Archive for the ‘Media’ Category

Those Who Forget the Past…

Monday, March 1st, 2010

Many of the online news services carried a headline recently, “Newspaper Local Web Sites Most Trusted Source for News.” The story behind the headline cited research recently completed for the Newspaper Association of America (NAA) by Comscore. Even though any self-promoting research must be viewed with skepticism, the Comscore results may well be valid. The problem is, it doesn’t matter. Unless the local papers can monetize their draw for news, they will still be shoved aside by other sites that can. Local newspaper sites that still depend on run-of-site static display for most of their online ad dollars will not see the increases in advertising that others who use search, targeted rich text, video and online direct will enjoy.

A long time ago (only 15 years, really … it just seems like longer now) newspaper research found another satisfying trend. The numbers seemed to show that when a person turned 35 or so, bought a home, and started to make a better than  average salary, he or she somehow morphed into a newspaper reader. It may seem laughable now, but it was an accepted industry fact back then. A few years later, research from Clark, Martine & Bartolomeo proved that this “fact” was absolutely wrong. The “Born to Read?” research showed that if readers were analyzed by year of birth instead of age, a very different picture emerged. Instead of some miraculous transformation, a generational change was occurring. Baby boomers read newspapers less than their parents, boomer’s kids read less yet, and so on. We now know their research was right. We see it every time newspaper circulation is measured.

Newspapers got on the Web early, but they weren’t very smart about monetizing their online presence. Instead, they offered many services (including news) for free. The theory was that these services would point users to the “core product,” i.e. the printed newspaper. Sadly, people who are used to getting something for free resist paying for it. Attempts to get money for online news have not been well-received. In the meantime, newspaper share of local online ad revenue has dropped by half during the last four years. So now newspapers have a conundrum: a trusted source of news that is hard to monetize. Rather than researching what they know and patting themselves on the back, they should be researching what they don’t know and figuring out what to do next.

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The Jeff Jarvis Interview

Friday, January 8th, 2010

I had a discussion with author and CUNY professor Jeff Jarvis recently and was struck by his passion about hyperlocal journalism on the Web – something I’ve never felt had a sustainable business model.  You can see the interview on our YouTube Channel.

Jeff’s passion reminded me of a book I sent last year to Borrell Associates employees.  It was titled, “It’s Not What You Sell, It’s What You Stand For.” The book describes companies that not only have great products and services, but also a purpose.  Our purpose:  to save that noble enterprise called journalism.  As corny as it may sound, it’s what we believe we are doing.  We’re helping local media companies survive financially so they can continue to serve and protect their communities.

Jeff shares that purpose, though I must admit he wins the prize for being more passionate about it.

Jeff Jarvis discusses hyperlocal site profitability

Jeff Jarvis discusses hyperlocal site profitability

Jeff heads up the Interactive Journalism Program at the City University of New York.  I spoke with him in New York a few weeks ago as we prepared for his keynote address at our conference next month.  (We just posted a list of attending companies – we’ve got quite a diverse crowd interested in this topic.)   Jeff has always expressed a great clarity and strong opinion on the topic of journalism.  When I asked, “Why are you so passionate about this?” his response was, “Because I believe in journalism. Because I care about journalism.  I teach journalism.  I want journalism to not just survive, but to prosper and grow in the new world. And I believe it can.”

I believe it can, too.  But I don’t believe that it can survive on the Web without a viable business model.   And if it doesn’t, and if more newspapers shut down or local broadcast TV stations cease their newscasts because they’re too expensive to produce, the bright light of good journalism will get dimmer and perhaps become so intertwined with commercial messages as to become powerless.

Is the Web a viable replacement?  Can it — as Jeff says — not only survive on the Web, but prosper and grow?  I think so.  And I think the Web might be an even more powerful educator and equalizer in society.

But it won’t get there unless we make it financially viable.  Jeff’s panel at our conference includes some people who are generating enough revenue to not only keep the sites running and pay editors and journalists, but also turn a profit.  We’ll be posting a video interview on our YouTube channel next week with one of them — a remarkable story from Fisher Broadcasting seeing financial success with dozens of hyperlocal sites in Seattle.

These are the people with a purpose, and I’m very eager to see them succeed.

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Mobile DTV? Watch WRAL

Monday, January 4th, 2010

First off, Happy New Year.  I hope you had a good holiday and are as eager to get back to work as I am.

