Posts Tagged ‘online advertising’

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.

Share and Enjoy:
  • Digg
  • del.icio.us
  • Facebook
  • Google Bookmarks
  • Reddit
  • Twitter

Tags: , , , ,
Posted in Conference, Media, local advertising | No Comments »

The Lady in the Sweat Suit

Saturday, November 7th, 2009

I was in a 7-Eleven last week and watched a middle-aged woman in a sweat suit pay $1.50 for the Sunday newspaper, then walk outside and dump half of it in the trashcan. Care to guess what part she dumped?

Like 37% of newspaper readers (according to Scarborough Research), she’s interested in the advertising. Her $1.50 was likely to have bought her at least $5 in coupons that she’ll redeem at the grocery store, Rite Aid or Wal-Mart. Smart purchase.

While most of the newspaper industry frets over giving away its precious news content, its most vulnerable franchise is produced by the advertising department. Newspapers should thank their lucky stars that the woman in the sweat suit did what she did. She could have stayed at home and gone to SalesCircular.com or one of the many other sites that would have given her the same thing. If she were in Long Island, she might get her coupons from www.yourli.com, an incredibly useful and popular site run by a group of radio stations. If she were in Bakersfield, Calif., she might go to www.shopkern.com, a shopping and coupon site run by KERO-TV.

I hope publishers learn soon that their most important content isn’t its local news.  It’s advertising. The issue was underscored last week when the president of the Newspaper Association of America sent a e-mail warning that J.C. Penney’s and Sears were threatening to pull their circulars because of lower circulation and the industry’s inability to reach younger demos. Circulars, he said, account for half of all newspaper retail advertising.

Local-allocation

I wouldn’t count newspapers out. Despite layoffs, bankruptcies circulation scandals and thinning classified sections, they are still king when it comes to local advertising. The crown is tarnished, but at the end of the day newspapers still control the largest slice of the $143 billion local ad pie, 26%. The next-closest share: Interactive at 14%. Then broadcast TV at 12%, then Direct Mail at 11%. Advertisers know about the lady in the sweat suit, and they’re eager to meet her on Saturdays and Sundays when she’s got her wallet and credit cards ready.  Newspapers remain the No. 1 source for coupons, representing 50% of all coupon sources.  The Internet represents 11%, but is certainly growing.

Newspapers are vulnerable, but their managers aren’t dumb. Gannett owns ShopLocal.com, an Internet distribution mechanism for its print circulars now plugged into all its newspaper and TV sites. The Suburban Newspapers of America this fall launched www.zip2save.com and is signing up smaller newspapers across the country. It’s modeled after www.flyerland.ca, a highly successful site created by Metroland Newspapers in Canada.

The debate over charging for news content is silly. Rupert Murdoch may be carrying the battle flag, but the legions of publishers following him over the hill appear to be heading into the sunset.  Charging for online access may slow the erosion in print circulation, but it’s never going to lead the industry to riches. Understanding the behavior of the lady in the sweat suit will.

Share and Enjoy:
  • Digg
  • del.icio.us
  • Facebook
  • Google Bookmarks
  • Reddit
  • Twitter

Tags: , , , , , , , , ,
Posted in Uncategorized | 3 Comments »

Is Google going down?

Sunday, November 1st, 2009

So what sets our Top 3 choices — Local.com, Yodle and Yellowbook.com — apart from the pack in terms of revenue growth this year?

These companies have defied gravity by focusing on selling the fastest growing ad categories:  search advertising, online directory listings, and streaming video. They also act as marketing consultants and can help small businesses with all the online marketing tools and advice they might need. They’ll put together a Web site for your business, offer complete analytics, online upgrades through a dashboard or if the advertiser gets stuck — they can just pick up the phone and talk to someone.

Google's in the crosshairs

Setting sights on Google

These companies are poised to beat the pants off traditional media because they see the gap that very few legacy outlets have been willing to commit to — the service gap. I mean, at most newspaper sites if a small business says to the account executive, “I need a way to collect e-mail,” the AE will probably send them to Constant Contact.  The right response should be, “Let’s set up a promotion to collect e-mails then we start mailing your list with specials.”

But, how can a traditional media outlet even compete, when according to our research, barely 60% of them have an online-only AE? That other 40% are trudging into advertisers’ offices with worries about cannibalization of the traditional product.

Back to the Top 3 — these company’s models are very similar and focus on soup-to-nuts interactive marketing for the small business. They have an actual phone number posted on their Web site. (Just try and find a phone number for Google.) In fact, this service-oriented model could disrupt Google, because small businesses need a figurative hand-holding. There is no face of Google and if I were them I’d begin to worry about that. They become vulnerable as advertisers begin to find other companies willing to lend a hand to pull them out of the service gap.

When I go into a market for a local media site and make an online marketing presentation to their potential advertisers, the small businesses are packing in and they are craving to have their questions about online marketing answered. They want to know what their business peers are spending, they want to know why their display ad doesn’t get clicked through and they want to know about the ROI. It is clear that you have to show a small business the whole online marketing picture and that’s exactly what these Top 3 are doing.

