Marketing Workshop: I Didn’t Know It Was Going to Work

Introduction:

This week, Shawn Busse and Loren Feldman talk to John Garrett about his contrarian approach to newspapers, marketing, and competition. Garrett has built a Texas-based chain of print newspapers that has managed to outcompete established news organizations and digital platforms for both community engagement and local advertising. Not surprisingly, when he first took out a $39,000 credit card loan in 2005 and started telling people that his business model would feature a monthly print publication that he would mail to everyone in his target communities for free, he didn’t get a lot of congratulations. And not everything he’s tried has worked. An expansion into Arizona, Tennessee, and Georgia, for example, failed early in the pandemic. But almost 20 years after its debut, a period during which most local publications have been in retreat, Community Impact is thriving. And from his seat as a publisher, Garrett offers a perspective on marketing that any business owner would be wise to consider.

— Loren Feldman

Guests:

John Garrett is CEO of Community Impact.

Shawn Busse is CEO of Kinesis.

Producer:

Jess Thoubboron is founder of Blank Word.

Full Episode Transcript:

Loren Feldman:
Welcome, Shawn and John. It’s great to have you both here. John, I still don’t completely understand how you’re doing what you’re doing. So I’d like to start: Could you just explain your basic business model to us? In other words, how are you making print work here in 2023?

John Garrett:
Yeah, thanks, Loren. Well, the basic premise is that even though we live in the Information Age, no one knows what’s really happening in their own backyard. We put together all the information that matters to you, that’s news to you, that you care about in your community, and we send it to you. And people love it. And since people love it, they read it. Then advertisers want to be a part of it. And that’s how we generate our revenue. We’re not a subscription-based product. We’re a free, high-quality, local journalism product that really connects people to their communities, and local businesses are a big part of the community.

Loren Feldman:
But what you just described could kind of describe local journalism for the last 100 or 200 years. And yet, publications have been closing all over the country. Why is yours succeeding where others are failing?

John Garrett:
Well, I mean, there are probably several ingredients to that. But let’s also not discount strategic decisions that a lot of those new organizations have made for a variety of ownership reasons, and whatever reasons, just bad strategy planning. But the critical piece, I think, for us, as the news organization that we are today, is the circulation piece. We mail 2.5 million newspapers every month to residents all over Texas. That’s by far more than any publication, actually, in the country.

And so, when a lot of the local news organizations, the legacy—I’m talking legacy right now—when they made their strategies on circulation costs, like how much it costs to subscribe to your local paper, they’ve ramped that up so much that their circulation has just plummeted. If circulation plummets, then fewer advertisers are interested in that audience. Their model is: Let’s build a reader-revenue model. So they’re just trying to drive circulation dollars, while Google and Facebook and TikTok and all those guys just say, “Thank you. We’ll take all the local ad dollars.” And their product just isn’t competitive any longer.

We are competitive, because we’re local. For most local businesses, geography is the number one filter. Do you live near my store? Do you live near my restaurant? We do geography better than, I would say, even better than Meta or better than a lot of these digital companies do.

Loren Feldman:
What do you mean by that? Because, obviously, they do it with geofencing and other digital techniques. What are you able to do that they can’t do?

John Garrett:
Yeah, so I mean, we know every address we’re going to. There’s no digital ambiguity about the cell phone and exactly where it’s at. The other thing is that, if you continue to look at Round Rock news articles, we know that you care about Round Rock. So we have good first-party data. So naturally, going to every single household in a geography is pretty impressive—as opposed to buying geo targeting, which I think is a great product.

But when you’re talking about competing, we’re not saying we’re the only ones that can do geo targeting. When you’re talking about going to a business owner and saying, “Hey, do you want to reach these people around you,” we need to be able to compete. And we compete very well. And so that’s just unique. I mean, none of the large dailies in any of the cities that we compete with here in Texas can compete from a geographic standpoint like we can. It’s not even in the same conversation.

Shawn Busse:
Yeah, I could see that. It’s like, when I go online, and I say, “What is my IP address?” You look it up, and it has me over in Hood River, which is about 45 minutes east of Portland. And if you’re advertising to me thinking I’m in Hood River, all of those ad dollars are wasted. It’s not even that close.

What people are realizing is that a lot of these digital media companies actually aren’t quite as good at ad targeting as they say they are. And that’s a whole other thing. I don’t know if you have any thoughts on that.

John Garrett:
Oh, man, I’ve got lots of thoughts on that. [Laughter]

Shawn Busse:
Throw your competition under the bus. Go!

John Garrett:
Listen, I mean, it used to be cheap, right? It used to be inexpensive on Facebook to do all these targeting tools, and they know a lot about us. Obviously, what Apple’s done to Meta is crazy. I’ve always felt like the data was wrong. But now, I mean, even if they are really good at it, they’re expensive. They’re not inexpensive any longer. And so we compete with them on dollars.

