John Garrett is founder and CEO of Community Impact Newspaper, a hyperlocal news company that delivers a free monthly newspaper to every household in the geographic areas it covers. The company serves 22 communities across 34 cities in Texas, including Austin, Dallas-Fort Worth and Houston metro areas.  In this edited transcript of our interview for the RJI Futures Lab update, Garrett talks about Community Impact’s advertising model, print versus digital advertising, and what publishers can do to stay ahead.

What is Community Impact Newspaper?

We’re a group of 22 hyperlocal newspapers in Texas, and we a unique model where we cover city councils, development news, local business news. It’s kind of a business journal for the average joe. We like to say we’re kind of like the local Wall Street Journal for these communities we serve. We actually mail our newspaper for free to everybody once a month. Everybody within the geographic areas that we cover actually gets a Community Impact Newspaper in the mail delivered to them; they don’t pay for it. And, obviously, advertising pays for the costs associated with producing the paper.

What is your advertising model?

We really have three ways that we target our customers. We really love the mom and pops, so we built a model for them to be able to target large areas around their store in an efficient way so they can reach 100,000 households for about $500, depending on what their budgets are. But we also have created some unique targeted ways to reach folks so that we can do geographic targeting around locations, where we can actually get to the neighborhood level for them. That’s important because as targeting gets more fine-tuned from our competitors, we need to make sure that we’re continuing to improve our targeting technologies as well.

What makes this model unique, and why do you think other news outlets aren’t doing this?

I started at the Houston Chronicle in the late ‘90s, and we were doing some great carrier-route targeting for grocers. What’s happened lately, though, is all this data is out there. I mean, we had data back then, but the data’s become so good that you can really, at the neighborhood level, figure out what the consumer looks like. For advertisers, it’s very important because birds of a feather flock together. If you own a restaurant, you want to only reach the neighborhoods around your store.

The reason why it’s unique is because the technology we built. Anybody can do what we’re doing, but the way that we’ve built it is so easy, and the products that we have are so unique and fine-tuned, that it gives us some competitive advantages and allows us to compete with digital targeting that before only solo could do. Even though we do solo mail, we also do some products in the paper and on the paper that allow us to do fine-tuned targeting.

In terms of why others aren’t doing it, I think there are a lot of reasons for that. Really, the industry has chosen cost cutting as a way to get the bottom lines better and that means cutting reporter positions and operations positions, but also cutting production. So outsourcing newspaper production at other facilities will harm your ability to control your distribution and your targeting.

What are the ads? Are they leaflets inserted into the newspapers?

It’s an insert or a sticky note on the front of the paper. It’s usually insert targeting. I will say that these new presses that we’ve bought are going to give us some really unique options on targeting for both content and advertising. We’ve just started to build those profiles out, but these presses that we bought are better at short runs, so we can zone content as well as ads in the paper at a more hyperlocal level. That’s kind of a goal that we’re working on for 2017.

What kind of software or technology do you use to target this way?

We’ve basically built databases around our distribution areas and, because we’re geographically based anyway, the easiest way to do that was the carrier-route level. What we’ve done is we’ve basically taken all of our carrier routes and then merged it with demographic data that allows us to understand those carrier routes better.

We have an in-house development team that just continues to innovate. We’re always trying to find new ways to make the data work and new ways to make the software users’ job easier. It’s been a journey, a two- or three-year journey from using Google Docs to Google Sheets and then to putting it into our own database that’s obviously a lot more friendly.

Where do you get the data that you use?

There’s a lot of data providers out there, and I’m sure they’re all connected, but there are services out there from different data providers where you can buy data. You can either do it at the household level, or you can do it at the carrier-route level, or you can do it at the community level. The cool thing for us, as we build out this database, is that we can start collecting our own data. And based on reader feedback or different reader surveys, there are ways we can build our own data as an overlay.

How are you able to compete with larger companies like Google and Facebook?

There’s a lot of national consumer and advertising buyer momentum for Google and Facebook. It makes business owners feel like if they advertise on Google or Facebook, that it’s like pixie dust and their business is just going to do amazing. But the truth is that branding and advertising is hard, and there’s a lot of platforms to use to be able to get that message across for business owners.

What we try to do is, number one, if we’re talking to somebody who’s using Google or Facebook, we we respect those platforms. We understand they’re good platforms, but we try to show what our competitive advantage is over Google and Facebook.

Just because an ad is served up on your phone doesn’t mean that the consumer really looked at it or paid attention to it. It was really just served up, just like in our newspaper, we serve up the paper. Then it becomes a question of, hey, are people reading Community Impact Newspaper or not? And if people are reading Community Impact Newspaper, and we’re able to compete at a price level that is competitive with Facebook, then we have a story to tell. And when you’re selling advertising, that’s all you want.

What we have that Facebook doesn’t have is we have relationships with these mom and pops, so our people are literally are going to Chamber of Commerce luncheons with these guys and they’re meeting them, and they’re getting to know their kids and that kind of thing, whereas Facebook is very transactional. The key to competing with those guys is having a product that’s valuable, and then building relationships with those customers and being able to tell a story about why investing in your product is worthy of their hard-earned dollars.

What advice would you give leaders of other news organizations who might want to try a similar targeting model?

Certainly from what I’ve seen from the industry trends and what I read about is that many news organizations are very into digital agencies — creating opportunities for them to go out to these mom and pops and sell them these digital services that, I feel like, are our competitors.

My first advice would be: You have to own your own platform. The problem with digital services, and even digital networks that you’re selling, is you don’t own the platform. The best way to find out the effectiveness of those kinds of programs is to talk to the salespeople that sell them. My experience from what I’ve learned from talking to those folks is that digital is just as difficult as any other platform to provide real accountability to the advertiser and ROI.

If you’re a newspaper executive and you’re going to spend your resources on developing agencies that are really going to sell other people’s products, then I would say that that’s a dangerous deal. Because you don’t control the platform.

My advice would be to continue to build on that product and make sure that advertisers and ad agencies understand the value of the print product. Then work within that print product to get better at targeting so that we can continue to compete and win against whatever’s next.

Do you have anything else you’d like to add?

I really believe print leaders need to help create the industry again. And what I mean by that is that if you go out and you just sell Google and Facebook to your customers, you’re really telling them that Google and Facebook is better than your own product. I want to plead with you that you’re creating this vacuum of ad dollars that is being sucked out of a valuable platform in print, mainly because of the perception that digital is better than print.

Print has a lot to offer advertisers, and we need to talk about that more or else we’re going to be out of business. Google and Facebook are not your friend — they really don’t care if you live or die, and I think we need to try to compete with them. It wasn’t too long ago when news executives really believed in what we did and were competitive, and I want to bring that back.