Next, I wanted to suggest that you brace yourself for an onslaught of news from this week’s Consumer Electronics Show in Las Vegas.  The show will churn out a lot of hype about cool devices that deliver mobile video. I imagine local broadcast executives will be busy forwarding articles from the show to their editors and programmers with the notation, “What are we doing about this?”

An appropriate reply might be, “We’re watching what WRAL does with it.”

If anyone in the local broadcasting business wants to stay ahead of the curve, the easiest way is to watch and then copy WRAL-TV in Raleigh.  If you think local TV is defined by its enormous broadcast towers, news choppers, remote satellite trucks and digital news broadcasts consider this:  WRAL has the tallest tower east of the Mississippi, was the first station in the country to buy a news helicopter, the second to broadcast via satellite truck, and the first station to go digital.  Live video on mobile phones?  Old hat to WRAL, which has been doing it since 2007.

Its latest worth-copying venture is an aggressive foray into mobile digital television. City bus riders are already watching WRAL as they tool along the streets of Raleigh.  How cool is that?

But is there enough money to support mobile DTV?  “We’re looking five, 10 years down the road,” station vice president Jimmy Goodmon says in Monday’s Wall Street Journal.

In other words, not today, but certainly in the near future.

U.S. Mobile Advertising Spend 2005 - 2014

U.S. Mobile Advertising Spend 2005 - 2014

While everyone else is throwing out big numbers for mobile advertising, I continue to encourage broadcasters to pay close attention to two things:  a) the “local” portion of the numbers, and b) the “video” portion.   Yes, mobile advertising approached $2 billion last year and will probably hit $3 billion this year.  But the amount spent by local advertisers is barely 20% of it, and the amount spent on local video is 12% of that….meaning local mobile video advertising won’t crack $100 million this year, or barely 2% of all mobile advertising.  By 2014, we are forecasting that it will hit $1 billion, for a 10%share of all mobile advertising.  (For more detail, you can download the free mobile advertising report we released last month.)

I’ve been to Raleigh a number of times over the past few years to meet with Goodmon and his staff.  They are absolutely the most forward-thinking, positive-minded, innovative set of local TV operators I’ve ever run across.  That’s why I’ve asked Goodmon to speak at our conference next month in New York.  WRAL is definitely worth watching.

Does this mean local media companies should sit back and relax, or rush out and create agreements with city bus lines, local gas stations, or other outdoor venues?  I’d say it’s definitely time to experiment for those in the Top 50 markets, mainly because of competitive issues.  But I’d also warn that it’s best to get realistic about the advertising support that will undoubtedly lag the audience.  The vast majority of local mobile advertising in the next few years will come from text-based applications, not video.

It’ll be great to hear what’s working and what’s not during our Feb. 8-9 conference in New York.

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Google-Yelp … Nope!

Friday, December 18th, 2009

Google’s rumored $500 million offer to buy Yelp, a site offering consumer reviews, drives home my longstanding belief that the major portals — Google, Microsoft and Yahoo — are becoming the national networks in search of local affiliates like an NBC, CBS, ABC and Fox.

But while the deal apparently fell through over the weekend, I don’t think this it would have been a game changer because Yelp misses a key element: Local salespeople, or at least trusted ones. Just Google “Yelp salespeople” and you’ll understand the stickiness of this situation.

Our conference in February features an entire afternoon exploring these evolving portal-local media relationships. “Partnering with the Portals” features key executives from Google, Microsoft and Yahoo! who are in charge of developing relationships with local media.

Fasted Growing Local Online Marketing Companies of 2009

Fastest Growing Local Online Advertising Companies of 2009

Yelp is indeed a marketplace force. Its numbers weren’t previously made public until last week’s speculation of it being a $50 million company in 2009. While its estimated growth rate — if true — would put Yelp in the Top 5 fastest-growing local online advertising companies in 2009 at 66% growth (see chart), it still doesn’t make our list of the largest.  Craigslist, for instance, has twice the revenues as Yelp.  With a Google deal for Yelp, that might change.

However, I view very few things as “game changers,” and despite its potential magnitude I don’t think this would have made the list. Google has had a tough time making itself look local. Acquiring Yelp would have tied together two very important ends: Google and individual consumers. Real people.

But what they’re missing is an army of real salespeople. Local advertising is sold, not bought, which is to say that SMBs really do need a local sales force to hold their hands. They may go online after midnight and buy AdWords with credit cards, but eventually stop buying because they don’t have enough time to manage the account or understand whether it’s actually working.

