AR&D - Audience Research and Development

Over a three year period, newspapers have lost 17.2% of market share on average. Television has picked up share (7.6%) since 2004, and that's due to a more focused effort by stations and the rise of online video, among other factors. But the big gainer is internet pureplay companies (34.4% market share gain), including the biggies, like Google, Yahoo, AOL and MSN. Remember, this is LOCAL online ad revenues. The category, however, also includes a growing number of niche verticals and other local online sites, many of which are no doubt run by media companies — sans the brand.

Borrell Associates president Colby Atwood told me that these are interesting times, to be sure.

The acceleration in local online ad spending is giving newspaper sites some serious whiplash. Those sites are growing far faster than their print parents, but not fast enough to keep up with the market. New online advertisers are swarming out of the woodwork while newspapers continue to lean heavily on their print customers for online revenues. TV and radio sites shouldn't get too smug, though. They are gaining share right now, but if they don't get beyond selling Web packages to their on-air advertisers, they will roll into the same patch of deep sand that is holding the newspapers back.

Colby's exactly right. Growing online revenues may be putting smiles on some faces, but the truth is the market is growing faster. When you combine radio, television and newspapers, the problem comes into focus (down 11%). It's not television versus newspapers; it's traditional media against new.

So media companies will continue to fight for a decreasing share of the local web advertising pie, while pureplays will continue to grow. This is just one of the reasons why we see opportunity increasingly as outside the media brand's reach/frequency strategy   <Link>

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MARCH MADNESS: NETWORK/AFFILIATE MODEL TAKES ANOTHER HIT (Terry)
Follow the thought process on this one. CBS has decided that it, along with the NCAA, will offer all 63 of the NCAA Division I Men's Basketball Championship games via its March Madness on Demand. No blackouts. None.

Staci Kramer wrote in PaidContent.org that "until now, the network has protected its affiliates by maintaining roughly the same blackout rules online as it has on air and in its DirectTV out-of-market package, essentially keeping the local games to TV only."

This is smart on CBS's part, but it continues to frame the network-affiliate relationship as the red-haired stepchild. The inevitable conclusion of this, as I have written before, is that one day affiliates will be asked to pay for content that they used to get compensated for airing. If you're a CBS "affiliate," for example, and you want to sell a couple of ads on CSI in the future, the network is going to want in on that compensation. All of programming will be syndicated, and won't that be fun for local companies? We used to think long ago that the networks needed us, and they did. We used to actually negotiate for INCREASES in network compensation, and it was a pretty hefty contributor to our bottom line.

Everybody used to pay for film processing, too.

Of course, the network spin paints this move as positive ("this is additive—not cannibalistic"), and it is, from a web perspective. But it's further evidence that program creators don't need the affiliates anymore to serve "content" directly to consumers. We would all to do well to get out our spyglasses and take a long look down that path.

For consumers, the beauty of this is that there won't be a lot of work taking place the last two weeks of March. We'll all be watching March Madness at our desks.

Nice.   <Link>

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TAKING A RISK ON A NEW CONCEPT (Steve)
Fox Chicago has put together a site that is unique and wonderful, and I encourage you to take a look at it.

LiveNewsCameras.com takes local Fox live feeds from around the country and posts video thumbnails all on one page. You choose the feed you want and it streams live in the center of the page. In addition, there is a site moderator on a webcam who gives a "heads up" occasionally to highlight particular items of interest. They call this person an "NJ" or "News Jockey." Text messages reinforce the headlines and point users to featured feeds.

In addition to the Fox local affiliate feeds, you'll find CSPAN, NASA TV, two NBC affiliates owned by Raycom Media, and I've seen SKY News there as well.

There are so many interesting implementations here. First, note that the text alerts are done via Twitter, and the News Jockeys are streaming live via Mogulus. I've written about both services in this newsletter before. They are free services and they are excellent. This is the best implementation I've seen using multiple free services in this way.

Here's the coolest piece: this site was built by a guy at Fox Chicago who is a meteorologist by training. I emailed Steve Baron to find out how he pulled off this wonder:

"Mind you - I'm not a developer - in fact, I'm a meteorologist (I only fill-in once in a while and during severe weather here at WFLD) who also manages our 5 person web staff and interactive efforts. I kind of created my own job, and I love it. And like I said, I work with awesome station management."

How did he do it?

"I coded the site by hand and in Dreamweaver, and after close to a year of experimenting, came up with a workflow that used existing hardware common to all stations in our group, with two pieces of software to generate live thumbnail images of streaming content. Once that happened, it took about 10 days for me to get everything into a format solid enough to take to Corporate, and then after a few tweaks, 5 days later we launched on Super Tuesday. The underlying code is a mix of HTML, Javascript, and AJAX, plus the flash embeds from Twitter and Mogulus."

