I'm a big believer that you find your core business and become the very best you possibly can at it. If you can't excel at your core competency as a company, you won't be around very long to find an alternative.
The best example of this was when I bought the Dallas Mavericks
. When I bought the team the conventional wisdom was that we were in the basketball business. That our customers were entertained by the beauty of the game. In reality our real business was "creating sore throats from screaming and sore hands from clapping". Sporting events are pretty much the only place where a CEO will scream and yell while sitting or standing right next to a 16 year old with a Mohawk and pierced everything and then hi five him/her when something good happens for their team.
Google realized early on that they are in the traffic monetization business. They started off in the search business, but quickly realized that while continuously improving search was important, continuously improving search and page view monetization was more important. This small step for Googlekind meant that "the not searched for here" syndrome was quickly eliminated and Google search was put everywhere and anywhere that could create incremental content. That Adsense was a no brainer extension and that great monetization algorithms clearly matched the goals of advertisers. Click Fraud excepted, if a user clicked on an ad because it was of value to them, all the financial participants benefited.
I think their ability to excel at monetization dramatically above and beyond their competition has put them in a unique position to arbitrage the financial expectations they have for a page view vs the expectations of everyone else on the net. Myspace, AOL and many others are on a list of partnerships that appear to be made on a simple principle of "We can pay you more for your traffic than you can earn for yourself". Thats a powerful position to be in, and Google certainly and rightfully has used that power to their and shareholder's advantage.
Which leads us to Newspapers/Local Media companies. Whether you are a standalone newspaper, or a local media conglomerate with Paper, TV and more, the one thing you have without question is a salesforce. A salesforce that goes out into the business community and sells them on the benefits of advertising on your properties. The job of each salesrep, when done well, is to create a return to the customer that exceeds their investment. Of course its not always easy to define that return, but the salesrep hopefully has a close enough connection to the customer that they can evolve the strategy to fit their needs.
The "touch" methods of selling for local media, as opposed to the "self service purchase" of Google Adwords and its competition have been viewed by some in the Web2.0 world as a disadvantage. I think it creates an amazing opportunity to pull one from the Google Playbook.
There are couple certainties in the advertising world today.
1. Google isn't going to send a salesrep to visit, or have an inside salesrep call on the local 5 store pizza, dress, toy, laser surgery, dentist, whatever chain of stores. You are.
2. Some percentage of those small to large localized businesses you call on will have a website and of those, the vast majority of them will have no idea how to properly use web services like AdWords or AdSense to either generate foot or phone traffic (the 2 Fs of brick and mortar) for their businesses or make some money from advertising.
3. Local traffic is worth more per click through than national traffic is.
Which creates a phenomenal opportunity for your company. Just as Google arbitraged its selling ability between its ability to monetize traffic and AOL and Myspace, why not use your sales force to arbitrage the ability of your salesforce to sell locally and all the Google Adsense/Yahoo/MSN networks to sell locally ?
You are already selling display and classified ads for the paper, or commercials for your TV station, why not expand that effort to include Search Engine Marketing ? Why not hook up with a local SEM expert and make that a service that you offer to your customers ? There is very little chance the local Pizza chain or Body Repair shop knows how to use SEM correctly and those that try more often than not waste a ton of money trying to figure it out. Why not offer it up as a service, even if they don't buy ads for your newspaper or TV station ? In otherwords, you put yourself in the position to become the dominant force for local advertising in your markets, NO MATTER WHAT PLATFORM those ads appear on.
Why not buy a media planner that specializes in your market ? Or put together the resources to compete with them ? Selling locally is a core competency. Optimizing advertising in a comprehensive campaign is a skillset that all local businesses need and many don't know how to find.
I did a small test. I used my Adwords account and set up an ad to sell Mavs tickets within a 10 mile radius of the American Airlines Center. I chose the simple options that Adwords presented and picked sports and take all 100 options that were presented. Common sense suggests that since I had already specified that i only wanted clicks within 10 miles, I would get local websites. The first site listed ..123india.com. Now i realize that Google will try to limit where it presents my ad to only those IP addresses that it thinks are local to me, but to a small business person trying to figure this out, it would be more than a little daunting.