And the other thing is that we’re tangible, and I think that that’s really important. I talk about this word called “phygital.” We live in a digital world. We’re physical beings in a digital world. Retail stores are coming back. Physical stores matter to us. In Round Rock, Texas, and in Austin, Texas, and Frisco, Texas, we’re a tangible product to the business owner and the decision maker. So Facebook’s not really tangible. So I think that gives us a little bit of an edge, because we have people there in those cities, but also we show up at the business owners’ home address. They kind of know who we are. I think that helps. It gives us a little bit of an edge.

Loren Feldman:
Could you take us back? When did you and your wife start Community Impact? And what gave you the confidence back then, at a time when a lot of media companies were struggling? What convinced you that this would work?

John Garrett:
Well, I always wanted to be an entrepreneur. I had all these really stupid ideas that my wife would always turn down. But I had been in the business my whole career, at that point. I don’t know, I just kind of drew out this idea that my wife and I—we had a two-year-old kid, we didn’t care about school sports. That’s a big thing, a difference between us and other community papers: We don’t write about sports, or courts, or anything like that. We write about business development, local news, and government.

So our focus area was always, “Hey, what do people actually care about that doesn’t have Johnny kicking the winning field goal that lives in their family?” So we really focused on things that we felt like people were interested in and curious about. And so I think, like any business owner—I mean, most business owners I know—I did not know that it was gonna work. [Laughter]

Shawn Busse:
I appreciate you admitting that.

John Garrett:
I took a $39,000 credit card loan to start it, because it was hard to get loans, and you’re still personally liable for it. So I took it, and I had one of those 1.9 percent financing for the life of the loan as long as you pay the minimum. I did that. And I was young enough in my career where I felt like I could make those mistakes, and then still go get another job. So I don’t know, I just felt like it was a good idea.

And I’d been in the business. So that’s the other thing. I grew up in the business, so I knew a lot about the business. I knew not only the business side, I’d learned some of the journalism side at the Business Journal here in Austin. And so I think I was kind of ready for this move. But I didn’t know it was gonna work.

I mean, my first issue, my costs were about 30,000 a month to print, mail, and have a couple of staff members. And we were really smart. On the front end, we did $16,000 of revenue, but it was 50 percent. So we told everybody, “If you sign a 12-month contract, we’ll give you 50 percent off the first month,” which was really smart because that meant in month two, we had $30,000 booked of revenue. And so we were pretty much cash-flow positive month two.

Loren Feldman:
Wow.

John Garrett:
Which is really, really helpful when you’re spending $16,000 a month on printing and mailing. So I was kind of stupid, to be honest with you, about how fast the budget would run out. I think I was kind of blind to the reality of how cash flow works, but it worked. And I did a lot of prepaid. My customers helped finance, obviously, the business, because we took the payment upfront. The printer gave us terms, but postage doesn’t. Like, you’ve gotta prepay postage, but just being scrappy at the beginning I think helps. Like, “If you prepay, I’ll give you a little discount,” that kind of thing.

Loren Feldman:
When was it that you started, John?

John Garrett:
We started in 2005 in the Round Rock/Pflugerville area. It’s the northern suburbs of Austin, home of Dell Computer Corporation. It’s not a sleepy town. I know a lot of people around the country think we ride horses to work. It’s a high-tech town, and it’s a great place to start a newspaper.

Shawn Busse:
How did you sell those first deals? I mean, you basically have an unproven thing. You don’t have any, I don’t know… credibility in a lot of ways, right? So clearly people trusted you. How did that happen?

John Garrett:
Yeah, I mean, I had a graphic designer kind of put together some mock boards—like giant poster-board signs, but really nice—of what it would look like. Because it was just a different concept, so I needed our customers to visualize it. So I had these two giant boards, I’m walking around with one of those portfolio cases taking it to local businesses. I’m like, “Hey, don’t you think Round Rock needs this?” And I mean, listen, I got told no a lot. Some of the most successful business owners in the city, who I had looked up to, said things like, “You’re gonna mail 60,000 newspapers? You’re crazy.” And I mean, I got a lot of a lot of nos.

But how I got yesses, there’s a lot of luck involved. At one of the biggest health care companies here in Austin, this woman never answered her phone. She told me this years later, but I called, and she thought it was her family. And so she answered it, and I got a meeting with her. And she was a big supporter at the beginning.

So, I got kind of lucky, but also I had relationships. I was in the Austin market. I knew local business owners, and I had a lot of people take chances on me. Actually, my invoice number one, his name’s Ken Moncebaiz. He owns a steam cleaning place here in Austin. You know, a lot of entrepreneurs want to help other entrepreneurs. And I think just being vulnerable business owners, directly, is a really good way to build trust. And there were a lot of Austin entrepreneurs who just helped me because they wanted to help me. And that’s something special.

Shawn Busse:
Yeah, I think that’s such great advice. So often, I’ll talk to somebody who’s trying to get something off the ground. And they approach it from, “How do I sell and convince,” as opposed to just asking for help. Again, in a way, that’s what you’re doing, right? You’re going out there and saying, “Hey, can you support this thing? Here’s why it’s different.” And sometimes people will say no, but then they’ll point you to somebody else who will say yes. And that’s a whole other thing to think about: How do you turn a no into a yes?

