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 ?
Tell me what you think
The Google Brilliance applied to Newspapers and Local Media
Reader Comments
(Page 2)22. It is about monetizing traffic and eyeballs. Period. Unless a website is set up as simply an information piece or compliment to an off-line business. But credit has to be given to Google. They did it...are doing it...and are doing it well. They realized search eyeballs were good, but monetization needed to happen and they nailed it. It may not be theres forever, but they were first into it in a big way.
Posted at 6:38PM on Nov 28th 2006 by basketball drills
23. Great article,
I have been working at a Internet agency for the past 4 years. At the beginning(3-4 years ago) we focused on bringing mom and pop stores online by building their online presence and selling them advertising from google and yahoo as a second step after building the site.
The challenge was to teach the online advertising concept to small business owners(I am talking small stores you see in a regular commercial street). At the time, they liked the idea of advertising in google, most of them wanted to be on the first position on most of the words and such. However, when they saw the reports(i.e. overture) and the amount of money they had invested per click and keyword together with the fact that now they needed to have a resource in charge of the site; some of them realized that their cost structure was not able to keep committing ad dollars to keyword buying and the consulting needed to design an appropiate keyword strategy for each business.
Add the fact that google and overture at the time didnt had partner programs established for the companies that are visiting mom and pop stores.
So, you are right, making owning the sale and delivery of advertising is a sound strategy for local markets, however, the winner must be able to design a package that covers online presence/website(for whoever is not online) + keyword sales + seo strategy + report analysis(small businesses doesnt have this expertise and wont learn fast) in a profitable way both for the client and the provider of the service
Posted at 8:35PM on Nov 28th 2006 by Juan
24. Mark,
ReachLocal is a company that is dong what you are talking about only they are not a big media comapny. They have raised one round of VC money that I know of ($7.75 million I think). I don't work for this company so in no way is this a plug - just a business model that is similar to the topic of conversation.
I don't think the mom and pop shops are as "slow" to understand the local online advertising business as some of the comments make reference - think about it - traditionally they have paid money to have an ad in the yellow pages - they know exactly how many calls they get from the ad, they most likely don't even create the ad - people flip to it and call. Boom - business. The internet is not any different - I need a plumber in Grapevine - I search - find the number and call - not too hard to understand. The mom and pop owners (in my opinion) don't care about how the yellow pages are printed, published, distributed, etc. - all they care about is results - show me the "customers." With ReachLocal that is what they are trying to do - help local companies see the return on the investment and leave all the hard work up to the "expert."
I'm not 100% sure that the business model will scale nationally but seemingly they are giving it a try. We'll see. Seems like an existing sales force already calling on Mom and Pop would be better than building one from scratch - but what do I know...
http://www.reachlocal.com/register/login.php
Posted at 8:56PM on Nov 28th 2006 by GSM
26. Mark
I agree with your comments, but I think Google's intentions are even deeper. As a sports marketers myself, Google and the other super portals are prepping to cut into everyone's business.
My interes is in preserving content value and increasing the marketing forces between content and marketers.
The solution is one you probably know well, "DIGITAL CONTENT NAMING RIGHTS DEALS".
Here' my blog entry.
http://brandentertain.blogspot.com/2006/11/digital-content-naming-rights-deals-is.html
Posted at 10:30AM on Nov 29th 2006 by Cord Pereira
27. Mark,
The problem the local Newspapers will continue to have is competition from local search traffic coming from the engines, and its growing fast. In addition you have programs like Adsense and YPN (Yahoo Publishers Network) that are going to show ads locally on relevant content pages. Just remember most of these local businesses in America have monthly budgets of $500 to $10,000.00 in media ad spend. Since I run an SEM (Search Engine Marketing) company, and work on targeting certain geo areas, I can tell you that between using Geo modified keyword targeting, ie. Denver Self Storage or targeting a Zip Code Radius (Denver = 80202) and delivering geo based ads on high trafficked phrases like Self Storage, there is enough inventory to accommodate those ad spend levels.
