Wednesday, May 30, 2007

SPECIAL TO OUR READERS: MEDIA COMPANIES AWAKEN TO THE INTERNET SELL (Terry)
Borrell Associates fifth annual benchmarking report on local web revenue is due out in a few days, and it's a shocker. We've obtained some intel from Gordon Borrell that we can pass along to you. There are at least two big stories here: growth of the pureplays in taking local revenue and an awakening by local media companies of a need to make pure internet sales efforts.

From the report:

The days of easy online money for traditional local media are over.

After a decade of up-selling their print and broadcast advertisers, many sites began experiencing significantly slower growth in online advertising in 2006 and early 2007. As a result, the past year has been characterized by a frenetic process of remolding the business model through reorganizing, hirings, firings, divorces from old partners and marriages to new ones. Many local media companies -- Freedom Communications, Gannett, LIN Broadcasting, Fisher Communications, Hearst-Argyle, Barrington Broadcasting and Nexstar Television -- appointed corporate-level interactive executives and began hiring.

What is being tossed out the window is exactly what was in vogue just two years ago. The old model relied heavily on the up-sell. The new model -- perhaps a recognition that the wagons have been hitched to a fading star -- includes bundled sales but is beginning to look more like a stand-alone business with separate staffs and network affiliations.

Sales staffs are swelling as a result. The number of locally based online-only salespeople grew 26 percent in 2006. Budgeted figures reported to us for 2007 anticipate an extra 35 percent increase in hiring this year. Some of the largest local sites are now employing two dozen or more online-only salespeople as they migrate from the up-sell model to embrace Web-only sales. The median gross revenue per online-only salesperson was $278,570; the largest sites were seeing triple that rate.[1]

[1] This figure is calculated from reporting by 1,329 sites by taking gross revenues and dividing them by the number of salespeople they have who sell only online advertising. The figure includes a certain base of "up-sold" advertising that the site receives.

This remarkable shift in local online sales is driven by a reality that we've talked about here for a very long time, that the real competition for those dollars is coming from outside the market. We'll simply never keep up as long as we make convergence or bundled advertising our bread and butter. Take a look at these two (preliminary) graphs from the report showing the changes in the shares of online revenue between 2004 and 2006.

revenue share 2004

revenue share 2006

Despite growth in real revenue, newspapers have lost eight percent of the market share in just two years, something Borrell calls "huge."

Regardless of which form of local media you represent, the real enemy is internet pureplays and directory companies who are siphoning off half of all the money spent in an average market.

Adding web-only sales people is a good first step, but until we begin competing in the same arena as the pureplays, we'll continue to fall behind.

These numbers confirm the validity of the vision that we at AR&D call Simulpath™ for local media. We simply must begin developing revenue streams along a new path, one that bears little resemblance to the mass marketing realm in which we currently live and breathe. Media 2.0 is no longer an option for local media companies; it's the price of doing business in the future.

The massive report will be available in the next few days. Check with the Borrell website for availability.    <Permalink>

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WANT TO LEAD YOUR MARKET IN WEATHER? BUY SOME KEYWORDS. (Steve)
Here's a humbling exercise for you: go to Google, and enter the name of your city and then the word "weather."

I can promise you that your station won't come up first. It probably won't come up in the top ten and it likely won't even be on the front page. And if you're not on the front page of a Google results list - forget it. You won't get the traffic.

There is an easy and inexpensive solution to this, however: buy some Google (or Yahoo or other search engine) keywords. You know those paid results that come up at the top of your search? That's what we're talking about. You want your result to come up first. That's worth a little bit of money. You spend plenty of money marketing your weather - and the incremental amount to add or shift online will be an excellent investment.

Pick the name of your city, along with the top 10 or 20 communities around you and purchase them along with "weather," "news," "sports," "information," and other keywords. Almost nobody is doing this - and it's easy. The way the Google ad marketplace works is this: whomever is willing to pay the most for the placement gets the highest placement. But since nearly no stations are advertising, you'll pay next to nothing. If you're one of 12 hardware stores in town, the rates can get up there. If you're the only one advertising - the ad buy is the lowest it can be on the sliding scale.

There is a catch: you have to deliver.

It's not enough to have the repurposed video forecast or five-day graphic on your site. That's false advertising. You've told the Google searcher who is looking for a custom forecast that you have it. So make sure your site gives the user plenty of options to customize their forecast. Make sure they can drill down to their area. Make sure they're getting the exact information they want. Make the visit worth their time, and you will earn a loyal and regular customer.

That's worth a few pennies in online advertising, isn't it?   <Permalink>

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SKYBUS DECISION HERALDS OPPORTUNITY FOR ALL (Terry)
Skybus LogoSkybus of Columbus, Ohio has hired the Travel Ad Network to serve ads on its website, a first for the airline industry in the U.S. According to an Online Media Daily article, about 40% of the ads will be non-travel and are expected to launch June 15. Ads will appear on destination pages, post confirmation interstitials, and booking confirmation pages and emails. Built-out destination spotlights with integrated ad opportunities are also in the works.

