ad:tech “The Great Transfer of Wealth: The Transformation of Local Advertising”
- Gordon Borrell , President, Borrell Associates, Inc. (NEW REPORT, Free Executive Summary)
- Eric Stein, Director, Local markets, Google
- Kurt Weinsheimer, General Manager, Local Marketing Services, Spot Runner
- Peter Hutto, VP, Business Development and Sales, Local.com
- David Smith, CEO, Media Smith
Notes from the Panel
- Local is the new black! It is trendy and everyone wants in. The panel felt it is finally time for local, and it is primed for growth.
- Majority of local spend is done on newspapers, TV, etc. Interactive media has a 9-13% share. Borrell expects single-digit growth in 2009
- Google Local – partners with traditional media: newspapers, yellow page companies to resell Google’s listings. They have thousands of feet on the street, and are great at sales. People need to transform their businesses to take advantage of that stuff.
- Spot Runner – provide advertising solutions to drive measurable results. Local, to them, is driven by affiliated businesses (co-op, franchises), where businesses can take advantage of their national counterparts.
- Consumers are going online for their information
- It was easy to ignore online when business was good, but now businesses have to follow the consumer online
- Most SMBs can’t answer the question: “Is your marketing working?” but they want to understand how to make their marketing dollars stretch. Are they telling the right story online and on TV?
- Local.com – How people define local is different for many businesses. Reaching small advertisers is extremely difficult.
- Local.com was a tier 2 search engine like Miva, etc., and then decided to move to exclusive focus on local search
- They have 17 million uniques and are targeted to earn about $35 million this year
- Aggregated advertisers and content: Marchex, Yahoo, etc.
- Focused on direct advertiser aggregation
- National advertisers with local footprint
- Regional players that cover DMAs
- SMBs that focus on a city or sub-city level. They are focused on signing up these companies. They feel they get the other advertisers through other deals.
- Mom & Pop businesses move slow, don’t get online, and do not understand technology. There are over 16 million of these businesses (doctors, dentists, car repair).
- Proving and establishing value is very difficult. They don’t care about measurements and don’t want to be bothered.
- They are using outbound telesales. Get them onboard/online, and then upsell.
- Enhanced profile pages are key. Rich media pages are taking off, especially with video. Think MerchantCircle.com meets linkedin.com for businesses.
- National advertisers are limited to the top 40-50 markets, while there are some 200 DMAs in the US
- DMA buys (dealer association, retailer) are done by companies that have distribution throughout the region
- Mom & Pop can’t reach the whole DMA because they can’t service the whole market
- Other than yellow pages, it is difficult for them to segment
- Online, they can geo-target or buy local sites
- Buying Dallas- or San Francisco-targeted sites may result in people interested in visiting Dallas, for example
- Location-based advertising will slowly start to take off as iPhones proliferate. This is the holy grail of one-to-one marketing
- Flatpanel television penetration will dramatically increase in bars, grocery stores, etc., as the price decreases. This will provide Mom & Pops new local inventory to target and segment their buys.
- Local media companies will dominate. They see the transference of wealth and want to keep it for themselves (Hearst, Tribute, Gannett, etc.). In the local marketplace, these companies know that media is closed on the golf course and soccer fields. How does Google or Local.com sell to Mom & Pops?
- The competence of the incumbents seems to be insignificant and has created a vacuum of opportunity. There is no one really servicing this group.
- AT&T has struggled in migration from yellow pages to online, and appear to be completely fumbling this strategic imperative
- Newspapers are selling $3.1 billion in local advertising (jobs, classifieds, etc.), at a 40% margin
- Google partners with traditional and non-traditional companies to access their local sales force
- Google has done well with the self-service model. But over the next five years, many new businesses may come from resellers, so the process can be simplified to eliminate the complexity of technology.
- The balance between simplicity and powerful segmentation is a difficult one to achieve
- Online revenue for local newspapers shrank
- Sales force compensation is structured for print and not online, and it is difficult to get the sales team to focus when they aren’t financially rewarded for doing so
- You can’t manage local online ad sales without robust technology, and many/most online companies don’t have to deal with sales compensation issues
- Yellowbook just announced a deal with YouTube for putting up local commercials (only two days ago). The traditional companies are moving very slowly.
- Spot Runner – platforms and partnerships are critical to access those relationships, while bringing technology to simplify and enable the sale. Many business segments are very difficult to break into – like lawyers.
- Small businesses don’t buy solutions – they are “sold”
- The next wave of moving companies online will be tied to simplicity
- Media will continue to fragment. The panel didn’t see rapid consolidation. Today, there isn’t radio and TV sales. There aren’t people in the newsroom pumping out TV scripts. At the national level it may be possible, but at the local level, sales will be vertical and specific. It takes a dedicated sales and training force to get local to work.
- Banner advertising is on the decline, and is declining faster in media. Advertisers want to buy Google and know how it works, and are moving away CPM/banner ads. 51% of all local online spend is banners, and it is moving quickly into search and some into video.
More to come…