Chicago is the World

Here’s an innovative way to find revenue from a very innovative community non-profit media outlet, the Twin Cities Planet., one of the handful of ethnic and community news hubs around the country.

This is an article from J-Labs, click on the link to read the rest:

When Twin Cities Daily Planet founder Jeremy Iggers approached a local sushi chef about helping support his site with a half-price gift certificate deal, the chef at first didn’t bite.

A large social deal-making site, Groupon, had already approached Koyi Sushi Too, but its chef feared that too many customers might present certificates and overwhelm his restaurant. A few weeks earlier another local restaurant was involved in a similar deal: It sold 5,000 gift certificates – and then had to deliver on $200,000 worth of food.

Koyi’s chef wanted to attract attention to the store’s new location, but wasn’t sure he could handle a customer onslaught.

“We’re local and we’re a nonprofit and those things appealed to him,” Iggers said of his site, which was launched with J-Lab funding in 2005.

How Social Deal-Making Sites Work

The social deal-making business model promises deals better than half-off for consumers, more customers for local businesses and, of course, considerable returns for the industry and their backers.

Here’s an example of how it works: For one day, customers can buy a $40 gift certificate to a restaurant for only $20. Of that $20, the local partner gets $10 (typiclly half the revenue) – and the deal company keeps the rest. So the business is giving away $30 of food per certificate and is banking on a combination of customers (a) eating more than $40 worth of food when they come in, (b) enjoying the food so much they come back and (c) forgetting to use the gift certificate entirely, in which case the business just pocketed $10.
After some thinking, the chef gave Iggers’ idea a shot, and in June 2010 the restaurant became the first Daily Planet Deal of the Day. Customers could buy $35 gift certificates to his restaurant for just $15. He and the site then shared in the coupon revenue: 60 percent for him, 40 for the Daily Planet.

Over the first two weeks, the Twin City Daily Planet sold fewer than 100 deals to the restaurant, a more reasonable number for the chef to accommodate.

But of even greater importance for the Twin Cities Daily Planet and news sites like it is that, in the first two weeks of the program, the revenue from local business deals surpassed traditional advertising sales, Iggers said.

Iggers did not want to disclose exact revenue numbers, but his deals hold promise for opening up at least a small revenue stream for community news sites. Consider that if a community site were to sell seven different $15 coupon deals a month to 100 people each, it might bring in $4,200. After paying an ad salesperson a 20 percent commission, the site could net $3,360.

The Daily Planet Back Story

“I think a lot of advertisers prefer this kind of deal to display ads because with those ads you never know how effective they are.” – IggersIggers and his sales manager Yvonne Hundshamer had been looking for another way to bring in revenue, aside from banner and tile ads – an issue community news sites often struggle with daily. So they put into practice the deals idea floated by Michael Skolar as a fellow at the Reynolds Journalism Institute. He spent a year studying the future of news and hypothesized that local sites could, through coupon deals, leverage their audiences and provide meaningful connections for advertisers.

http://www.kcnn.org/spotted/small_coupon_deals_boost_local_news_sites_and_merchants//