That creates an opportunity to become the be all, end all media sales organization in your market and for your market. Why not go to Google, Yahoo, MSN and try to work out a deal to get a percentage of revenue for national placements ? You might get the agency 15pct, or possibly more. The 3 are so competitive, some would say Yahoo and MSN show signs of desperation, that they just might cut you a special deal to exclusively deliver the ads you sell.
For local ads, which would be a critical component of what you sell, why not expand what you currently use or partner with one of the big ad networks mentioned above to allow you to partner with local websites and blogs to sell ads for them ? When your salespeople call on them to see what their advertising needs are, they could also enroll them in your own localized "Google AdSense" program. Imagine the Dallas Morning News or Star Telegram network of Dallas Ft Worth based or relevant websites. It could actually become more relevant to your ad customers than your own newspaper website since the paper websites garner significant out of town readers while the local Pub featuring bands is going to be 99pct local.
Why not go to the local independent SportsPage or Free Weekly and become their sales organization ? In stead of beating your own head against the wall creating free morning dailies, why not co-opt their eyeballs ? They struggle with sales and hiring and retaining a salesforce, incorporate them into your product line. Its a much cheaper means of expanding eyeballs.
In this day and age, like Google, the advertising you sell doesnt have to be in one of your properties, it just has to be sold through you. Google doesn't care where the eyeballs are at, as long as they are selling and delivering the ads to those eyeballs. Why should you be any different ? Instead of spending a fortune , or driving yourself nuts trying to get back the 1.9pct circ you lost, go grab eyeballs elsewhere.
Which leads to leveraging your content. In a for profit business, great content is supposed to be a driver of eyeballs. Continuously great content is supposed to drive loyal readers or viewers. Unfortunately, in this day and age of so many choices, our loyalties are diluted and often change. So rather than taking a your media vs the rest of the world approach, why not take the Google approach and co-opt other peoples traffic. (OPT?). If great content, whether audio, video, text or pictures, is just a means of selling more advertising, does it really matter where the content appears, as long as you are selling the advertising around it or on the website that hosts it ?
Of course, we have seen this done with before in TV and Radio, but its always been on a limited basis, and for parties that are related or owned by a single entity. Why not remove all limitations ?
If the local weekly, free sports page or even local Band with a website agrees to let you sell their advertising, why wouldn't you give them the opportunity to use some of your content ? Its no different an arbitrage than what Google does, except that its content based. You have content that you decided wont pay for the paper it would be printed on. Let another paper cover the print cost, while you sell their eyeballs. Let another website host your perishable, unused content in exchange for selling their eyeballs.
If it helps drive more eyeballs to them, its more money for you.
For the small websites, you can also pull a Google and set a very difficult to achieve check hurdle. With AdSense, until you earn $100, you don't get paid. I can only imagine how much money Google has as an accrued liability for this category (do they accrue 100pct as a liability or capture some guesstimate as revenue that they adjust over time?), but i know its a lot. Your newly focused sales organization could do them one better by setting the hurdle at $100 dollars, but possibly setting the first $500 dollars as being an automatic advertising credit in your network rather than a cash payment.
This is a lot of hypotheticals, obviously. But in a nutshell, its about making owning the sale and delivery of advertising in your market the primary core competency of your business. Google, Yahoo and MSN think they can do to your local display advertising what they have done to your national advertising buys and Craigslist and the jobsites have done to classified. (the Newspaper Yahoo deal not withstanding).
From the outside looking in, I think newspapers and any local media organizations have to make a stand and go where you are strong and that is in face to face selling and knowing your market better than anyone. You have a local salesforce, they wont. However, you can create self service publishing and ad buying comparable to theirs that is geared towards your market, and complements your face to face selling. You might not be as efficient in monetization as Google, but most of your customers will never know the difference. All they will know is that you have earned their trust as the company that handles all their advertising and website ad publishing needs so that they can focus on selling Pizzas, laser surgery and cars. That is huge for any small business.
Just like Google Search created the foundation of traffic that led to their algorithms and Ad Sense network, your newspaper or TV station can create the foundation that led to the creation of your marketwide salesforce.
