Funke's growth strategy for local journalism: markets in support grow significantly

How can local journalism be profitable for publishers? A successful practical example shows how it can be done.

The air is getting thinner for publishers: while the digital transformation is still in its infancy in many media companies, artificial intelligence is developing rapidly. It's not just online searches that could be revolutionised - the provision and use of content could also change permanently.

This makes it all the more important for publishers to focus all their efforts on tapping into digital revenue sources and target groups. FUNKE Niedersachsen launched the "Local Markets" project last year. Managing Director Tatjana Biallas presented the underlying strategy in Forward Publishing's January webinar.

Is there a perfect balance between range and subscription?

In the Digital News Publishing Barometer 2022, the managing director of a major German publisher says: "[The digital platform] must ultimately be profitable and it will be profitable through various business models - not just one - and by making the best possible use of the customer relationship in order to monetise it."

While traditional newspaper publishers urgently need to diversify their offering in order to be economically stable, optimisation naturally starts with the two traditional revenue streams, advertising-financed reach and subscriptions. A paywall, for example, does not automatically lead to subscriptions.

Potential subscribers must first be made enthusiastic about the offer. The question must therefore be more specific: How can a balance be struck between ad-financed free offers and subscriptions?

Funke pursues the "subscription before reach" strategy. "For us, this means focussing on quality journalism," explains Tatjana Biallas. "This cannot and must not be free in order to guarantee independent reporting - for an open and informed society."

Market analyses and an interdisciplinary team

This goal and the strategy behind it require the merging of different departments that used to (and in some cases still do) work separately from one another. "We need to think more radically," demands Alexander Drößler from Landwirtschaftsverlag in the Digital News Publishing Barometer 2022. "Putting a print product online and attaching a price tag to it is not enough." Instead, it is important to focus on target groups and their needs, and this is best achieved in an interdisciplinary team.

This is why Funke's editorial team, data analysts, audience development, sales and marketing all work together. The ambitious goal: Funke wants to sell one million subscriptions by 2025. To achieve this, 120 cities and regions are divided into local markets and analysed based on data:

  • What are the needs of users in the specific market? Interests vary depending on the city and region.
  • What is the local competitive situation? In Wolfsburg, for example, Funke has to "share" the city with Madsack, which requires different strategies, for example to be more up-to-date than the competition.
  • How high is the purchasing power? Depending on the city and location, different offers can or must be made.
  • What editorial resources are available? Often, a small number of journalists work locally on the local print section and also manage the online presence.

Collect data, prioritise, develop detailed strategy

This information can be used to classify and prioritise. Where can the best results be expected? Funke will start with these markets at the beginning of 2022 and all other markets will be added gradually.

In a first step, a penetration matrix will be used to determine whether the strategy in the respective market will focus on reach or subscription.

The aim is to first achieve a lateral and then an upward movement in the matrix. The classification on the X-axis depends on the "unique users" as a percentage of the determined market size.

The number of "fans" is measured on the Y-axis: A "fan" is someone who has visited the website at least 19 times in 30 days.

The first step is to achieve reach penetration; after all, people first have to find out what quality content they get from Funke.

Step 1: Generate reach and train teams

An extensive, six-week onboarding programme for the respective local editorial team includes several important training steps, and a dedicated audience development manager accompanies this process. Data is analysed daily and decisions on topics are made on this basis.

Funke's editorial teams learn how to work with data in six areas:

  • Finding usable data: It is not enough to collect a lot of data. It must be meaningfully analysed and then integrated into daily work so that it can influence conscious content decisions.
  • SEO training: You can't just upload a newspaper article and think it will work. "Almost 80 per cent of content does not lead to reach or subscriptions," says Tatjana Biallas in the webinar. You have to learn how to use search engines and recommendation systems such as Discover correctly.
  • Reduce the paid rate to 50 per cent: Funke has found that users have to encounter paywalls around eight to ten times before they consider taking out a subscription. Without free content, however, they don't even get "to the top of the funnel" and therefore never have any real points of contact with the product.
  • Revise the headline structure: Newspaper headlines that already contain a lot of information have nothing to do with a digital headline that needs to arouse curiosity.
  • Topic teams: Funke is moving away from the traditional departments that, for example, cover sport in general. Instead, topics are identified according to local needs and teams are formed for them. In Wolfsburg, for example, VW is a focal topic, in Braunschweig it is football centred around Eintracht.
  • 12 articles per day: To achieve reach, you need a corresponding publication frequency. This does not mean frantically searching for topics: Instead, it also helps not to pack all the information into one article, but to write several articles, each with different information.

Depending on how far the market has progressed after the six weeks, the next phase then begins.

Step 2: Loyalising the target group

Loyalisation involves opening up or expanding additional channels in order to retain new (or old) readers and convert them to subscribers. At Funke, this includes the following measures:

  • Facebook/Instagram analysis: What content works particularly well there and when? Communities are established and expanded.
  • Optimising newsletters: Direct approach in your own mailbox with your own topics.
  • User-generated content: Strengthening a hands-on mentality - your content for our region.
  • Local competitions: Who doesn't like to win something? This can also strengthen loyalty, especially if it has a personal and regional connection.

Funke's new strategy: Is the market development working?

The results show that markets with support and a clear strategy grow significantly faster. This is time-consuming, requires time and motivated staff - but it is worth it.

The visualised targets in the data dashboards contribute to motivation in the editorial offices. Equally important is the regular dialogue between local editors, chief editors, audience development and sales: only good communication creates cohesion and the feeling of working together on an important mission - and that is Funke's mission for good local journalism.

You can watch the entire webinar again here: