The local ad opportunity (and the danger of losing it)

The promise of local ad support for news will come only if a new population of very small businesses can be served in new and effective ways – before Google beats everybody else to it. That’s apparent in the results of Webvisible and Nielsen surveys reported by MediaPost (via Marketeting Pilgrim and Frank Thinking), which show that local marketers are leaving newspapers and the yellow pages but are still dissatisfied with – and don’t pay enough attention to – internet marketing. Factoids:

* 42 percent of small businesses say they use the local paper less and 23 percent use yellow pages less – while 43 percent use search engines more.
* “Though 63% of consumers and small business owners turn to the internet first for information about local companies and 82% use search engines to do so, only 44% of small businesses have a website and half spend less than 10% of their marketing budget online.”
* “Only 9% are satisfied with their online marketing efforts.”
* Mediapost found a disconnect in how small-business owners act as business people and marketers vs. how they act as consumers. That is, as consumers, they use and are satisfied with the internet and search to find other local businesses, but as marketers themselves, they use online less.

In these stats lies a big – but fleeting – opportunity: serving local businesses by helping them use online well. By this, I don’t mean doing what local newspapers have been doing: trying to sell them display or directory ads, just as they did in papers but in a new medium. Instead, I mean redefining what it means to help them succeed online. This might mean helping them place ads smartly on Google with good SEO (see Fred Wilson’s tweet out of our New Business Models for News Summit at CUNY). It might mean finding was to help local businesses interact more meaningfully with their own communities. It might mean enabling armies of citizen sales people – neighbors who really know their local businesses – to serve and sell those advertisers. It might mean providing tools to help local businesses create better (more informative, more SEOed) online presences and providing them data to show them their return on investment. I might mean finding other means to efficiently sell local businesses (can phone rooms ever work?). And so on…..

The assumptions I so often hear about local advertising – it doesn’t work; it doesn’t pay enough; small businesses are ignorant – need to be updated. The assumption that most needs to be updated is that a business needs an ad. It may need other tools to be found in search and to reach the right people and to improve relationships with them. All that may count as marketing, but not necessarily with an old ad in a new medium.

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  • http://wyman.us/ Bob Wyman

    Users spend most of their time on geography independent sites and those sites serve primarily geography independent ads. Non-Local ads are easier to sell, buy and serve since they can be contracted for in large bundles and don’t require fine-grained location detection. Thus, local advertisers are essentially locked out of many of the advertising opportunities that are commonly exploited by non-local advertisers.

    When I read LAtimes.com, I see ads which are either specific to California or that are general to the US as a whole even though I live in New York City. Similarly, if I’m a resident of North Dakota reading the New York Times, I see no ads for sales in Grand Forks any “local” ads are for New York City… This is silly. Ads should be specific to the readers’ needs, not to the “scope” of the publisher.

    National newspapers are read by “everyone” while local papers are read primarily by locals. Having larger audiences, national papers can sell cheap ads in bulk to “national” or “regional” advertisers but lose the opportunity to access the potentially rich market for targeted local ads. Local news sites have a problem in that while they have a highly targeted audience and can often charge premiums to access that market, they often can’t aggregate sufficient audience to generate the revenues they require.

    If the national news sites could carry targeted local ads they would make more money. If the local sites could efficiently access the audiences of national sites, they would make more money and get higher readership.

    At the same time, we have both national and local newspapers cutting back on reporting staff since they aren’t making enough money. So, the solution seems obvious… The national papers should partner with local news bureaus to provide “local” coverage and ads on a common platform. For instance, a news bureau in Grand Forks, ND might provide the “North Dakota” coverage for the New York Times. Readers in Grand Forks would “opt-in” for North Dakota coverage as their “local news” option in the New York Times. This “hint” would swap the North Dakota news in place of the default NYT Metro and Local coverage. The location hint would also cause the advertising engine to serve local North Dakota ads. Thus, the Times would expand the market for its ads, the Grand Forks news bureau ad sales would gain access to local readers even when they aren’t focused on local content and they would probably get higher readership as well since readers who go first for non-local news would get local North Dakota news mixed in with the NYT coverage. The Times and the Grand Forks group would split revenues on both local and non-local ads when served to readers who self-identify as North Dakotans. Everyone wins.