It takes a local sales force, and it will take a different type of partnership for Google to really become a local advertising powerhouse. It’ll need to acquire a company with a fairly large local and reputable sales force.

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5 Things to Watch–and Act On

Monday, December 14th, 2009

We have issued our Top 5 recommendations for local online advertising in 2010. They’re pretty straightforward:  Identify and copy the fastest growers, start partnering with other companies, offer “promotions” services to advertisers, monitor but be cautious about mobile, and dive into video advertising. But I thought I’d also offers some predictions for 2010 that might startle you.

First, I’m excited to announce that we have a new list of speakers we’ll be announcing this week for our Feb. 8-9 conference in New York. In the spirit of identifying and copying the fastest-growing local online advertising companies, we’ve gone to the trouble of identifying them for you — and getting their top executives to stand up at our conference and tell you why they’ve become the new darlings of Main Street.  We’ve also secured speakers from companies like Fisher Broadcasting, which has launched 43 hyperlocal sites in Seattle that are fast becoming profitable, as well as leading revenue producers in email, video, promotions and paid search.  Wait ’til you see the final agenda.

OK, on to the startling things.  I believe that 2010 will see a clear divide between the local media companies that are crossing the gorge and those being left behind.  Positive growth in Internet revenues will be the delineator.  Those who continue to see declines will clearly have tied their Internet operations too closely to their legacy media companies or will have formulated products that don’t resonate with Main Street advertisers.  Other predictions:

Largest Local Online Advertising Companies, 2009

Largest Local Online Advertising Companies, 2009

1.  Newspapers rebound.  Look for a 2-4% increase in newspaper ad revenues next year.  Smaller papers might fare better.  Those who make the digital transition will see up to 20% of their total ad revenues coming from the Internet next year.  The Yahoo-newspaper partnerships will generate $200 million to $300 million in geo-targeted banner sales.

2.  Local Internet advertising grows 5-9% next year, making it harder than ever for many companies to ride whatever tide is left.

3.  Mobile advertising skyrockets (on a small base), but local ad buys remain short-term and experimental.

4.  Cable companies dive deeper into local Internet sales.  Look for acquisitions and partnerships like we saw with the Yellow Pages in the early to mid-1990s.

5.  Yellow Pages continue a precipitous decline, high single digits but perhaps double digits for some.  Meanwhile, their Internet revenues will grow to comprise one-fifth of ad revenues.

Predictions are no more than educated guesses, so I really didn’t want to spend too much time on speculation.  The recommendations are key to what I think you should be watching.  The largest local online advertising companies are interesting to observe, but the fastest-growing ones above $25 million in revenue are the ones worth studying — and copying.

I hope you can make it to our conference.  We’re going to spend a lot of time dissecting these companies and learning why local advertisers have become so enamored of what they’re offering.

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The Hands of Radio Listeners

Tuesday, December 1st, 2009

Tuesday’s article in The Wall Street Journal about radio’s online efforts painted a perplexing picture of an industry that’s accustomed to targeting, but hasn’t figured out the most targeted medium of all – the Internet.

What’s worse, the target that the radio industry is hitting online is incredibly valuable.

With the help of Ken Dardis at Audio Graphics, we’ve been surveying the massive online “listening” audience” for the past year and have found some incredible things.  I’ll describe these results at next week’s Radio Forecasting Summit at the Harvard Club in New York.  Here’s a preview of some statistics about the estimated 42 million online radio listeners:

  • 42% of them said they bought something as a result of seeing an advertisement on the Web for a local business.
  • 53% of them use online coupons, and half of them use an online coupon at least once a month.
  • 33% of them use the Internet exclusively to look up information about local businesses, and 47% of them use both the Internet and the phone book.

If I were a local advertiser, I’d be very interested in this audience.  Engagement is high, and these listeners have a propensity to search for information about local businesses on the Internet.  Those are some powerful statistics that run the opposite of less-engaged mass broadcast audiences.  (Think of hands on keyboards versus hands on steering wheels.)

Online Radio Listeners and Advertising Survey

Online Radio Listeners and Advertising Survey

So why isn’t the radio industry doing better?  While some will say they are, the facts are pretty clear:  Radio stations will get about $230 million from local online ad sales this year.  Most of it will come from slapping banners on their CallLetter.com Web sites or inserting a $5 CPM commercial in their Internet audio streams.  Meanwhile, the yellow pages industry, which is roughly half the size of the entire radio industry ($10 billion in yellow pages ad revenue, compared with radio’s $19 billion in local and national network radio sales), will get more than six times as much online revenue – about $1.5 billion.    Even the TV guys are getting more than four times as much as radio, which is remarkable considering the fact that there are about half as many local TV salespeople pounding the streets compared with radio salespeople.