John Garrett:
That’s exactly right. I love what you said there. Like, “Will you help me? You know, we would say that. “Will you help us bring local news to Frisco, Texas?” We had no credibility in those cities, right? “But will you help us?” That’s really good. And you’re right, yeah, we direct you to other people. That’s really good advice.

Shawn Busse:
So you were tapping in. Even from an early point, it was almost like a higher purpose. So you’re saying, “We need this. Will you help us?” As opposed to, “I’m running a business trying to make money, and I’m trying to sell you.” So it’s a very different way of approaching it.

John Garrett:
Yeah, it resonates with everybody to say what I said: “We’re living in the Information Age, but no one knows what’s happening in our backyard.” That just resonates to us all. There’s all this information, and it’s everywhere. It’s out there. Where do I go to find the city council agenda? Where do I go to find out what they’re building behind my house? Hey, are they going to build something cool nearby? When’s this road going to be done? Like, where do you go to find that information? It’s out there. We just curate it in a unique way, and we send it to everybody, and people are like, “Thank you.”

Loren Feldman:
John, you told us that, today, it’s a lot more expensive than it used to be to advertise digitally. And today, you have tremendous credibility. You’re sending your publication to every home and the advertisers that you reach out to know that and understand that and believe that. That wasn’t the case in 2005. Back then, who did you see as your competition? And back then, your digital competition was a lot less expensive. How did you win that battle?

John Garrett:
Yeah, so we did view the local dailies and the local community papers as competition. We won by circulation. Like, it wasn’t even close. The Round Rock Leader, the local paper in Round Rock, a city of 50,000, 60,000 people—they might have been going to 3,000. We were going to all of them. So for us, our selling pitch was kind of a cost per household. So even though it’s cheaper to buy in the Round Rock Leader, sure, it’s only $100 a week there. And maybe it costs us $400. But we’re going to 30 times as many households. So we sold it on a cost-per-household, cost-per-thousand basis, and that’s how we competed.

But it didn’t take long, because, listen, one thing that we are serious about is design. Our product is a 35-pound, high-bright newsprint stitched in thread. It’s a beautiful product. And so it stays on people’s coffee tables all week long. I mean, all month long. We’re a monthly. And when they see it, quality sells. So, we never wanted to be the cheapest, although on a cost-per-household, we were an incredible value. We are kind of more expensive, even today. Today, we’re really selling against digital. I mean, we still sell against billboards, and there’s some TV, but mostly we’re selling against Facebook and digital services, those kinds of things.

Shawn Busse:
The quality comment is really interesting, John. I think about when I was in a small town, I grew up in southern Oregon, and I was in a community of maybe 25,000 people. And I remember that you’d go to the restaurant, and there’d be a little wire rack, and there’d be this very poorly designed, very cheaply printed kind of local news sort of thing. So it was free, like yours. But it wasn’t coming into my home, and the quality was just terrible.

And then the other option was, like you said, the paid circulation. So the Ashland Daily Tidings, which is now out of business. So that was actually not very well done either. So it seems like you’re doing something interesting here, where you’re giving something away of high quality.

John Garrett:
We have like 38 editions. And we have something like 33 designers on staff. So most publications in our industry would have, like, four. And it shows in how we curate the news. Yeah, design is a big part of who we are.

Loren Feldman:
Can you give us a snapshot of how big your company is? Employees?

John Garrett:
Yeah, so hopefully, the budget says we’ll do 35 million in sales this year. We’ve got about 200 employees, including staff, and we have our own printing facility here in Austin. And we’re all over the state, so we’re in Austin, Houston, Dallas, and San Antonio. And we’re focused on Texas. That was a big change for us.

During the pandemic, we had a lot of difficulty. We were out in Phoenix, which was profitable, but what happened with the supply chain and what happened with the world just made us think, “What are we doing?” So we’re focused on Texas, which is a pretty good place to be—ninth largest economy in the world. So we’re gonna hang out here for a bit. We have a lot of room to grow here.

Loren Feldman:
Tell us about that. What drove the decision to expand? And if it was profitable, can you tell us more about why you decided to stick with Texas?

John Garrett:
Yeah, so our DNA is hilarious. Like, our DNA is, “Let’s fight the incumbent.” And so what happened with us is, we were growing in Houston, Austin, and in Dallas at the time. Hurricane Harvey hit Houston, and hit it hard. And we’re local businesses. So they were flooded, but we just had this mentality of: “Okay, giant, you’re gonna face us. Let’s take it on.” There’s a phrase that says, “Everything’s bigger in Texas.” We said that CI is bigger than Texas. So we felt like what we did should be bigger than just the state. And so, yeah, we went out to Phoenix and, listen, I’m not counting out that we will ever go national again. I think what I’m saying is, the world changed.

