Digital agency services are changing the news media business model in Latin America

Mike Blinder, president of The Blinder Group, spoke at the INMA Conference de Medios Latinoamerica about the challenges and benefits to Latin American news companies as they consider bringing in new revenue through digital agency services.

“It’s forcing businesses that have not focused on building Web sites, maintaining social media content for small businesses, handling their social media ad campaigns, or even search engine optimisation and marketing — it’s forcing these newspapers to invest in new technology or new outside vendors, which can be pretty costly,” Blinder said.

In addition, companies then have to hire a sales force that is trained on these topics and the products. “So the challenge is getting newspapers to invest up front in the tools they need to build these digital services,” Blinder said. “Then, train up their existing sales force and bring in additional sellers that understand how to take them to market.”

Blinder added that media companies also have to think about fulfilment.

“Fulfilment means sometimes you’ve got to hire someone else that can collect content, or maintain the campaign that has been placed for the advertiser, while the salesperson moves on to a new prospect,” he said.

This is changing the landscape because in tough economic times, when revenues are challenging for legacy newspapers, they have to invest up front to see the back-end returns.

The benefits, Blinder said, are simple. When looking at where the local digital money is going in the United States, for example, the highest share is going to digital services — not advertising. It’s going to Web site rebuilds, social media management, and search engine marketing.

“You’ve got to be with that advertiser, handling all of their marketing needs, or you may lose the advertiser,” Blinder said. “If you don’t sell digital services to these small businesses, someone else eventually will.”

In a sense, the relationship must be given a holistic approach — as an agency handling all aspects of the advertiser. Not just your core competencies, such as newspaper advertising, but also taking it to the next level to help them with the marketing tools they are going to spend money on, he said.