There you have it - a homebrewed site with a unique URL that features the best of an entire local network of news and information, thanks to an experimental guy with supportive management. As news breaks in a given market, I will be turning to the FOX affiliate's local feed via LiveNewsCameras. Kudos to the Fox affils for agreeing to this experiment and a hearty salute to Steve Baron.   <Link>

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VERTICAL AD NETWORKS — OPPORTUNITY OR ILLUSION? (Terry)
Every new media article these days seems to contain a reference to the money machine that is vertical ad networks. While Steve and I certainly support the concept, there are some things in it that are a concern.

To begin, let's make sure we all understand what constitutes a vertical ad network. Wikipedia defines "vertical market" this way: A vertical market, or niche market, is a group of similar businesses and customers which engage in trade based on specific and specialized needs. Often, participants in a vertical market are very limited to a subset of a larger industry. A vertical ad network, therefore, is one that serves the niche.

Glam Media is, I believe, one of the more interesting vertical nets, choosing women as the ad targeting option. Glam operates several sites itself, but its network extends to others who deliver users predisposed to advertising targeted to women. In this sense, its scope is rather broad, including such things as glamour, fashion, entertainment, cooking, and so forth.

CEO Samir Arora is flamboyant and controversial. He's even been called a flim-flam man, but as Fox Business reported, his company is advancing in the world of niche verticals.

"We founded Glam on the belief that the Web needs to be more focused on women's needs. The rapid rise of the Women's category and Glam's rank as number one within the category, reinforces the fact there is large-scale fragmentation in this space. Glam's pioneering distributed media model has lead to the creation of new opportunities for brand advertisers and publisher alike."

Russell Fradin, CEO of Adify, wrote in a MediaPost commentary this week that vertical content niches represent a way for big brand publishers (and I assume this means locally as well) to overcome disruptions to the gathering of mass — using the Web's "long tail" to aggregate by niche. Steve and I have both been making this recommendation literally for years, but most media companies have instead continued down the path of placing all of its niche content inside the walls of its portal.

The problem with this strategy can be found in Fradin's words: "Publishers must now adapt by developing broader content to complement the deep content -- capturing more eyeballs, and, as a result, increasing advertising revenue."

Do you see the problem in this statement? I'll give you a minute to think.

Thinking....

Thinking....

The problem is that the content creation onus is on the media company. "Developing content" is the most expensive end of the new media value chain, and the numbers just don't work when it comes to compensation for that content. This is why trying to control content within a walled garden is suicidal. It's the scent of food drawing us to the tar pits. We can't make enough content to overcome losses to our legacy businesses. It is impossible. In a world where pageviews is your god, growth is limited to two options:

1. Get more page views. While technology can do some of this, most companies simply turn to their thinning ranks of content creators and say, "Give me more!" There comes a point where this is simply impossible.
2. Raise prices of ad impressions. The ad industry has shown little willingness to move down this road, and while I think we can certainly expect some increases, I wouldn't bet the ranch on it. Here's the deal, folks: Nielsen and ComScore didn't drop page views as a prime metric arbitrarily. The further we get down the online "impression" road, the more advertisers are beginning to ask hard questions like does anybody really see those ads?

The real value of niche verticals is the ability to include content created by others, and that is what separates it from what most companies are doing. That's why Arora's Glam has passed iVillage.com as the top distributor of advertising for women.

Instead, Fradin suggests we use our brands as a form of local authority in the developing of niche verticals.

Importantly, the nature of brand credibility is also evolving to complement vertical network building, with grassroots publishers' credibility rising as understanding of the power of the Internet's "Long Tail."

Advertisers like niche verticals associated with media brands, because there's a greater chance the sites will contain "qualified editorial content" and not the less advertiser-friendly content created by many in the personal media world.

The other thing we like about niche verticals is they can be highly market-specific. It all depends on what makes the market unique, so as you think about these things, don't limit yourself to broad advertiser categories. Niches can be built around anything; the more unique, the better.   <Link>

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WHEN GROUND CONTROLLERS FIGHT! (Steve)
I travel a lot, and believe me I find most people's "travel horror stories" boring. But here's a snippet so dreadful I thought I'd share.

Certainly - this is a new one.

After being stuck on the tarmac for four hours Tuesday night during an ice storm in Philadelphia, our plane was ready to return to the gate. We were 50 yards from the gate when we were mysteriously put on hold.

After 20 minutes, the pilot came on the PA.

"Folks, I will be honest with you," he said sheepishly. "We can't pull into the gate because two ground control members got into a fight and they aren't speaking to each other. We're trying to fix this, AirTrain is too, and so is United. I've never heard of anything like this."

Two people, too busy with their own petty fight, held up an entire airport in an ice storm, literally putting lives in danger. We pulled into the gate after about a half an hour.

I hope they kissed and made up. Or got fired.   <Link>