So we have this print facility here, and pre-pandemic, it made a lot of sense. We would print here, ship a day out to Phoenix, and it cost us like $2,500 a truck. We could make those economics work. What happened with the pandemic—you remember the truck shortage—it went from $2,500 to $10,000. And our paper, by the way, paper’s still like gold. Our paper costs per ton went from like $650 to $1,200. And for us, our circulation is about $100,000 a month of COGS increase.

So we just couldn’t justify the mission, because we were growing. I think we had five editions in Phoenix. And what happened was, there was another locally-owned, independent news organization that wanted to kind of go where we were. And so we ended up selling the operation to those guys and just kind of put our tail between our legs. It was sad. We put a lot into it. I lost a lot of money, to be honest. And so it’s kind of sad to suck that up.

But today, knowing all that I know, today, all that’s happening in the world, I feel really good about that decision—even though, as an owner and as just somebody who likes to win, it hurt. It hurt a little bit, obviously to close that down. So, luckily, all of our employees were offered jobs there with the new company. And you know, we did the best we could as an ownership group—ownership group meaning me and my wife—to take care of those folks.

So, yeah, we’ve won, and we’ve lost. Atlanta we launched in March of 2020. Like, really? [Laughter] That was gonna be six weeks, right? The pandemic was going to last six weeks. That’s what we thought back then. And so anyways, we ended up closing that down as well. And we had a little operation in Nashville where we had actually acquired another publication, and we ended up closing that down, too. So we just said, “Hey, let’s focus on Texas.”

Loren Feldman:
And have those supply chain issues and the heightened costs reverted to where things were before the pandemic? Or are you still fighting that?

John Garrett:
Yeah, trucking is a little easier. I don’t really know how much it would cost to send a truck out there now. I’m sure it’d be double, but probably not $10,000. But paper is still high. We just got our first reduction that we’ve seen in years. So we got a 15-percent reduction cost, but you know, we’re up 100 percent. So we’ve got a little ways to go. I’m not a math expert, but I think we need to get back to a 50-percent reduction. I think that’s right. We’ll be back to where we were before, but I don’t see that ever happening. I think there’s a lot of stickiness to these cost increases.

Shawn Busse:
Tell us, John, I’m familiar with the Business Journal here in Portland. I know they’re a national organization. Their model seems to be really built upon paid subscription and then events. They do a lot of that stuff, and then advertising sales. Tell us a little bit about how you differ from them and how you see your strategy when they’re in a market you’re in.

John Garrett:
Shawn, I love that question. Because part of the reason why I started—you know, I was at the Austin Business Journal, same company. Here was our sales pitch back in 2005: “The reason you want to advertise in the Business Journal is because you want to be around decision makers. The reason decision makers read the Business Journal is because we tell people about things that are happening first.”

And I just thought to myself, “Why is it only the insiders”—like the smart developers and bankers and all those guys—”are the ones who know first? Shouldn’t everybody?” Like, if you own the farm that the developer knows the road’s going through, shouldn’t you know that when he shows up at your door so you don’t sell the farm for an unfair price?

So that was how we flipped it. We said, “Everyone deserves to know this stuff first.” And so we flipped it on its head that way. We don’t do events. I think that’s a great business of theirs. We could get into events, I think, although I will tell you that most of our customers say, “Please don’t do events. We’re so sick of all these events.” [Laughter] They’re smart to do it. I think it’s a big revenue driver for them.

And I think most people in our industry are less concerned about ad sales than we are, print in particular. We really still believe in the power of print, and it shows in our numbers. But most news organizations are selling digital services. You know, how do I help this local business buy Facebook? And that kind of a thing, so more of an agency model. We’re really more focused still on owned and operated.

So we did create a great email newsletter during the pandemic. I think it’s the best community email newsletter in the country. It’s free, and it’s growing like crazy. We’re sending out about 180,000 a day now. So we’ve turned it from a monthly news organization to a daily news organization. And we’re doing sponsored content, Loren. So there’s a real product mix, market fit for digital, that in my opinion, hasn’t been there in a long time for news organizations. You know, pop-up banners and autoplay videos, they don’t get me too excited. But sponsored content is pretty fun. And it’s a great product for some of our customers.

Loren Feldman:
Why do you think the newsletters succeeded? What are you offering that people wanted?

John Garrett:
Well, I think people just want to know what’s happening in their own backyard. Every day, there’s news. So we are geographically targeted with the newsletter, just like our papers, so that we have a Round Rock newsletter. And we tell people the same kinds of things we do in the paper, but we do it through the digital email format. And people like it. So I mean, it’s really not rocket science. We’re giving people news that matters to them about their area, and people like it, so they subscribe to it. It’s not hard!

Loren Feldman:
Are you competing with yourself though? Does that take away from interest in the print publication?

John Garrett:
Yeah, Loren, I think we learned that lesson as an industry—some of us did—in the late ‘90s. That’s stupid. Like, give people the news the way that they want it. And what was really interesting is like, we’ll write a story about something that City Hall does in the newsletter. By the way, what’s really funny about that is we would do that anyways online. But now we’re actually putting it out in an email. But the reader reads it, and then they get the paper. And we may say the exact same thing, but the way our brains work, we need to see things and hear things multiple times for it to really resonate and to be truthful and factual in our brain. So it’s kind of reaffirming what they may have already known. And it hasn’t impacted our business at all. We hear the same things about our newsletter that we do the newspaper.

