and direct marketer Valpak. Overall, it’s a $1.8 billion dollar company.

Yet Cox, a privately held company, hangs on to, and makes judicious investments in, its newspapers.

Dawg Nation sits atop a $1.2 million investment, one Joseph calls “incremental.” That funding built out a separate content management system and hired a product manager, two additional reporters and a tech staff. “We believe it [will cost] another 1.2 for each additional site,” said Joseph.

Dawg Nation joins a movement toward enthusiast sites. Unlike many newspaper experiments, it comes out of the gate fast. At the end of August, it had posted 15 stories in about 24 hours. That reflects a focus on early-season conjecturing, including good treatment of the inevitable quarterback controversy; the site also betrays an insider knowledge of the all-important topic of recruiting. At launch, Dawg Nation includes a daily podcast.

Overall, Joseph said, Dawg Nation has already tripled AJC’s sport page views. The company juices that traffic by social management. “We are socially distributing content. Aggressively social distributing content,” said Joseph. “The headlines that go on Twitter are different than the ones that go on Facebook, are different than the headlines that go on the website.”

Importantly, its early business model focuses on sponsorships. Dawg Nation has nabbed its first one, at a $100,000 price point. Beyond sponsorship, Joseph cites the multiple-revenue-stream Politico business model (disclosure: Politico is the parent site of Politico Media] in his presentation and names four other revenue streams to be built out:

· traditional CPM-based ads. The free site’s traffic could make that stream meaningful;

· subscriptions, possibly at a “pro” level;

· products and services, possibly including newsletters;

· e-commerce

To be sure, Dawg Nation sees lots of competition, including team sites via ESPN, Bleacher Report, Fox Sports and Dawg Sports, one of Vox’s SB Nation’s sites. Dawg Sports displays further development in areas like Facebook sharing, fan post and comments, while offering national commerce in ticketing (through TicketNow) and apparel (through Fanatics). Yet, I counted only 14 stories on its home page over the last week. If the content comparison remains valid, AJC’s Dawg Nation may serve the industry as a way of reclaiming local – a local that has been invaded by numerous national sites smartly using sophisticated templates — if less than robust local content.

Mike Joseph put that local-national coverage conundrum in perspective. He assessed honestly the content plight of today’s reduced local newspaper franchises.

“In 2005, we were probably publishing 20-page sports sections. Today we are down to eight on a good day, six on probably not a good day. The resources that we have to throw against that were a lot more significant than we have today. I’ll guarantee we’re less than half. That’s just in one thing, never mind across the board, so a lot of cuts. What do we try to do today is … to produce that nice strong product for those consumers….The reality is it’s been watered down so much. Are we satisfying enough?”

Look at the niche strategy within that compelling context. Newspaper companies can’t afford to rebuild their entire products; besides they must adjust to a greatly changed news and feature landscape. What they can do – with the $7 million or so investment envisioned in the Cox experiment – is place new bets, backed by actual content.

Will it work? As in all things digital, expect more middling products, or outright failures, than roaring successes. It’s tough to get the formula right: compelling, daily content, smart sales, multiple revenue streams – and beating whatever competition forms.

For Dawg Nation, one number in the formula is Georgia’s statewide population of 10 million, only half of which is found in the Atlanta metro area. That statewide reach into UGA’s fan base is essential, said Joseph, to making the Dawg Nation arithmetic work.

“I firmly believe that we just try to be in Atlanta, if we try to be successful with an Atlanta-based topic, we lose. There’s not enough scale there for us to win, so what we have to do is we have to win Georgia. We have to make sure that the topics that we select are statewide, so that we can win the state. If we win the state, we survive.”

That’s a reminder of the days when newspaper companies could consider wider reach print reach an asset, rather than a liability, caused by greater costs of physical distribution.

Joseph said the criteria used in the strategic exercise are commonsensical: “What’s a franchise topic that’s actually of value to us? What’s within our core competencies? What do we now that we do well? What do we do now that we could invest a little more money in, we could do a lot better? Is there a probable audience that’s tied to that?”

We can bet the list will run the spectrum of sports and features, from tech to health to education to faith to family to arts and entertainment – and perhaps other sports niches. Take a look at the top navigation of many a news site, from the AJC to the Huffington Post, and you can see the usual suspects lined up.

If the whole publishing world sees the value of niches simultaneously, the math tells us that only some will be able to scratch them into sustainable success. Let the Niche Games begin.

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