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In a challenging media market, local news taps new tools to drive revenue

A browser window, a connected TV, and a smartphone float in life preservers within a blue line graph as a hand pulls them to safety.

Illustration by Dave Cole / Getty / The Current

As news outlets shutter or shed staff around the globe, there’s a refrain often heard in media circles: publishers must find a better business model, one that supports digital media and local audiences.

Programmatic advertising might be one key to unlock that elusive solution. Perhaps the most promising advancements are playing out in local news organizations that are building programmatic teams to increase monetization, enabling them to make the most of real-time demand during breaking or trending news, when viewership surges.

News sites often sell ad impressions based on an expected number of pageviews. That means when a story goes viral, they can’t always capitalize on the additional readership. It’s hard to predict which stories will break through, but it’s possible to create an infrastructure to make the most of filling available ad inventory on all stories.

“This can create unique opportunities from national advertisers who care about reaching target audiences at scale locally,” says Ivan Balzer, VP of programmatic revenue and partnerships at Nexstar Media Group Inc., whose portfolio includes 200 owned or partner local broadcast stations in 116 U.S. markets.

Capitalizing on surges in traffic

Nexstar runs its business with an eye on local media markets as the largest local television broadcaster in the U.S. Its stations span from the top market in the country, New York City, to the 197th market, San Angelo, Texas. An integral part of Nexstar’s local station business is its news sites and apps that all generate digital ad revenue, leaning on the efficiency and automation programmatic provides in filling ad inventory at a moment’s notice.

This means if any story gets traction because of an important news event and delivers unexpectedly high traffic, Nexstar can maximize the revenue opportunity by leveraging programmatic tech to provide immediate ad availability on those new impressions.

“When news happens locally, the trust that we’ve built in local communities means they look to us first. The opportunity to provide relevant ads adjacent to that content means we can leverage that traffic boost, providing tremendous value to the advertiser and the engaged user — and ultimately generating revenue for our stations,” Jenn Scilabro, Nexstar’s senior VP of sales enablement, tells The Current. Nexstar adds that it’s mindful of advertiser rules and employs “anti-keyword targeting technology alongside third-party brand safety solutions” so that ads only appear alongside content that is deemed brand safe.

Nexstar has seen great success over the last year, in part thanks to that model. The media giant posted a record $364.6 million in digital revenue in 2022, 13 percent higher than the year before. Nexstar can also flex its muscle as a national business that operates in smaller markets by availing these smaller markets with national ad campaigns programmatically, which can result in new demand and incremental revenue.

And as Nexstar’s programmatic team is centralized, Balzer says his team optimizes every local station’s programmatic ad configuration based on their specific needs and qualities. Plus, all the revenue Nexstar says it gains programmatically goes back into funding its own journalism – the bedrock of its business, according to Balzer.

Pushing advertising dollars into local media

In this challenging media environment, local news outlets in Canada are banding together to create a “one-stop-shop" collective to try to engage ad buyers, many of whom are starting to realize that investing in local media is also good for business.

The Canadian Media Directors Council (CMDC), which represents 97 percent of Canada’s total advertising investment, developed “The Canadian Media Manifesto” in late 2021. The initiative is focused on getting the country’s biggest advertisers to invest in local media, with the goal of increasing the share of digital media budgets on Canadian media from 19 percent to 25 percent by 2025.

Increasing media share by six points could represent a $350 million boost to local Canadian publishers and raise total digital investment in local outlets to over $1 billion. Since the program was launched, the rate has gone up to 22 percent, with leaders holding out dreams it could hit 50 percent someday.

Bringing some of this spend up programmatically can connect advertisers with engaged, relevant audiences at scale.

Sarah Thompson, Dentsu’s president of media in Canada, is a staunch advocate of local news and believes media agencies are overly reliant on advertising within Canada’s biggest cities. She tells The Current that advertisers can find value by putting their ads in front of underserved audiences in smaller towns that are growing rapidly, as parts of Canada bring in a record number of immigrants.

“[This population growth] presents an interesting business opportunity for us and also a market problem,” Thompson says. “A town like Moncton, which sits around 88,000 people after having the fastest-growing population in Canada, is currently invisible in our data sets and has been underfunded from a media perspective.”

Advertisers stand to benefit from understanding the audience nuances that exist within smaller communities, as it can help them build campaigns specific to their local interests and needs. For their media plans to take off, according to Thompson, advertisers have to evolve their thinking when it comes to activating media on these local news sites.

Still, local publishers getting a seat at the table to transact programmatically can be a challenge, Thompson says. Agencies are often looking for scale, which is where the Local News Collective comes in. Started by Village Media in 2022, the collective has brought together independent publishers and given them tools to activate programmatically, while also managing their data exchange.

The effort now spans 370 sites across 46 publishers, making it the largest hyperlocal digital news collective in Canada. The Local News Collective aims to simplify access to advertising with agencies and buyers, which Thompson says is a game changer.