    The Times, of course, will object that the journalists in Grand Forks don’t meet their standards or that the folk in Phoenix don’t. But, this is what editors are for. If it is a concern, then the Times should work to help train, select and edit their local partners. The Grand Forks folk will object that folk will end up reading the Times and won’t visit their own site. This is actually good… They’ll end up making more money off more locals at the Times and they can reduce their local technology costs…

    What have I missed?

    bob wyman

    • http://www.buzzmachine.com Jeff Jarvis

      May the New Century Network rest in peace.

      • http://wyman.us/ Bob Wyman

        Why should we let it rest in peace? The problem with NCN wasn’t the original idea, rather it was the idiots who were given responsibility to run it and the short-sighted newspaper publishers who couldn’t understand what it was supposed to be. NCN is kind of like Vietnam — too many people learned the wrong lessons from the experience…

        NCN done right would have addressed the core *structural* issues in the news business. But, its real impact has been to frighten away any who attempt to address structural issues. Journalists would serve themselves well by standing up to this ghost and trying it again…

        bob wyman

  • http://www.metaprinter.com Robert Ivan

    Jeff, nice meeting you at TOC2009. You are much taller than I expected.

    @BOB “If the national news sites could carry targeted local ads they would make more money.”

    When local businesses bring me in for online marketing consultation they almost always ask me these questions and make these statements:

    1. Newspaper advertising is too expensive and complicated.

    2. The cost structure / sizing in their media kits looks like the table of elements.

    3. I only want to advertise next to relevant content.

    4. I want to market my self, my own website.

    5. I did it once and it was horrible, I lost money.

    6. I wanted an ad on their website, but they could not tell me where exactly it would appear.

    7. How can I use the internet to drive business to my company?

    My clients want to get placement on Google Maps, Yahoo Local, Yelp, YellowPages.com, etc… They pay me to help them set up these free accounts and show them how these features work to drive traffic to their own websites. This costs them a few hundred bux but lasts as long as their accounts stay valid. I give my clients a service that Newspapers seem incapable of providing at a cost they cannot match. Oh, and I also build websites for them if they want.

    Newspapers need to step up their value proposition if they are sincerely interested in remaining viable entities.

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  • http://www.outside.in Mark Josephson

    In our opinion, newspapers are not dead. But they do need to change.

    They have at least three things going for them:

    1) strong brand and history in their market (though some recent research shows huge generational shifts in this)

    2) some level of traffic in the market — maybe not google or yahoo level, but probably bigger than everyone else in the market

    3) longstanding relationships with local advertisers.

    They need to focus on how they leverage these three assets to help change and get to their next business.

    Also, they need to better focus on identifying their true competitors. It’s not “the internet” or craigslist. Craigslist has taken the classifieds biz, made it free and it’s not coming back anytime soon, if at all.

    Real competitors are the ad networks that can bundle massive amounts of inventory and sell impressions cheaper to national advertisers through volume discounts.

    Look to your core strengths and build on those.

  • http://www.thisfrenchlife.com/ Craig McGinty

    Whilst the old media advertising teams continue to churn the same faces I will gladly offer new, smaller businesses an opportunity to get in front of a targeted audience.

    Something that lets them quickly write ad text, edit it if required whenever they want, and start with an initial outlay of £10 so they can go at a pace that suits.

    MSM is focussed on sticking with the same size pie dish, but I’ll gladly look to bake a bigger pie.

  • http://www.savenewspapers.org Scott B

    Jeff,
    I agree that local ads are a tremendous opportunity for local newspapers. Small businesses are by and large being ignored by newspapers, who, even for web ads, utilize “press kits” and commission-based salespeople. Instead they should ask WWGD? Allow text-based ads (a la AdWords) that can be placed and targeted entirely online, significantly lowering the costs to the advertiser and the paper. Make it very user-friendly so that it doesn’t require a consultant just to place the ad. This, among other local strategies, could open up a huge untapped market to newspapers, and help offset the billions that national advertisers are directing elsewhere.

    • http://www.savenewspapers.org Scott B

      Sorry Craig, I was writing my post as you posted yours… didn’t mean to echo your words.

      • http://www.thisfrenchlife.com/ Craig McGinty

        Great minds!!!