Sure, the Newspapers might have the sales force, but SEM’s are launching local initiatives to fill that sales gap between small businesses and the Search Engines. We are launching http://www.localsearchtraffic.com/ and going to track both form fills and phone calls coming through to our local clients. Our clients will receive traffic from only people who search for their service in a regional area. We will not track by just clicks like the Google, Yahoo and MSN does, but we will know what their Call through Conversion percentage looks like, which will give them a Cost Per Call metrics. Note that companies cannot go out and buy calls in volume from the Engines in large scales. It needs to be generated with proper design, technology and marketing strategy.
Bottom Line: Newspapers will lose ad dollars to Local Search because of better conversions from the Engines.
Also, I notice post #24 talked about Reach Local, they have made an aggressive move in this space on the methods I am speaking about. If you are interested in learning more, I can explain what's going on in the space.
Andrew
Posted at 4:29PM on Nov 29th 2006 by Andrew Beckman
28. "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."
Uh, yeah, sure. Unless the CEO is sitting in the cheap seats. The cost of decent seats at an NBA game is ridiculous. Chances are a 16-year-old with pierced everything and a Mohawk won't be close enough to mom and dad to get freebies and not willing or able to shell out a couple hundred bucks for a couple hours of entertainment.
Posted at 6:25PM on Nov 29th 2006 by GM
29. Ok Ok Ok.....
Let's step back a little bit in time. Whatever happened to direct mail? Does it work? Is it targeted? If you can place an advertisement directly in the palm of a consumers hand with no distractions it is an effective marketing tool. We are not talking about 10 ads a dail in your snail mail.
Capital One sends a credit card application to just about everyone in the states. We can get that same advertisement in your clients hand for about $.07 cents.
We actually created a NEW advertising medium. It's incredible, effective and affordable.
Stay tuned for details on this amazing project.
30. Don't forget that content comes before advertising. Local newspapers need great web sites and community-led content. Look at this post. Fellow commenters have made better by their insights.
Posted at 5:08AM on Nov 30th 2006 by Pramit Singh
31. You hit on the most important failure of any new or old media business model when you wrote "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."
Survey some business decision makers (not agency people or marketing gurus) with at least 5 years of promotions buying experience and ask them "Have the returns exceeded your ad investment often enough to keep you coming back?" And if they say no ask "How many ad sales reps develop a close enough connection so that they are able to evolve a strategy?"
I saw a satisfaction survey like that back in the late 80s and the results were not good.
Posted at 9:33AM on Nov 30th 2006 by laurence haughton
32. IMO... Google advertising is currently a POPULAR marketing medium, but not necessarily an EFFECTIVE one.
I agree it's a good idea to chat up Google, Yahoo, MSN, for a joint venture in advertising because it can make your localized media company a little extra scrilla - But, you'll only be fattening your own wallets, and not those of your advertisers, because those ads are quickly losing their effectiveness. You can spot a Google ad from a mile and a half away, and web savvy surfers stay away from them - It won't be long before all internet users are hip to their operations, and then where will Google be? (I know, I know... Google ain't goin' no where, as they'll always be successful as a result of their consistent drive to innovate. But I'm willing to bet that Google knows that their current adv platform won't stand the test of time.)
Sure, the small business owners would appreciate the additional advertising option within your media kit - But would you really be helping them get more customers, or would you be deceiving them with a promotional gimmick that you knowingly understand to be less than stellar at achieving results? I think you answered my question right here...
"You might not be as efficient in monetization as Google, but most of your customers will never know the difference."
Ouch... That's not a sign of someone who has their client's best interests in mind. An advertising sale should be wrapped up with the business owner valuing AAAAND understanding what they're getting into. I don't want to sell my clients perceptions, I want to sell them performance.
You're a brilliant entrepreneur Mark, but I gotta disagree with ya on a couple of the points you mentioned.
33. It's definitely worth a try - so long as the Yellow Pages and directory people do not have the same idea. I'd argue that they have a much better infrastructure for bringing in these advertisers, and much fewer institutional obstacles to doing so.
Posted at 10:43AM on Dec 1st 2006 by Gari. N Corp
34. Mark, I just came across your blog and think it's great, I imagine the billionaire bloggers club is a small one.
After 25 years in small business and 40 years of reading newspapers, I would like to take issue with your assertion that sales is a core competency for local newspapers (though it may well be for TV). I believe the core competency of local newspapers is in providing an information marketplace for certain segments.
