How to devise a marketing strategy and pitch a journalistic venture to an investor

Journalists and money do not usually have a fluid relationship. Perhaps because this is a symbol of power that they often investigate or inquire. However, the path of a journalistic venture towards sustainability involves overcoming this resistance.

“Stop being disgusted by money,” recommended Adriana Peña, founder of consulting firm Advernativa, as a first step to tackle the task of generating income in her presentation on the second day of El Otro: 2^nd Meeting of Entrepreneurial and Innovative Journalism.

Peña, a member of the Board of Directors of SembraMedia, suggested to focus the commercial strategy on diversification of services (sale of brand contents is a major trend today), customers, and sales channels.

She also stressed that advertising is one of the most important monetization methods for digital media of any size; and of course, traffic level counts. “The most expensive currency today is user attention.”

In her view, the design of the web technology of a media outlet is not simply a matter of aesthetics or editorial style, but a matter of business and financial viability, because it directly impacts on the quantity, quality and behavior of the users and their visits; the media brand; and its business strategy.

The initial implementation of the strategy will enable journalists to meet the minimum requirement to pitch the idea to an investor: driving revenues, even if the outlet is not yet able to break even. This was explained by Patricia Torres-Burd, Vice President of UBC International Media Consulting, during her presentation at the meeting.

After that, you would need to define what type of investor you are looking for. Torres-Burd distinguished two types. First you have the philanthropists who give out grants and seek to make a positive impact in a community; they will not demand profits but they also do not want to see their money going to waste. Then you have your venture capitalists, whose priority is to make money, and who will usually ask you to reduce costs and streamline processes.

“Starting off with a grant can often be the first step to make the project profitable within three or four years, so it can be pitched to a venture capitalist,” explained the media specialist. In either case, the most important thing is to come prepared to the first meeting with the investor. Here is a series of preliminary steps recommended by the chairperson of the SembraMedia board:

1.    What makes you different and what problem you are trying to solve: Is it a type of journalism not being done locally? does it target an unserved audience? Ideally, your media outlet’s vision should have the answers. Providing a service to a community gives more value to your venture.

2.   Not everyone is your consumer: “Aged 18 to 74, with or without education” would be a very general, and therefore, wrong description of your target audience. It is almost like thinking that everyone will read your posts. The more accurately you define your audience (consumers), the more you will be able to define your product.

3.   Be clear about who your competition is: “There is no media outlet, product, or start-up that has no competition. If you do not know who your competition is and meet with an investor who does, will they carry on with the meeting?,” said the Vice President of UBC. Ideally you would even have to know who in the world is doing something similar, and how, and how successfully.

4.   Propose a business model: This means is planning milestones along your project. How long will it take you to make it profitable? What is your competitive advantage? And, how will the money be used? These are some of the questions you will need to answer. We recommend to keep it to a three-year maximum, not five years, because of constant changes in the market.

5.   Know the costs of your business: “85% of businesses fail for not understanding the costs to do business,” said Torres-Burd. It is important to detail the costs of competing in the market as part of the business model, measuring the audience, reporting, making presentations to potential clients, etc. In addition, you need to be clear that an investor will never give money to cover past or overdue costs.

The Vice President of UBC added three recommendations to interact with an investor:

1.   Prioritize ethics in relation to investors: Honesty and transparency will help create a bond of trust. If we are asked for information that we do not have at the moment, it is best to acknowledge it and explain we will provide it as soon as possible, instead of giving made-up information.

2.   Do not forget to value your project: Based on the level of revenue your venture will start to drive, you can estimate how much it is worth now and what its future value would be. With this information, you can discuss with the investor how much they would receive for a certain share of the venture. We recommend not to give 51% or more to the investor, because they could fire you the next day.

3.  Planning for divorce: “Talk to your partners and/or investors: what if we fight?, what happens if you leave us hanging one year? (...) You have to understand who you are marrying and if you will be able to have a long-term relationship,” recommended the media consultant. Putting these agreements in writing would make it easier in case separation occurs.

Patricia Torres-Burd closed her presentation with a phrase: “Do not be discouraged.” There will be many investors who will reject you, but they will also be important sources of feedback and lessons to get a “Yes” in the future.

About El Otro

El Otro: 2^nd Latin-American Meeting of Entrepreneurial and Innovative Journalism was held on July 31 and August 1 in Lima, Peru, as an initiative by the Gabriel García Márquez Foundation for the New Ibero-American Journalism (FNPI), CAF and SembraMedia, with the support of the Peruvian University for Applied Science (UPC), John S. Knight Journalism Fellowships (JSK) and the International Center for Journalists (ICFJ).