Why not ?
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Reader Comments
(Page 1)2. I agree with you that there is a huge opportunity for someone to better monetize the local, small business area. There is an enourmous gap between large scale advertisers online and the "mom and pops" who are also looking to take advantage of either search or geo-targeted display advertising.
What I am looking forward to seeing however is how perceptions may change in regards to Google, and all Search engines, when conversion attriubution grows up and is no longer based soley on "last click or view." When marketing analytics packages are updated so that they can look at the entire media mix of a user, not just the last ad viewed or clicked on I think we will see the true value of search engines (as well as all online properties).
Posted at 6:26PM on Nov 27th 2006 by MVD
3. Deals with disconnected, tech behemoths won't make newspapers relevant on the internet. I'm still hoping some Startups make the right strategic decisions to bring journalistic reporting onto the internet in a forum that is collaborative, portable, and profitable.
I am very disappointed in the fact that so called old media with its untapped localization potential and historic roles in socialization and community building has allowed the search engine companies and tech behemoths to eat their lunch.
Newspapers do not need established internet companies to help them reach critical mass on the internet. What they needed were their own networks of blogs and collaborative news sites (social media) to leverage the popularity, influence, and community connectivity of local reporters, researchers, advertising reps, and distributors to gain traction on the 'net.
Posted at 6:45PM on Nov 27th 2006 by Gerald Joseph
4. Mark,
Two quick comments. I think you are right or at least on a good track here - and that any firm with a strong, locally focused salesforce should be looking at these opportunities.
First comment - in addition to local newspapers (and many local independents have really strong ad sales forces - the Chicago Reader in Chicago for example) this model could work really really well for the Yellow Pages - who have traditionally touched nearly 100% of the local businesses - but whose business model has been decimated almost entirely by the rise of the Internet (I haven't looked at a yellow pages in a few years - google, even google on my cell phone, is usually faster and better).
Second comment, old media, especially newspapers, have to embrace and realize that their ADS ARE CONTENT. That is the major reason I would (and occasionally still do) pick up a local independent weekly is for the ads - especially the concert listings, movies (especially sneak previews), restaurants ads w/coupons etc. Many people subscribe to local Sunday newspapers almost entirely for the coupons and sales notices. I subscribed to the Wall Street Journal for years mostly to watch who was buying the full page ads in the first section (especially the center spread) and what messages those firms were seeking to send to the market (often I used this as a negative signal for some firms - such as .coms who were sending poor/mixed messages).
In short, newspapers much like Vogue magazine have to realize that their advertisers are a critical and valuable source of their content. I argue that part of why online newspapers have suffered monetarily is that they have not yet found (in most cases) good ways to include their advertisers into the their online presences or to leverage them in ways that are valuable for both the advertisers and readers. The SF Chronicle has taken one small, but good, step of making ALL of their print ads available online - but they do so in a way that is quite separated from the rest of their content. The last time I looked the WSJ still hadn't incorporated their print ads into their web presence (at least not on their free side as best I can tell).
Shannon
Posted at 7:13PM on Nov 27th 2006 by Shannon Clark
5. Mark,
Your thoughts are spot on. No large player has been able to compete on the local advertising field yet for the same reason that Mom and Pops still exist.
The reality is that your proposed solution is already happening in quiet corners without the national publicity that Google/Yahoo/MSN get. I'm involved with one such old/new media partnership (I'm on the new media fortunately), forged from the reality that old media can't capture eyeballs and new media can't monetize them. We're making huge inroads with local businesses who, for the most part, now deem Google et al largely irrelevant to their marketing needs.
Posted at 7:46PM on Nov 27th 2006 by stinor
6. mark
just to clarify. google did not invent adsense. they bought it.
here is a great podcast from jay walker (father of priceline).
he tells of inventing adsense 30 days after bill gross. who
sold it to yahoo. who sold it to google.
the point? not very smart on your own? hire it done!
http://www.peapodcast.com/danbcast/MITX-JayWalker-2005-12-08.mp3
fyi: the whole hour is well worth listening to... and i have
on several occasions.