In fact, Loren, since you asked, the city of Round Rock does this city survey—I’ve talked about this a few times—every two years they ask their citizens: Where do they get their news or information about the city? It’s a part of a large city survey they do about police, public safety, all that stuff. But anyways, long story short, in 2020 74 percent of residents said they get their news from Community Impact—by far number one. Like, there’s nothing even close. The Statesman, the daily paper here, that has been here for 150 years is like 14 percent. Facebook is like 40 percent. I think 74 percent in 2020.

We launched the newsletter. Guess what happens to that number? It goes up: 77 percent in the 2022 survey say they get their news from the Impact. So I feel like it’s a flywheel. Both the print and the digital create energy for each other. And I mean, come on, anybody can try to start an online news organization. But we’re in everybody’s home, and we’re online. That feels like a good heavyweight fighter right there ready to win and help local residents really know what’s happening in their backyard.

Shawn Busse:
I’m thinking of all these media sources that I’ve consumed over the years, and it feels a little bit like the mistake that they made was that they tried to do everything poorly. You know, they tried to be original journalism, but then they would cut their news staffs. They tried to get distribution, but they would charge just enough to where people wouldn’t really want to pay for it. So they wouldn’t pay for circulation. So they’d have weak circulation.

They tried to make it work with advertising dollars, but then the advertisers would look at circulation and go, “Well, you’re not that valuable.” And then they tried to become digital agencies, as you mentioned earlier, and they kind of do that shittily. They’re just a middleman most of the time, marking it up when you can just go DIY it or hire another agency.

So it’s like, they’ve tried to do everything, but they’ve done nothing well, and I think that some, like The New York Times, have figured out some of this stuff is just a fool’s errand. But the local publications, they’ve been on that train for a while now. And it seems like they can never get off it. And if I see this correctly, what I think I’m hearing from you is: We’ve given up a few things. We’re willing to say, “We’re going to get no revenue from circulation dollars.” We’re just not going to do that. In exchange, we’re gonna go to advertisers and say, “Hey, we touch a lot of households,” three quarters of the population in the market you just talked about. Am I hearing that right? Is that a fair assessment? Or what am I missing?

John Garrett:
Yeah, I mean, I think the only thing you’re missing is I think there are a lot of independent news organizations around the country—usually family-owned—that are doing it right. There are. They’re just kind of not on the radar. Yeah, obviously, when you think about big names everyone knows, The New York Times and the Wall Street Journal are doing it the best. The Washington Post is starting to show some real cracks. I bet Bezos is maybe running some of that.

But I think what most people think about metro newspapers, there are a lot of differences between the ones that are in the cities around the country. But the majority of them fit that to a tee. There was this philosophy around our industry that said: If you look at a spreadsheet, and you have 100,000 subscribers, and they’re paying $300 a year, that’s less money than if you have 50,000, paying $1,000 a year. And so they were willing to lose 50,000 of their subscribers to get more circulation revenue. And it was a total train wreck.

Shawn Busse:
Wow.

John Garrett:
That’s where these private equity companies, a lot of them, have bought these organizations on those kinds of calculations in an Excel spreadsheet, and what have they left themselves with? It’s the idea you have a three-puff cigar, so you pay for two puffs of it. And you get that last puff for free. And that’s how they view these news organizations. There are only three puffs left there. They say things like, “There’s a runway left.” “How much runway do we have left before print dies?” I mean, that’s what they say in our industry. And I’m like, “Guys, you’re just destroying your best asset.”

Shawn Busse:
Was it the outside acquisition that really was the catalyst for this decline? You know, private equity coming in or consolidation?

John Garrett:
Well, I think they were disrupted, for sure. I mean, Craig Newmark from Craigslist says, “It’s not my fault.” I mean, it totally was his fault. You know, he’s funding journalism now. He’s trying to be the nice guy, but he destroyed so much of the institution, the legacy stuff. And I’ll say this, it’s starting to happen. I think AI is going to be as disruptive to local news as the web was back in the 90s. And I think it’s going to be interesting to see. I think AI actually gives these news organizations, who have a lot of data and can provide a lot of context that Google kind of does now, a chance to compete with Google for information.

If you really wanted to know what’s happening in Oregon, and you went to the archives of all these newspapers and pretended like they were actually producing new content—some of them are—so you can imagine what a great data set that is. My thinking is that: Will the news organizations—what we learned in the 90s, how we failed, how Craigslist destroyed classifieds—will we learn from that? And in 2023, we take this new technology that truly will, if you study it, could disrupt Google. And if it does disrupt Google, can news organizations that have data compete in a new way?