  • http://www.sunvalleyonline.com Dave Chase

    Craig/Scott – The self-serve models are intriguing but have failed with local advertisers to this point. I have a client who is a “leader” in that space and can tell you it’s a loser right now. Instead, the aspect of those tools that is more acceptable today is what I’d call the “publisher assist” model. The tools are very efficient and can allow a lower cost sales force (e.g., inside sales) to use these tools and keep the customer acquisition costs low and thus economically viable. Like many things in tech, we overestimate the short-term impact and underestimate the long-term. I’d put self-serve ads in that category. They’ll get there but my experience has shown that 99.5% of the local guys aren’t ready yet (there are a few exceptions). My hunch is we’re 3-5 years out before true self-serve drives meaningful local ad revenue.

    To Bob’s point, as a local publisher I’ve had some early discussions with national pubs about selling their local audience. It’s a slow go with them yet when I’ve spoken with the local advertisers, it’s something they have interest in as long as they don’t have to buy a bunch of non-relevant inventory.

    Disclosure: I am a local publisher (SunValleyOnline.com) but also consult with organizations setting up their low-cost sales models. Their expensive shoe-leather salesforces are ill-equipped to do much of what their companies want them to do. The sales model is much closer to Dell than it is the Dallas Morning News. The good news is that it’s working very well but requires a lot more than a tweak here and a tweak there to their sales org.

    • http://www.thisfrenchlife.com/ Craig McGinty

      >>The self-serve models are intriguing but have failed with local advertisers to this point.<<

      Depends what you are offering, I’ve had 18 new advertisers in the past four and a bit months, and whilst I’m not putting a down payment on a Ferrari just yet, I feel that if I look to help advertisers they will gain confidence with online ads.

      And if that 3-5 years prediction could speed up a bit that would be nice :-)

      Also not sure if Jeff has highlighted this study from the UK, granted it is from a vested interest:

      Consumers with spending power more responsive to ads on niche sites than portals – http://bit.ly/HGgBJ

  • http://www.4local.org David Gricunas

    Geo-targeting local ads is the key to online success for any business who can target their customers [prospects] by postal code or place name. Local newspapers and yellow pages should have a great head start in this arena but are too bogged down by trying to force their failing business models onto the Internet without much innovation.

    At this time, it is most important for a local business to OWN their primary Internet resource and use other online venues to advertise this hub. Services such as LocalADLink and MerchantCircle are emerging as potential leaders in this local search rodeo and the good old local newspapers should be in the forefront of organizing and promoting these services to their business communities.

    • http://www.savenewspapers.org Scott B

      I agree that LocalAdLink and MerchantCircle are offering valuable services, but if newspapers want to survive, they need to compete with these companies, not work with them. A local daily paper should aim to be the dominant player in local advertising/marketing, like they were not too long ago. If not, then they might as well go out of business now. They’ve already ceded much of their territory to Google… now’s the time to take some territory away from the yellow pages, direct marketers, and other local publishers.

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  • http://fidly.com Mike McWhorter

    I am involved in a just newly launched local search network,
    Built by TrafficCentral. visit fidly.com to see an example.
    My email trafficqc@gmail.com

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  • http://frontdoorpagesexposed.com/ Vince Runza

    As we watch Yellow Pages businesses go into Chapter 11 and newspapers die a slow and painful death, the real challenge for small business is to find an effective way to promote themselves online.

    Those who have websites that are stuck in Google’s Witness Protection Program (can’t find ‘em in the search results) usually think that online is a waste of time. Those who are findable but just get “surfed over” are sure their SEO consultant is robbing them.

    The key to effective local business promotion lies in the business itself. The owner has to look at:

    * The business’s current sales process
    * How the business keeps in touch with current clients/customers
    * The business’s business plan — specifically, the Mission Statement
    * The most profitable merchandise, products and/or services
    * Any underused capacity that can be scaled up easily
    * What causes the most aggravation for the business (and its owner)

    Only then can the business select the means (SEO, geo-location, email marketing, online video, etc.) and the method of using the Internet effectively. Just blindly revamping a website or starting a blog may not be the right thing to do.

    Speaking to you now as an Internet Marketing consultant, I’d rather tell a business owner to continue to put display ads on restaurant placemats, if that’s what works for them, than “sell” them a package of Web design and autoresponder tools that they really don’t need (and not charge him or her for the advice). On the other hand, I also want to help those businesses and professionals that can use my services best — and can afford the recurring fees I charge for such services.

    Sincerely,
    Vince Runza

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