-ski
7. Thanks for the post. I like thinking about this stuff.
Here's what I wonder;
In local newspapers / TV broadcasts I would argue that a large part of the local advertisers (small business owners) do not have internet sites, but old-worldly still rely on name recognition and walk-in traffic. Now I wouldn't care and still offer to sell their ads to online entities with a local presence, after all; just like there is no click-through opportunity in papers and tv, advertising on local online entities can still add to name recognition and store traffic. Maybe the payment system for online ads is a bit flawed for this.
The main hurdle I see in relation to this is the old world thinking of that local business owner. The guy who relies on putting a big bright and shiny sign on the sidewalk, in the same color as his ads running in the local print newspaper in order to increase his number of customers. To him, doing the online thing, while half of his fellow mom-and-pop stores on main street also lack an online presence, might be too big a step.
Next to that he might wonder; in how big of a long tail environment am I as one of about 4 liquor store owners within a 10 mile radius? Don't all these people already know that I'm here through the big red sign on the sidewalk and the similar colored ads I've been running in the Pahrump, Nv, Weekly print newspaper for the past 10 years? What new use / extra value would advertising on the net bring me?
Nevertheless, I like what you're saying here and I think there's definitely an opportunity. I just think that the # of potential local businesses willing to / looking to advertise online might be a small % of the entire local business community. And given their budgets and the time to target them, that might be a problem.
Thanks.
Posted at 7:56PM on Nov 27th 2006 by Mich
8.
I agree somewhat with post #3. Where old media wins is if they get their established journalists to start blogging and participating in a collaborative fashion. Established journalists have the sources, credibility, and following to move on the web and compete well with some of the non conventional bloggers out there. Some bloggers clearly get scoops in stuff like tech or gadgets, but covering local news or bigger issues the old media definitely have the better sources and ability to cover a story.
However, I think its a big leap for many of these companies to take that risk and selling ads for big media vs the web is very tricky. The size of the deals are very different and require different skillsets. Selling online marketing to a small shop can be very labor intensive and require a great deal of knowledge what amounts to not a lot of money. The same company that might spend $10k on a print campaign without blinking will need lots of hand holding on a $500 online campaign. I just don't know if the newspapers and TV stations of the world have the skills to accomplish it without taking on lots of costs and we all know that most of these companies are public and cutting costs all over due to declining margins.
Posted at 8:01PM on Nov 27th 2006 by Jim Mansfield
9. All your forward thinking sales people left the local print, TV and radio game a longtime ago. As local media companies lost market share to new technology, they started to cut sales commissions to their sales force to keep their numbers looking good. Thus aggressive forward thinking sales people moved on into multi-media and online companies’ years ago. Leaving slower and less talented sales people who are happy with a job and decent base salary at your traditional media companies.
What you are describing would take a sharp and hard working sales team to structure. I am saying that the sharp and hard working sale people are already doing this type of thing at other companies.
I know the DFW traditional local media sale force, the turnover rate is unbelievable, and very few local sales reps call on the same client for long enough to build a relationship. The days of a BELO rep getting to know a small local client and building a lasting relationship has been over for a while. Your sales force still has some good people, maybe it is something you should put together.
Do the numbers, do you know how many local, small business websites and niche local papers you would have to put together to equal the eyeballs of one average sized national website?
The perception of the local network you put together would be worth a lot more than the actual amount of traffic you would be able to drive. Thus selling advertising on your network would be easy, but would not provide much bang for the buck.
Just my thoughts
Jake
Posted at 8:02PM on Nov 27th 2006 by Jake
10. An excellent approach for legacy media to follow, Mark.
As I still enjoy getting the majority of my news (as do the large majority of people who earn/hold the greatest share of nation's income/net worth)--especially the kind of detailed, in depth reporting still difficult to find on the web--from print, I hope they're listening...
Another little-addressed yet critical factor which will continue to further shove the smaller, local businesses away from EVER getting into paid search (even as the giants expend even greater efforts to bring them into the "SEM tent") is its growing complexity.