For example, today's Dallas Morning News first section is, as it is on every Saturday, full of furniture ads. Before we shop for furniture (and with a new house we've been doing that a lot), we consult this information market in order to get a general feel for who is offering what. If you are a furniture retailer, you are practically obligated to advertise in there every Saturday in order to get a chance at those consumers like myself who are, at this moment, highly motivated to purchase furniture.
Likewise, the ads for automobiles in the sports and classified sections and the entertainment section for movie ads.
I believe that advertising in a local paper is now pretty much limited to industries that have to be represented there in order to get a shot at the traditional newspaper readers. In other words, local advertising in newspapers is not "sold", it is "bought" and even the best salesperson cannot change that.
There may well be a great opportunity in providing personal service in assisting small businesses to use the internet as a marketing platform but I don't see where there would be many advantages for that as a part of an old media company rather than as a new start up- particularly if the new start up was staffed by people with the appropriate contacts from the old media job they used to have.
Posted at 9:00AM on Dec 2nd 2006 by Trey Tomeny
35. Mark,
I admire your dedication to the evolving internet and the business side of Google. I agree that your comments are very realative to how effective internet services like Google can be. I am developing a website call clickaticket.com which will be able to eventually sell tickets online and I believe that using GOOGLE ADSENSE will help to drive business to my site. Appreciate your insight. Landrus Clark, Entrepenuer
Posted at 2:07PM on Dec 2nd 2006 by Landrus S Clark
36. I think you are right that the newspapers should look at these new revenue sources.
However, I think this ship has already passed. Yahoo Local is leading the way here. They just signed up with 150+ newspapers to share revenue on classifieds in its HotJobs site initially. It only makes sense for them to build on this relationship and allow them to sell ad space across their Local search platform.
The newspapers are going to be helping Yahoo grow its Local portal and people are going to start going there for their news This means that the newspapers will be sending their news stories to be read on the Local portal and will no longer get as much readership on their own websites. So newspaper staffs will be much slimmer and they will be relying on the search engines for the revenue share while continuing to push advertisers to them for additional revenue.
Posted at 5:36PM on Dec 5th 2006 by Bad Ass Mo Fo
37. I find your third point very interessting and important:
3. Local traffic is worth more per click through than national traffic is.
I believe that here lies the real potential of Google. For example, if every pizza restaurant, every craftsman, every backery would advertise on Google ...
It's also kinda scary, Google gets bigger and bigger. And even bigger.
38. Seems as if the newsies are doing the exact opposite. Witness the latest: " Journal Register Co. said Thursday (12/14/06) it's become the latest newspaper publisher to sign on to Google's Print Ad program." Talk about rolling over and exposing their collective underbellies... They are simply giving up and allowing google to "gut" them.
Posted at 1:59PM on Dec 15th 2006 by korn
39. I still think we have to realize that "old school" and legacy doesn't always mean bad or outdated. There are some things in life people will always want (to read a hard-copy book vs reading something online...that kind of thing). Now, where those old'style businesses can change is with distribution, advertising, customization, etc. Not everything will be, or should be, on demand, instantaneous, etc.
Posted at 3:40PM on Dec 16th 2006 by basketball
40.
Marks comments are spot on!
Carmelo Lisciotto
Posted at 8:13PM on Jan 4th 2007 by Carmelo Lisciotto
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21. Hitting local markets on TV and Radio is currently done.
I work for a TV marketing company that focuses on both National Cables as well as local Broadcasts with a "Google model"
many of the advertisements you see on TV that tell you to visit a web site or call an 800# are following this exact model.
We get stations to run commercials for FREE and pay them based on Responces to that commercial. Our company makes close to $50mil a year...
Pay for Leads... not Media... that's basically what it is...
Mark... you know who we are... you met us and spoke with Mr West in Boston this year... we even sent you a framed picture of our sales force with you included...
Google on TV... ya, it's called REVShare
Posted at 6:19PM on Nov 28th 2006 by Wolfe & West