This may seem simply an interesting quirk in the travel business, but it's really a sign of what we believe is a new phase in the growth of online advertising -- the movement of ads to sites that aren't media sites and therefore aren't supported by advertising. This is going to be huge, because technology makes it easy for any business to build a new revenue stream by serving ads online. For advertisers, it's all about aggregating eyeballs. Such ads can be highly contextual, too, and we expect to see ad networks serving this market within the next 12-24 months.

Even sites that are advertisers themselves can now earn money by running advertising -- like an auto parts store running automotive ads -- and this offers a huge opportunity to local media companies smart enough to begin building their own local ad networks.

This is basic Media 2.0 -- where the rules are very different and the opportunities unlimited. Ask yourself this: if my local media company doesn't extend it's advertising reach via a local ad network, who will?

You guessed it: the internet pureplays.   <Permalink>

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GET MOVING IN MOBILE! (Steve)
One of our clients is starting up in the mobile space. The more I investigate, the more opportunities I see here. And the more I use web-enabled phones, the more I'm surprised by the lack of offerings - especially on the local level.

The numbers are gorgeous. Just think of how many people have mobile phones. And, as our mobile client likes to say in their pitch meetings "our studies have shown that 100% of people who own a mobile phone know how to make a phone call." The mobile phone is another computer. At some point, you have to wonder when we're going to stop calling these things "phones."

There are a few websites that are "optimized for mobile browsers," meaning they can detect when I'm checking them out with my phone. But they aren't many. Other sites make me memorize a confusing URL, such as www.SiteName.com/mobile. Lots of times, I just guess that there will be a mobile page set up that way. Usually, I'm wrong.

It's easy to have a mobile local news page. You could have one today. Many of you do, but it's either hard to find or not compatible with many phone browsers. So let me suggest the following:

Have a mobile page at its own memorable URL, and make it as stripped-down as possible.

I'm not a huge fan of mobile email alerts. That's not a professional opinion - I just don't sign up for them. (OK - except for Red Sox final scores.) But when I want local news, if I knew that each market had a CityNameMobile.com site, I'd visit. That would be the base upon which you could add mobile video and further content as well.

If you add the mobile page to your existing platform and automate it, there's no additional work. No, this does not come with automatic ad money built in. But it is an automatic marketing play for your station. And it will build an audience quickly - a niche audience with a gorgeous demographic that will sell.

Terry and I talk a lot about knowing your audience and the platform they use. This is exactly that: the mobile audience wants basic, spare information. They want it to be ridiculously easy to find. In this, you can truly be your own focus group. Just grab a mobile phone and try it out yourself. How would you want to access local information? Take notes, and build accordingly.   <Permalink>

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FREE IS A PRICING STRATEGY, NOT A BUSINESS MODEL (Terry)
Here's an amazing quote from Googleís senior vice president, Engineering & Research Alan Eustace and vice president, Engineering Jeff Huber:

"(Google) accepts that some projects will never have an associated revenue stream." (Link)
This is a key piece of knowledge from the Media 2.0 world, and itís why I cringe my teeth during a lot of conferences about what the local media industry needs to do to dig itself out of its current conundrum.

Since this concept has so much potential to be misunderstood, letís review.

Public companies are concerned with quarterly profits. Since those profits have slowed or turned south, thereís a great hue and cry from the boardroom for revenue, revenue, revenue. Hence, all these companies can do is search for "innovations" that bring money into the tent. Even the excellent Newspaper Next project has as one of its innovation drivers the need to spell out profit and loss over time. This is a death sentence, in my opinion.

Thatís because revenue isn't the problem; audience is the problem. And we need to fix the problem.

Umair Haque rightly writes that free is a tactic, a "pricing strategy," not a business model, and this is where we really miss it. We're so busy trying to get cash in the coffers that we can't see what Googleís doing.

And no review of this would be complete without acknowledgment, once again, that Google and the internet pureplays are the real enemy of local media companies. They want -- and are getting at an alarming rate -- our revenue, so when two Google VPs state at a conference that some of their projects will NEVER have an associated revenue stream, well we need to pay attention.   <Permalink>

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BLOW UP YOUR HOME PAGE? (Seth Godin - by permission)
Seth Godin's BlogDo you really need a home page? Does the web respect it?

Human beings don't have home pages. People make judgments about you in a thousand different ways. By what they hear from others, by the way they experience you, and on and on. Companies may have a website, but they don't have a home page in terms of the way people experience them.

The problem with home page thinking is that it's a crutch. There's nothing wrong with an index, nothing wrong with a page for newbies, nothing wrong with a place that makes a first impression when you get the chance to control that encounter. But it's not your 'home'. It's not what the surfer/user wants, and when it doesn't match, they flee.

You don't need one home page. You need a hundred or a thousand. And they're all just as important.   <Permalink>