The Google Brilliance applied to Newspapers and Local Media

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

47 thoughts on “The Google Brilliance applied to Newspapers and Local Media

  1. Any ad agencies or ad reps that see this site, and would like to help
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    Comment by J. Graham Davies -

  2. Any ad agencies or ad reps that see this site, and would like to help a nonprofit in local advertising, please leave your comments here on the live link provided on this site. There is a market for nonprofit orgs that wish to advertise their services locally. I am in Pasadena, CA. Nonprofits gain when word of mouth spreads and more support is acquired from those with the same goals and values. Thanks for your help.

    Comment by J. Graham Davies -

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    Comment by shawn -

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    Comment by george morgan -

  7. Interesting topic!
    My view is that too many local businesses are jumping on the Search Engine Position bandwagon in the belief that their biz will show up as soon as someone submits a search.
    Given the number of businesses sharing the same catagory, this is just not feasible.
    Type in Restaurant Glasgow and you will be offered a number of directories to choose from.

    I believe most local biz would do well to avoid paying for ads on Internet search engines.
    having said that, more people are going online to find a service or product.

    With this in mind, I’ve tried to take a different route in offering ad space to local business.
    Space on a website that advertises within the local community.
    I’m not vying for (or paying for) search engine position.
    Basically, local biz advertise on my website and I advertise my website in the local area.
    So it’s realy a local classified in website rather than printed form.
    I know many local biz are paying good money for internet advertising that doesn’t give them a return.

    John

    Comment by John Campbell -

  8. Marks comments are spot on!

    Carmelo Lisciotto

    Comment by Carmelo Lisciotto -

  9. 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.

    Comment by basketball -

  10. 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.

    Comment by korn -

  11. 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.

    Comment by Amelie -

  12. 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.

    Comment by Bad Ass Mo Fo -

  13. 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

    Comment by Landrus S Clark -

  14. 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.

    Comment by Trey Tomeny -

  15. 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.

    Comment by Gari. N Corp -

  16. 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.

    Comment by Brad -

  17. 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.

    Comment by laurence haughton -

  18. 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.

    Comment by Pramit Singh -

  19. 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.

    Comment by Jay -

  20. “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.

    Comment by GM -

  21. 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 SEMs 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

    Comment by Andrew Beckman -

  22. 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

    Comment by Cord Pereira -

  23. Now you see why Google is doing Google Co op. Someone is going to classify all the websites by certain locales using Google Co op. This will allow google to provide advertisers the ability to advertise to local websites. Absolute genius.

    Comment by John -

  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

    Comment by GSM -

  25. 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

    Comment by Juan -

  26. 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.

    Comment by basketball drills -

  27. 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

    Comment by Wolfe & West -

  28. 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.

    Comment by RD -

  29. 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.

    Comment by Matt Kennedy -

  30. 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.

    Comment by Jason Barnett -

  31. 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.

    Comment by Jason Barnett -

  32. 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:)

    Comment by Average Betty -

  33. 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.

    Comment by midtee -

  34. 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…..

    Comment by Marc in Illinois -

  35. I agree with you. Great Article!

    Google does earn allot of money from those they
    don’t need to pay that don’t reach the 100 dollar mark
    like you said. They should have started at the 20 dollar
    mark instead. Unless they planned that on purpose.

    Comment by Katie -

  36. 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.

    Comment by Gavin the photographer -

  37. 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.

    Comment by Hero Style -

  38. 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 exactlyand 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.

    Comment by Steve Morsa -

  39. 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

    Comment by Jake -

  40. 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.

    Comment by Jim Mansfield -

  41. 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.

    Comment by Mich -

  42. 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

    Comment by ski -

  43. 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.

    Comment by stinor -

  44. 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

    Comment by Shannon Clark -

  45. 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.

    Comment by Gerald Joseph -

  46. 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).

    Comment by MVD -

  47. 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

    Comment by Peter Cranstone -

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