There’s a lot of that happening in our industry. People are looking at that right now. And I mean, I see that as a huge opportunity. So I don’t think it’s just one thing, to answer your question, Shawn. I think there’s a variety of factors, but you kind of nailed it on: They destroyed their own product with pricing. They didn’t invest in the thing that made them money. And now they’re like, “What does the market want? The market wants Facebook, so let me go sell Facebook as a third-party reseller.” I mean, you’re exactly right.

Loren Feldman:
John, do you see AI as an opportunity for you to use?

John Garrett:
Yeah, but it’s different than what you think. So I mean, what people are scared of is it’s gonna replace reporters. I think companies will do that. I think that’s a mistake. I think AI in the news business will be: The companies that do three things really well can do some fun things. And those three things are: Number one, you have to have the data. The data has got to be yours. And it’s got to be new, and it’s got to be fresh. You’ve gotta be completely updating the data. And it’s got to be old for context. You can do some great things with context and new data. That means you’ve gotta have reporters finding that stuff out.

The second thing is: You’ve got to have great circulation. How are you going to get that information out, if it’s just a database somewhere, and there’s no real traffic to the site? You’ve got to have circulation. But the third thing that I think is gonna be the most vital is trust, brand. If I trust the news organization that is using AI to give me context to what I’m looking for, home run. And I think that there are gonna be a lot of organizations out there that are using AI—they already are—that aren’t trustworthy.

So if the local news organizations have a good brand, they can use it. And I think that it could be a valuable tool to how we gather news, how we answer questions, and how we help local businesses succeed—the revenue side. So I think it’s gonna be a big opportunity for people.

Shawn Busse:
What about the design side? I mean, you talked about having 33 or so graphic designers who were putting these things together. Do you see them worried about that?

John Garrett:
There are a lot of questions about design, in terms of copyrights and how the machine doesn’t really understand art like we do. But I mean, if it gets better, I could see it being a useful tool. It could help a designer think creatively. Yeah, I think it could help. I don’t know what the future looks like for our ratio of designers to paper, but I don’t know.

Honestly, I haven’t done enough work on the design AI side. I’ve been mostly focused on how it takes content, summarizes it. I’ve been playing around with crazy stuff, like, I took a cnn.com video, plugged it into ChatGBT-4, and I said, “Tell me the five things that I need to know about this video so I don’t have to watch the video.” Man, it spit it right out: This is what the guy said on the video. All I did was, I inputted a link. That’s pretty valuable. So that’s what I’ve been playing around with. And I think that that’s got some really cool implications—not from a cost-cutting standpoint, but from a product-quality standpoint. That could be a game-changer for our industry.

Loren Feldman:
It sounds like a good reporter’s tool.

John Garrett:
Exactly right, Loren. Let me flip that on its head. Say a reporter’s using it, and it gets all the context and all the data. I think that one media company I really admire the most right now is Bloomberg. You know, the Bloomberg terminal, right? That’s really what this is. Now you flip it on its head, and let’s just say that we built a reporter’s tool that’s really amazing, has all of this context, helps us write the stories better. Flip it on its head and give that to the reader. Like, what could a reader do with the same tools that a reporter has? I mean, I just think that’s amazing. So it really would help a business leader, for example, understand a community that they’re going to for the first time. I just think there’s some really cool stuff that it could do. And I’m very curious about it.

Loren Feldman:
John, how do you market your business? Do you reach out to subscribers? Or do you just mail your product to them? And how do you reach out to businesses and market your opportunity to them?

John Garrett:
Yeah, I mean, direct mail is a great product. We direct mail 2.5 million pieces every month about who Community Impact is. It’s crazy. Most news organizations don’t believe this, but we get something like 80 call-in leads a week that are interested in advertising. It’s wild. So yeah, our product is so good, but in terms of brand, we really have stepped up our brand game a lot.

It’s funny, they always say that what you’re really good at, you’re not really good at for yourself. And so we’ve been investing a lot more time in our brand. We used to be Community Impact Newspaper; now we’re just Community Impact. Our tagline used to be “Local. Useful. Everyone Gets It.” Now, it’s just “News Everyone Gets.” So we’re kind of developing, as well, our own brand, and we’re using HubSpot to do some email targeting to our clients. We’re doing some things, but we’re still growing in that area. And it is funny: We sell it, but we don’t really focus on it enough ourselves. So we have work to do there.

Shawn Busse:
How do you see your role in the new marketing landscape? I think a lot about how, let’s say I wanted to send something to somebody. I don’t even know if they’re in the office anymore. Like, if I wanted to reach out and send somebody a really, I don’t know, thoughtful gift or a letter or something as a prospect, they may or may not even be at their office. But they have a house somewhere. I’m curious if you’re thinking about that at all.

John Garrett:
Man, that’s a good one. I’m gonna have to put that one in the parking lot somewhere. Yeah, I like that idea, and especially because from a circulation standpoint and distribution standpoint, we’re already doing a lot there. No, I think for us, our growth strategy right now is pretty simple. We want to build, we’re calling it CI simple. We’re gonna do a redesign of our paper that’s a little more simple. Great design is still simple; simple is still great design. But we’re gonna do some things. Because you think people are learning a little differently, so we’re going to try to innovate that. We’re going to continue to build up our newsletter. We think that’s a huge upside for us. And we’re going to grow in some new markets.