Here is one of the problems:  There are 250 million people listening to terrestrial radio, yet only 3 to 5 percent of them are listening to their audio streams on the Internet. To radio GMs, the audience is too small to mess with.   But as I’ve outlined, this audience is probably the distilled portion – the ones most engaged and most likely to purchase something.

I see encouraging signs that the industry is beginning to learn that it’s niche, not mass, that’s making the money on the Internet.  Once they start paying bigger attention to smaller numbers – and realize the value of their hands-on audience – they have a chance of seeing better returns from their Internet ventures.

* Joint survey of 973 online listeners in Dec. 2008-April 2009 via Audio Graphics and Borrell Associates Inc.

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Embracing TV talent on the tiny screen

Tuesday, September 29th, 2009

If legacy media companies were conservative parents, David and Michael Castello would be the beguiled rock stars leading the kids astray.

The hip brothers own six “city.com” domains in Tennessee, California and Florida, as well as sites like Whisky.com, Chili.com and Bootleg.com. They just scooped up weatherman Tim Ross, formerly from local NBC affiliate WSMV-TV.  Ross has joined the talent at the Castello’s Nashville.com. Once voted the most popular TV weatherman in Texas, Ross said the Castellos have “given me the freedom to stretch my creative wings.”

The sucking sound of the Internet has struck in other cities where personalities have moved from the small screen to the tiny screen.  It’s almost as if these anchors stood up, yelled “I’m mad as hell and I’m not going to take it any more!” and left.  In reality, their contracts weren’t renewed as the local TV market downsized.

Nashville.com, a Castello Property

Nashville.com, a Castello Property

In Charlotte, popular weather anchor Terri Bennett lost her job and promptly bought billboards around town to lure her audience to terribennett.com, an ad-supported site where she provides information on the weather and conservation.  In Charleston, S.C., longtime WCBD anchor Warren Peper got canned and wound up doing videos for Charleston.net, the site owned by the Charleston Post & Courier.

Back to the Castellos. These guys bear some watching. One of their sites makes more money than any locally owned media site in that market. They do it without a lick of broadcast or print cross-promotion, a base of advertisers from which to up-sell, an existing staff to sell it, or a massive bank of news, weather or sports to splay across its Web site. Hundreds of independent sites are competing heartily and doing it well, from Myrtlebeach.com to Toledo.com Branson.com to SanDiego.com.

While they often get snubbed by legacy media companies because they aren’t very attractive or don’t contain serious news, their hearts are tuned precisely to the needs of advertisers and consumers.  They are the Craig Newmarks of the city.com business.  Kinda geeky, very little design skill, and perhaps more lucky than brilliant.

How do they do it?  I’ve invited Mike and David Castello to address our conference in New York next February. They’ve graciously agreed, and I intend to let them speak about WestPalmBeach.com, PalmSprings.com, Nashville.com and the other sites they own. I also intend to grill them on whether these sites are truly making any money, or whether this is all just smoke and mirrors.

Hope to see you there. It’ll be a very interesting session.

Borrell Associates Conference Feb 8-9, 2010

Borrell Associates Conference Feb 8-9, 2010

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You Need Online Reps to Drive Online Sales (Doh!)

Wednesday, July 29th, 2009

Whenever I make a presentation, one of the biggest laughs comes when I show a cartoon of a man explaining a plunging line on a flip chart. The caption reads, “The dip in sales seems to coincide with the decision to eliminate the sales staff.” We just completed a survey of 382 local ad sales managers that shows something just as dramatic. Sites with online-only sales reps make substantially more than those who rely exclusively on their seasoned print or broadcast sales staffs.

51335This revelation should come as no surprise to online managers. They’ve been telling us all along that print and broadcast reps “just don’t get it.” It’s not meant to impugn their intelligence; it’s just that those reps have their hands full trying to maintain existing customers. Online managers tell us regularly that they can drive revenues faster with a sales staff whom they can actually fire for not meeting sales goals. Our vice president of sales training, Bill Caudill, tells us that, after a training session, 30% of the reps “get it” and actually go out and sell online advertising. After three months, he says, half of them forget it.