While such complexity (CTR rates, lander page relevancy, real-time ad position changes, daypart options, demographic overlays, etc) greatly increases advertisers' keywords ROI, the knowledge base required to benefit from such factors is far, far beyond what local advertisers are ever likely to acquire.
Like you say; it's not their core competency. Far from it.
One approach which could bridge this ever-expanding paid search "knowledge divide" ; and which local media could more easily also sell to the local businesses; is a PPC ad system which would allow them to select and bid--not problematically on the words people enter into search boxes--but directly on the actual demographic and psychographic traits and characteristics of their most desired local prospects (think paid match/keytraits instead of--or; for those sophisticated and interested enough to use SEM; in addition to--paid search/keywords).
Such an approach; as described at MatchTo.com and detailed in pending patent #11/250,908; would allow local advertisers to quickly and easily gain access to the benefits of pinpoint targeting exactly—and only--those most likely to take advantage of their product and service offerings...doing so, because of its structured environment, with little or no human-generated click fraud.
Posted at 10:05PM on Nov 27th 2006 by Steve Morsa
11. I used to work in newspapers. These are exactly the types of bold choices publishers need to start making in order to save their soon-to-be extinguished species. On another note - and I am only throwing this out there because many of you are NBA fans and might appreciate this - here is a video some friends and I made in an effort to save a future extinguished species - the NBA. http://www.youtube.com/watch?v=3MKXF7FyNPY If you like Mark and you love the NBA, but don't agree with some of the decisions being made by the commissioner, you'll want to check this out. Otherwise - sorry for horning in on the discussion. I am glad people actually care about things like the success of local media. Thanks for letting me pimp my video.
Posted at 11:57PM on Nov 27th 2006 by Hero Style
12. Great points. I get traffic from all over the world, ranging from Vietnam to Zaire. As a photographer, the only traffic that leads to sales is local traffic (unless they pay for travel fees). Localization is an essential concept in any marketing plan.
Posted at 1:21AM on Nov 28th 2006 by Gavin the photographer
14. And obviously, Jim Cramer does not share your fears on the YouTube buy. See http://www.thestreet.com/_htmlbtb/markets/activetraderupdate/10324536.html
Makes them seem even smarter still.....
Posted at 9:28AM on Nov 28th 2006 by Marc in Illinois
15. This is already happening in some of the more forward thinking media companies, with varying degrees of success. Recently, a few print media firms including yellow pages have acquired SEM firms to enable them to publish to these new media sites and strengthen their own online search services, specifically their local search service.
Local campaigns have proven to convert at a much higher rate than national campaigns, simply because they are more targeted, closer to the consumer, and are within driving distance. Although these ads are perceived as more valuable, the bid rates are traditionally lower than that of national campaigns. The problem is twofold, 1) traffic is diluted across geographic areas (instead of 1,000s of searches, you may get 10s or 100s), and 2) lack of competition (you are the only firm selling Maverick tickets within a 10-mile radius for a set amount of time. without a competitor you are bidding the minimum amount possible). For these reasons, it is very difficult for media companies to scale the business. With high overhead - the local sales force - and low traffic/bid rates, it is difficult to revenue share with Google, Yahoo, MSN and still make any margin.
Outside of the economics, the problem is with the local mom and pop businesses. The vast majority of them don't understand this new media. They don't have the time to manage their campaigns regularly and make the program effective. Sales reps cannot spend hours with these clients trying to explain how the programs work... again it kills the margin. Not to say that these mom and pops are not catching on as they will do anything that is proven successful. But, most of the small, local businesses participating are those that re very entrepreneurial and are not scared of technology. It is a hard sell for the sales rep who himself may be technology challenged, or at least educated enough to explain the program in simple terms.
I agree with Jim's comments (#8). It requires a lot of hand holding. With traffic diluted across multiple geographies and merchants bidding at the minimum rates, it makes it a very tough business. However, for those merchants that get it, it is a very cheap and extremely effective method of getting high value consumers in your door. It is a great time for entrepreneurs to take advantage until the rest of the local market catches up.