We have a new approach to growing into markets that we call CI Light. And that’s kind of a double entendre—you like that, Loren, right? We want to be a light to the community, but we also want to go in there a little lighter. We go in heavy with the print product. It’s very expensive, and maybe we could go digital first, with a really high-quality newsletter product. So our focus is market share, and continue to grow in Texas. And then some of those side projects, like you talked about, could come in handy.

I do think we need to grow. Our digital products are getting really good. When I say digital products, I mean, owned and operated, like our own. So I think one of the things I’m thinking about is, we’ve always sold advertising per month. We’ve always been kind of a 12-month contract kind of company. I really want to go to a kind of advertising-as-a-service type model, where instead of charging somebody $67 3 for a quarter page ad and $350 for a newsletter ad, whatever, we charge $1,500 a month and we do all of these things for you. I think that that’s kind of a cool way to kind of build the news organization of the future. So that’s what I’m thinking about.

Loren Feldman:
John, if you go into a new community where you’re not established, and you go newsletter first, how do you spread the word and get people to notice it? I’m asking for a friend.

John Garrett:
Yeah, well, friend, you’re doing some really smart things. I think events are a really smart way to connect people to your digital brand. You know, I think there are some interesting tools out there that companies are creating for referral tools.

Most of our leads come from HubSpot’s pop-up on our website. Because it knows you’re in Round Rock, it says, “Hey, do you want to get the Round Rock morning newsletter?” It pops up, because it knows if you are a subscriber or not a subscriber. So that’s where most of our organic growth comes from. I mean, we’re not doing a lot of marketing for it, or the smart things that people are doing, but we’re growing almost 800 a week just organically. So it’s pretty good.

Loren Feldman:
Are there things you know about the digital advertising world because you’re competing with them?

John Garrett:
Yeah, today, I think the forward-thinking companies that are looking to do digital marketing are understanding that this whole idea of storytelling is really good. And everything that you’re doing—brand, image, billboards, Insta ads, or content marketing, whatever you’re doing—the message needs to be the same. So if you’re a business owner, the best thing you can ask yourself—and be honest with yourself—is: What are you trying to accomplish? Number one, are you trying to build your brand? Do you have a new product you want to tell a story about, or whatever? That’s number one.

Number two, are you trying to actually generate leads, like, fill out this form? Or are you trying to generate foot traffic, like couponing, or that kind of thing? You really need to decide what you’re trying to do. And then whatever that is—this is where business owners get in a lot of trouble. They have all these different vendors that are selling them all these different ways to do all those different things. Decide really what you’re trying to do. What is the number one thing you’re trying to do? And go all in on your marketing efforts to do that one thing really well.

We do a lot of design services for free for our clients. We’re like, “Hey, take this to the other magazine that you’re advertising in,” or, “Take this to your digital provider and make sure that the artwork is similar. If you have a QR code in there, or if you have a click-to-form or whatever, make sure every marketing that you’re doing”—whether you’re buying banners at a Little League baseball game, or buying flyers, or whatever you’re buying—”decide which of those three you’re trying to accomplish.”

Don’t mix it up. Don’t put a bunch of different objectives in there. Make sure all the mediums that you’re doing are going after that one thing, and go after that hard for at least six months, and then make adjustments, but stay consistent. And find out what works for your formula. You might have to up your offer a little bit. You might have to choose a different piece of artwork. Your call to action might not be big enough, whatever. Tweak around with it, but don’t spray 14 different messages all over the world and try to guess which one is going to work. That would be my best advice.

And I think that what’s interesting about the next generation of people, really—Millennials and Gen Zers—the idea that we’re not going to share ideas or thoughts with our competitors anymore is so my generation. Like, if we’re doing design work for a local business, and we don’t let them use it in another magazine—because that’s what I was taught at the Houston Chronicle when I started there—that is so uncool. And it’s just not gonna work. So I think we need to share more ideas with our competition.

Loren Feldman:
That could have been a lawsuit in the old days, right?

John Garrett:
Right. We need to be so generous to our customers and help them and work together with our competitors to help them. And it’s more money for all of us, and the customer wins. And that’s really the most important thing.

Loren Feldman:
I think that’s so smart that you see that, in doing this work for them for free but encouraging them to use it elsewhere, you’re not just helping them, but it pays off for you as well.

John Garrett:
Yeah, that’s right. And that’s a new way of thinking, Loren.

Loren Feldman:
For sure.

John Garrett:
That is the next generation teaching us older people some things. Now, listen, the next generation needs to listen to us about a few things, but we can learn from each other.

Loren Feldman:
All right, Shawn, that was really interesting. Now that John’s not here, tell me, what do you make of all that?

Shawn Busse:
Well, I mean, first, what an incredible business mind. You know, to build a business that’s—I don’t remember what he said—35 million or something? Clearly he’s tapped into something really, really smart. And it just kind of speaks to having good strategy, and maybe in some ways, swimming in the opposite direction than the rest of the market. What stood out to you?