Plus these three are going after the most lucrative online ad spending business categories. Our own research data has identified that in most local markets these are lawyers, healthcare providers and home improvement, to name a few. But too many traditional media outlets in local markets are still calling on their traditional advertisers, which are not usually in these categories.

The Top 3 have been doing their research and now are methodically going out to hunt and to plug the service gap in local online advertising. They may have Google in their crosshairs.

Share and Enjoy:
  • Digg
  • del.icio.us
  • Facebook
  • Google Bookmarks
  • Reddit
  • Twitter

Tags: , , , , , , , , , , , , , , , ,
Posted in News, Uncategorized, local advertising | 2 Comments »

Mobile Advertising’s Gold Rush

Thursday, October 15th, 2009

If you’re rushing toward mobile advertising, you’d better check the local numbers first.

The gold rush is definitely on. It’s the new-new thing. But it sounds a lot like 10 years ago, when everyone was rushing toward the Web. Many people starved on the journey or died when the mine collapsed in 2000.

The headlines scream big numbers for mobile. Here’s one of our own: Mobile advertising to jump 33% in 2010, from $1.6 billion to $2.6 billion (Borrell Associates, Oct. 2009).

Few people seem to understand how that translates down to, say, Knoxville, Tenn., or Montgomery, Ala.

Before you charge up the iPod and hitch the wagons, consider this: The amount spent by advertisers on mobile devices in most markets will likely be in the tens of thousands of dollars next year for applications like couponing, mobile video, and text messaging. That’s barely enough to support software licensing fees, let alone salaries and sales commissions. Overall, we’re estimating that local mobile advertising will hit about $500 million in 2010. Still sounds like a lot – until you start looking down into individual markets.

Let’s take Knoxville. We’re estimating that the total mobile advertising expenditure in Knoxville next year to be about $9 million for the full Designated Marketing Area (DMA). For the Central Business District (CBD), the figure is less than half that.

But wait – that’s TOTAL. The LOCAL portion of that – spent by businesses in Knoxville – is somewhere around 20% of that. And for an application like mobile couponing, you’re looking at one-half of one percent of the total spending, of which 33% is local. I’ll do the math for you: Mobile couponing in Knoxville will fetch less than $10,000 next year. The numbers look relatively the same for other markets and applications. In Atlanta, local mobile text-messaging sales come to about $6.5 million (not bad, but remember, it’s Atlanta), and local mobile couponing should come in at about $100,000 in total spending next year. In Cincinnati, mobile couponing looks to be about a $40,000 local opportunity, and in Montgomery it might be about $10,000.

All of this is to say, temper your expectations. Timing is important. Now’s the time for experimentation and “placeholders” in the mobile space, but overinvesting time and money might cause a premature scale-back when the CFO realizes there isn’t enough money to support the effort.

Mobile is, indeed, a growth category with a lot of marketing opportunity. I definitely wouldn’t ignore it, but I also wouldn’t buy the hype.

(For a list of mobile ad spending estimates for each of the 210 U.S. DMAs for 2009 and 2010, see Appendix C in our recently published “2010 Local Interactive Advertising Outlook.”

Share and Enjoy:
  • Digg
  • del.icio.us
  • Facebook
  • Google Bookmarks
  • Reddit
  • Twitter

Tags: , , , , , ,
Posted in Uncategorized | 3 Comments »

For Whom the Bell Tolls

Wednesday, October 7th, 2009

A seminal event occured on Wall Street last week. At precisely 9:30 a.m. on Oct. 8, Heath Clarke, the CEO of Local.com, rang the NASDAQ opening bell. In so doing, he essentially rang in a new theme on Wall Street: Local is the new black.

Heath Clarke, Chairman & CEO, Local.com

Heath Clarke, Chairman & CEO, Local.com

In a report we released a few hours later, Local.com is listed as one of the Top 3 fastest-growing local online advertising companies in North America. This is a remarkable feat in a year when ad sales are phenomenally depressed for seemingly everyone else. Yet Clarke’s company is seeing growth of 34% this year on revenues that are expected to top $50 million.

Internet advertising down? Not for Local.com, which is aggressively mining the lucrative new frontier of “local.” Clarke’s company – and others like it, such as Yodle (with a whopping 210% growth rate this year) and Yellowbook.com (with a 98% growth rate) — are the ones to study.

I’ve invited the top digital executives at some of these companies to speak at our conference in February. I want to learn more about how these companies are doing it.  The report we released last week shows local Internet advertising rising at a rate of about 12 percent this year. Many legacy media companies who are suffering double-digit declines in online sales growth will find that hard to believe. But as that NASDAQ bell clanged and the trading began, it may as well have been an alarm clock for them, and for anyone else trying to mine digital gold in the local hills.

Share and Enjoy:
  • Digg
  • del.icio.us
  • Facebook
  • Google Bookmarks
  • Reddit
  • Twitter

Tags: , , , , ,
Posted in News, local advertising | 1 Comment »

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.

Share and Enjoy:
  • Digg
  • del.icio.us
  • Facebook
  • Google Bookmarks
  • Reddit
  • Twitter

Tags: , , , , , ,
Posted in Media, Uncategorized, local advertising | 6 Comments »