Take a heap of staff stories. Stir in a cup of AP and aggregated articles. Fold in some user-generated content and material from media partners. Don’t forget that pinch of secret algorithm.
What you get is Pegasus News, a tasty blend of local news, events, commentary and ads. Mike Orren, former publisher of Texas Lawyer, created the recipe more than a year ago to serve the Dallas market. One unique ingredient is The Daily You, an algorithm-based feature that learns a user’s interests and delivers customized content.
Pegasus News was an interesting little experiment – until July. That’s when Seattle-based Fisher Communications, owner of 19 TV stations and eight radio stations in the Pacific Northwest, bought the site and announced plans to duplicate the operation in other markets.
Fisher aims to use its sales muscle to help Pegasus garner more ads and leverage its database of registered users. Nothing frightfully original there. The real cash may come from Fisher’s plan to license the Pegasus model in other markets. The idea is to market an out-of-the-box solution to media companies and others eager to grab a share of local traffic and ad buys.
Pegasus isn’t a journalistic powerhouse just yet. Some of the staff articles are a line or two long. And the lead item in the “Your Neighborhood” section might be a notice about a lost Yorkie. But with the Fisher sale, Pegasus sheds its ma-and-pa status and became a real player in the mad dash for local traffic.
Orren, the master chef who may soon see his creation become a national franchise, took some time the other day to talk about Pegasus, the Fisher sale and the future of local news online. Here’s the Q&A.
What changed at Pegasus after the sale?
The major change is that we’re no longer operating like we’re broke. It’s a big mindset shift from not knowing if you’re going to live out the month to working on a five-year plan. Consequently, most of the change in the first few months has involved getting systems in place; patching things that were previously held together with shoestring and bubblegum.
That’s mostly stuff that isn’t public-facing, but I suppose there has been some change in our thinking about which features to roll out when. We’ve changed the key decision point from “how sexy will it look to an investor” to “does it improve the site experience?”
We had about 16 full timers and two part timers pre-acquisition (all of whom worked for four months plus without pay before we did the deal). We now have 18 full time and six part timers. Most of the addition is in sales, and there’s been some shifting of roles.
What’s the status of the Fisher/Pegasus plans to expand to other cities? What factors go into choosing?
We are all very committed to getting things right with the DFW site and not propagating our mistakes all over the country. With our lack of resources before, we really didn’t have much of a sales operation and that’s what we’re focused on now. That said, once we’ve got that clicking — and we certainly hope that’s during ‘08 — we’ll look at rolling to other markets.
As far as factors for choosing a city, there are all the same ones we’ve always entertained about market composition — but one of the most important is having key media partners that can accelerate our growth, as opposed to doing it ourselves like we did in Dallas. So obviously the bigger Fisher TV markets like Seattle and Portland are high on the list. But we’re also interested in partnering with broadcasters and print properties in cities where Fisher has no footprint.
Talk a bit about “panlocal” vs. “hyperlocal.” What’s the difference?
The problem we’ve always seen with the whole hyperlocal trend is that there is a very finite number of people in a neighborhood or a suburb who are interested enough in that community to go to a separate source, even online. That means you may have a very active community that’s meaningful to those people who are passionate — but it’s not a business. And, the fact is that a narrow geography is only one of many factors that connect me to people where I live: Are you a parent? What kind of music do you like? What sports do you follow? Where will you eat on the way home tonight? The universe of people who find that information useful is larger, which means there’s enough of an audience to be meaningful to more than the 10 businesses closest to you (many of whom probably have locations all over the metro area).
So by being Panlocal (broadly local, niche and neighborhood) — and then customizing — you can reach people on all of those dimensions, increasing your universe of community members and advertisers.
In other words, if you can put hyperlocal content in front of someone while they’re checking NFL scores, traffic and where to eat tonight, there’s a larger audience for it. It’s what the newspapers should be doing instead of having all these separate hyperlocal products.
How does the business generate revenue? Are these streams enough to carry the Dallas operation? As background, this is from a Donna Bogatin blog post with Fisher Senior Vice President Rob Dunlop in July:
Fisher envisages a three-prong business model for the monetization of Pegasus:
- Targeted, local merchant advertising leveraging the local media sales know-how and clientele of Fisher’s TV and radio stations,
- Traditional database marketing leveraging Pegasus’ relationships with its registered users,
- Licensing of the new Fisher-Pegasus panlocal Internet media model to offer prosepctive partners “speed to market” entry into the online local news business.
We’re still focused on the first two — and you have to remember that we basically had no salesforce pre-acquisition, getting ads mostly over the transom. We’ve been building our sales team the last few months and should start seeing that impact in Q1 ‘08.
What we’re selling now is primarily display advertising with progressively higher CPMs for run-of-site, geotargeted (within a square mile) and behaviorally targeted. There are also section sponsorships and targeted email and SMS messages.
One of the differences we see on the ad front already is that people are more willing to talk to us post-acquisition and less skeptical that we’re for real. Fisher brings a real sense of legitimacy and comfort to the advertisers we talk to. So while the revenue didn’t become self-sustaining overnight, we’re certainly moving in the right direction. And once the momentum is right, we’ll be ready for Fisher and non-Fisher markets to replicate the model.
How’s your traffic doing?
Traffic’s certainly grown throughout the year, and tends to go in spikes and plateaus. We’re up around 280,000 unique visitors monthly and about 10,000 registered users. We’ve done that pretty much all on word of mouth and organic search. We’re starting to do marketing tests on everything from event presence, to SEM, to billboards, to direct mail.
How would you describe the Pegasus “secret sauce?”
I don’t know if it’s a secret sauce so much as an amalgam of best practices we picked up from watching others in the space. The blend of content sources and the customization are a big part of it. I’d also say that our “voice,” which is distinct, has a lot to do with it. While we’re not The Daily Show, we try not to be so deadly serious about everything. We try to approach everything with a wink without ever being mean. That’s something you don’t see a lot in traditional local news. And, a funny or off-the-wall picture with a zinger caption can make something like a run-of-the mill press release interesting to a lot more people.
We also work really hard to make everyone who engages with the site feel like there are real people behind it. Customer service requests and email inquiries are almost always answered same-day. We’re active on our comment boards. In the increasingly rare case that a user posts a substantive comment and no one from the community engages them, a staffer does so. We’re very transparent and often blog about our challenges and solicit advice from the community. So I think that there’s both a sense that we care, that we’re curating and that we value what everyone else brings to the table.
Who knew? Good local news coverage that people want to read depends on good journalism.
An 
Read/WriteWeb