Loren Feldman:
Well, to some extent, the same thing—especially the notion of running against the crowd. It’s kind of interesting how these things can go in cycles. But it’s almost like you hear now that there’s kind of a movement toward people doing handwritten notes again. I’m never going to do that. My handwriting is too bad, for one thing.

But they feel special now, in a way, because so few people do them. Same thing with print, I think. You know, print looks different today than it did 10 years ago, when it seemed to be going obsolete. Now, there are no pop-up ads. It kind of feels a little bit upscale. Does that make sense?

Shawn Busse:
Yeah, it does. I mean, I feel like a lot of these print publications have sort of raced to digital, but yet they’ve created a digital experience that’s not really that enticing. I mean, I don’t know about you, but I don’t need another pop-up ad. So they all sort of seem to be doing that same thing. And then I can’t remember the last time I bought a business magazine, a print business magazine. And yet, we have a Business Journal here, and I still read that in print form. So I think that combination of highly relevant to your local community, with the layer of quality and circulation—I think tha t’s a pretty powerful formula for him. And I think a lot of us are maybe a little bit tired of devices.

Loren Feldman:
The other thing is, for me, I mean, I started my journalism career before the internet. So I’ve endured some of these shifts at various publications, and they’ve been really painful at some of the places where I’ve been. And to see him come up with an entirely different business model is really kind of inspiring to me. I think it’s so counter to what the conventional wisdom has been.

In the old days, it used to be that everybody relied on cheap subscriptions, and getting as many advertising dollars as possible. The New York Times was kind of at the forefront of flipping that. They put up a paywall and made their subscribers pay real money and managed to hang on to a good bit of advertising dollars, and created a much more successful model.

Not everybody has been able to do that. I worked for a bunch of magazines that really struggled with the switch to digital, and in some cases still haven’t figured it out. They’re stuck with long-term, low-cost subscriptions. And that forces them to try to generate as many eyeballs as possible to throw at their advertising. And that means they’re much more focused on clicks than they are on quality. And it’s just kind of a losing formula.

He’s gone entirely in a different direction. It’s not just cheap subscriptions, it’s free subscriptions. Give it to everybody. And obviously, it’s got to be of value. It doesn’t help to give it away if people are just going to throw it out. But as he pointed out to us, people are actually getting their news from it in very large numbers. That means he’s got a much larger market than most local publications, and I think that’s how he’s made it work.

Shawn Busse:
Yeah, that’s a really good point. I feel like the trap so many businesses fall into is that they try to be a little bit of something to everything. So when he does something, he goes all in on it. So whether it’s design, he’s like, “We’re gonna go all in and make this thing look really, really good. Not just like a little bit better, but like, really good”—different paper, more expensive paper, hire professional designers. And to your point on circulation, he didn’t say, “Well, we’re gonna make it a lot less costly than something else. We’re gonna go all in and give it away.”

Loren Feldman:
To everybody in the region.

Shawn Busse:
Yes, that’s another all in, the all in of the entire region—not just some.

Loren Feldman:
How do you think about it, Shawn, from the perspective of local businesses in his areas of the regions that he serves? Why is this working for local businesses?

Shawn Busse:
I mean, some of it, I think, is simple choice. I think as Google rose and rose in power and reach and influence, a lot of channels just got kind of wiped out. And then that kind of became your one choice as a business. Well, especially if you’re a local, let’s say business-to-consumer organization, it’s sort of like, “Well, Google, that was your choice. And if somebody’s searching, you’d better be there”—much in the same way, like back in the day, you had to be in the Yellow Pages, you remember that? You would be a fool to not have a listing in the Yellow Pages.

Loren Feldman:
Now you have to explain what the Yellow Pages are.

Shawn Busse:
Well, we’ll get Jay on for the time machine. But I think John has come up with an alternative. And when you have an alternative, then it can start to highlight for you what are the failings of the monopoly, right? So, in Google, it kind of dumbs everything down to a listing. And it lumps you in with all of your competitors.

With a print publication, now you can be creative. You can have different types of advertising. You can try different headlines. You can experiment with imagery and design. You can have special offers. It just gives you a lot more flexibility and creativity that kind of gets taken away from you in the Google world, because Google wants to reduce you down to a commodity purchase of advertising. And then they want to jack up the rates on everybody over time. So I think having an alternative is a big deal.

Loren Feldman:
Again, though, I guess it really only works because he’s sending it to everybody. Which is something that, as he told us, a lot of people thought was nuts. The idea that you would print that many copies and just send it to people, whether they wanted it or not. It turns out, they did want it.

Shawn Busse:
Yeah. I mean, props to him. I never would have thought that would be the way to go.

Loren Feldman:
All right, well, that’s why we do these marketing workshops. I know I learned a lot from this. My thanks to John Garrett and Shawn Busse, and of course to our sponsor, the Great Game of Business, which helps businesses use an open-book-management system to build healthier companies. You can learn more Greatgame.com. Thanks, Shawn.