More on the research. We asked front-line sales managers across the U.S. and Canada to take a 12-question survey about sales compensation, number of reps, online revenues, and related issues. We’ll publish the full results in mid-August. Respondents were split among those representing radio, TV, yellow pages, newspapers and Internet pure-play companies. Overall, 41% said they relied exclusively on “legacy media” reps to sell online advertising. Wow, what a mistake. I don’t think anyone can cite a single example of a sales staff selling two competing products and getting a significant share in both. It doesn’t happen, and no amount of digital pixie dust sprinkled over a print or broadcast sales staff will change that truism.

This, by the way, doesn’t mean that print or broadcast reps should NOT be selling online advertising. They should be trained to sell as much as they can. You don’t want to leave that money on the table. But relying exclusively or too heavily on legacy media reps is a quest to achieve mediocrity.

The most startling bit of information from the research is this: Of those with reps dedicated exclusively to selling online products, 46% of the sites were making $1 million or more. Of those that relied solely on their print or broadcast reps, 14% of the sites were making $1 million or more.

One more result from the survey: Of those who rely exclusively on legacy-media reps to sell online advertising, 49.7% said those reps exhibited an “average” or “poor” understanding of how interactive media could serve advertisers.

I rest my case.

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Time for strange bedfellows

Friday, July 24th, 2009

strange bedfellowsCraigslist, Google, Monster, Autotrader… for local media the list of outside competition is growing longer every minute.  In old westerns, the scene would be akin to Indians popping up over the horizon, arrows ablaze, pouring down on the covered wagons of the cowboys.

More Indians have shown up – Yahoo said Tuesday it had signed a deal with AT&T for its sales force to sell Yahoo display ads to its small-business customers.  What this means is that over 5,000 AT&T reps will now have access to sell advertising on Yahoo to small and medium businesses competing with local media sites for a share of local ad spend.

On his blog Content Bridges, Ken Doctor summed up the Yahoo/AT&T partnership this way: “[The] Yahoo/AT&T deal represents new competition for beleaguered newspaper companies. Once AT&T sales reps got up to speed (and that’s certainly an intriguing question, given the newspaper company implementation experience), they’ll be competing head-on with newspaper reps.”

With major pure-play partnerships popping more often up how can a local media site compete against the big guns?  Newspapers, TV stations and radio groups need to dig deep themselves and begin their own partnerships at the local level. It is time for strange bedfellows. Cross-selling and using traditional media to drive traffic to the local site becomes paramount. The power of local media is what you are selling, it is your distinct advantage, over the outside, national networks. Local advertisers look to your Internet sales team for expert advice and they must be trained in integrated marketing campaigns and loaded with the latest products. Yes, you should sell your competition’s traditional media if it fits the campaign.

The quickest way to gain trust with a local business is to make their ad campaign successful utilizing the benefits of social networks, video, e-mail, search, promotions AND newspapers, TV, radio and even billboards.  Call your local media competitor today and break bread. It is time to start training your Interactive sales team on the benefits of selling integrated marketing campaigns.

It is time to circle the wagons.

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Local Ads Moving to Social Networks

Sunday, July 12th, 2009

We just did an assessment of advertising placed on social networking sites and were surprised to find that nearly 20% of all ad spending is by local businesses. Our assumption going into this research was that commercials on social networks were almost purely national. We’re estimating that local advertisers will account for about $641 million of nearly $3.3 billion this year trying to reach consumers via these sites.

Pie ChartIn the scheme of things, it’s still a drop in the bucket. The total is less than 3% of all locally spent online advertising. If we estimated it for individual local markets (we usually don’t do that until an advertising segment reaches $1 billion), it would equate to a few hundred thousand dollars or less in most markets.

Before you rush to create a networking site for Oklahoma City pet lovers or Duluth skydivers, consider this: 57% of all that local social-networking advertising is going to two sites, Facebook and MySpace. They are the only two sites generating more than $100 million from local advertising placement. We’re seeing quite a few local ads placed either through Google or Yahoo’s contextual placement program – probably through an intermediary and not by the advertiser directly.

We’ll be studying the full list of social networking sites and their local ad dollars over the next several days and offering more insights. The relatively small amount may not seem like much, but the swift growth of these networks appears to be causing a corresponding upswing in local ad placement. Keep an eye on Facebook. It is the biggest share-getter. In fact, 74% of its ad revenues are from local businesses.

Download a detail of Social Network ad spending.

Press Release

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