Quick Math on Local

I wanted to do some quick math on why I think a local only strategy is doomed. Allow me some assumptions. The first is that a local only strategy will be filled with local advertisers. Let us also assume that advertisers only care about local people that could patronize their businesses. This may not be true for some categories, but I'd guess them to be true for most.

Now lets take the the size of a fairly large city - Atlanta. In metro Atlanta there are around 5M people (give or take). The cumulative readership of the AJC is around 2.1M over four sundays. Let's assume they can convert all of this readership to online, or even grow it to 75% of the population.

We now need to make a guess on the both the number of pageviews each reader will generate, and the revenue that can be generated per page. I'll choose an RPM (revenue per thousand pages) of $25, and that each of these online reader visits 50 pages per month.

The math then looks like this (5,000,000 x 0.75 x 25 x 50 / 1000) = $4.68M per month. $56M per year.

75% penetration is pretty damn aggressive
$25 RPM is high, but possible
50 pages per month on average would be incredible

The ajc claims that they had 110M pageviews in January 2008, and most certainly they didn't come only from atlanta. If they did at a 50% penetration rate it would be 40 pages per user. I'd guess that less than half are from their area, but the penetration rate is much lower (20-30%). That would place current traffic at around 30 pv/user in the local area, and that still seems high.

The AJC is private, but I'd guess they were making between $300-450M per year in the print version. That's only local, delivered to the local people that the local advertisers value. Taking it to a logical conclusion gives me 20% of the revenue under pretty aggressive assumptions.

Certainly there are some additional streams of revenue that can be added, and there is the chance to monetize traffic outside the DMA. However, the core product, the product that is the mantra of local, local, local, the one that's set up for both content and sales to attack - does not look promising at the end game.