Posted at 10:31AM on Nov 28th 2006 by midtee
16. I have been using Google Adsense on my website and have yet to see a worthy profit. Often, I am a victim of getting textual ads that my audience will just not click on (RSS feed ads, etc). I have started exploring other advertising programs such as Amazon and the Linkshare program through iTunes. Linkshare seems the most exciting to me.
While Adsense makes it easy to have advertising on your site with the promise of getting lucky, I don't think there is much substitute for determining who your audience is and knocking on the door of your local ad agency that markets to your audience and trying to get advertisers.
That said, I am trying to get a video pre-roll sponsor for my video podcast/website. I think that will be the most effective route for advertisers to get to my audience of iTuners and provide the monetary incentive I need:)
Posted at 11:34AM on Nov 28th 2006 by Average Betty
17. I'm reading this topic and getting excited... it almost makes me wish I was in the newspaper business so that I could go make this happen!
I'm thinking about this and it makes so much sense. Yes Google could go buy up Tribune and force feed a strategy like this through the newspaper, but why should they do that? Create partnerships with local companies and/or SEM specialists. Let them take on the cost and risk of developing this strategy, but Google will still monetize the ad traffic. If it works then Google will make that additional revenue, but if it doesn't then they haven't lost anything.
In response to #7 and #8
There's another avenue that I don't think has been addressed yet. The demographics for people reading on the web vs. reading in the newspaper is different. I don't have hard facts to support, but I imagine that readers on the web would be more educated and younger than the readers of traditional media. Local media would now be able to target NEW local demographics and sell advertising to NEW local advertisers.
Where do you find advertisements for local clubs/bars? Not in the newspaper... on the radio! But what if a savvy local advertiser shows the college demographics of their online readers to clubs/bars... and they offer the advertising for $500...
One other area that might not have been addressed... website creation. Yahoo already offers site builders or something similar. Local media companies could take this a step further and offer to create a simple website for the mom and pop business and advertise through the newspaper / web media. In fact the media might offer this as a FREE service, just to get more "ad" content for their online newspapers. Pay a low rate for domain registration (which could also be a partnership) and now Mom and Pop have an online marketing presence for less than $1000.
Posted at 11:56AM on Nov 28th 2006 by Jason Barnett
18. Adding on to my comment #17...
Think about Google Local for a minute. Right now you type in a product and it will show you company names / phone numbers for local copmanies. Now imagine that local media companies are creating website "stubs" for these companies. The stubs could have ads that you print out and spend at the restaurant / bar / whatever. And the best part? Google gets people to click on the link to that site and then they get paid for all of those clicks. And all of this is made possible by the efforts of other newspaper / SEM companies that convinced local businesses to go online.
Posted at 12:18PM on Nov 28th 2006 by Jason Barnett
19. Reading Mark's comments are fascinating. It is precisely the product and pitch we at Local Thunder are using to service local radio and television broadcasters. Local media is best positioned to recognize that local advertisers represent far more that CPC opportunities - the trick is embracing the notion that local advertising CONTENT has value and that the media entity itself (radio, television or newspaper) can reap great benefits by taking seriously a role of broker between local merchants and local consumers.
Posted at 2:06PM on Nov 28th 2006 by Matt Kennedy
20. Mark
I think non digital sales people will be quite challenged in selling an integrated product.
Some publishers are already serving or acting as agencies for clients to come up with the big ideas. This area is somewhere that newpapers could ramp up, adding creative solutions to their ad selling. This would have to include an online component.
In the end newspapers free or paid get a "Get out of jail free card" until there is a portable format that can be tucked under your arm and easy to read on the train or bus.
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1. Hi Mark,
How about this, I have a mobile phone with a GPS and I log onto the Mav's web site. The web site now knows where I am - if it sees that I'm within 10 miles of the Stadium it offers me tickets - if not it offers me something else.
The problem is that currently neither Google or your web site know exactly where I am. Sure you can use IP address lookup, however that doesn't work on a mobile device.
We've figured out how to stream real time GPS data from a mobile phone over HTTP. Now any web server can know where I am (it's all permission controlled on the mobile phone). Now your ads and your website become location aware for your local customers.
Cheers,
Peter
Posted at 6:23PM on Nov 27th 2006 by Peter Cranstone