Ghost of Midnight

… about neighbors, community and Front Porch Forum

Today’s news about local online advertising

Posted on Thursday, July 31, 2008 by No comments yet

Front Porch Forum offers advertising space to local businesses at bargain prices right now as we’re working to develop as a new kind of service. With 10,000 Chittenden County households subscribing already, including one-third of our pilot city, Burlington, we have a sizable audience available for local businesses. Several are reporting strong responses to their FPF ads.

So we’re interested in news such as the items below, such as the following from Peter Krasilovsky

The 32 company strong Yahoo Newspaper Consortium, which covers 41 percent of Sunday newspaper circulation, has 700-900 reps selling Yahoo inventory, with a couple of the newspapers selling over $1 million in annual inventory…

And Michael Learmonth at Silicon Alley Insider reports

It’s been a dismal year for ad-supported businesses, but not everyone is getting hurt. A look through recent public company statements on their ad businesses shows a trend: those worst off are (a) exposed primarily to the U.S. ad market, and (b) have the most print and TV in their portfolios…

Who’s not getting hurt? Those heavily weighted in growing, international regions. And industries benefiting from the shift of dollars away from traditional media — such as digital, search, marketing services, and PR. In other words, the global ad agencies — which have strained their balance sheets making acquisitions over the past several years. They’ve had a decidedly upbeat quarter, or at least what passes for an upbeat quarter in 2008.

And Borrell Associates released a new report. From the executive summary…

Over the next five years, we are predicting that 39 percent of the ad spending on print yellow pages revenues will vanish as small businesses shift marketing budgets online. After 12 years as an advertising medium, the Internet has reached small-business owners with viable marketing opportunities in the form of keyword advertising, interactive directories and low-priced online video commercials.

Until now, the key beneficiaries of this shift have been the search engines. But legacy media companies — yellow pages publishers included – have unleashed a newly trained army of local sales people to hunt down this migrating money. Directory publishers have cross-trained nearly all their print reps to sell interactive media, while newspaper publishers have launched their own interactive directories and have deployed cross-trained sales troops to sell them. All told, online products are being peddled by 34,100 trained local sales reps — more sales people than any other local medium. With all those reps hawking banners, paid search, interactive directory listings and online video, it is no wonder that local online advertising is increasing at a rate of 61 percent this year, to $14.1 billion.

Yellow pages publishers have spent the past three years transforming their massive on-the-ground sales forces into marketing consultants who can meet their customers’ demands both in print and online. Their combined print/online packages are simple, low-priced, one-stop solutions to small-business advertising needs. The proof of the industry’s rapid transformation is in the numbers: Of all local media companies, yellow pages publishers have been the most successful in moving toward digital sales, averaging about 14 percent of their gross revenues from online sales this year. By contrast, the online contribution for most local newspaper, radio, cable and TV competitors is less than 5 percent of gross revenues.

The main battle for the small business ad spending is between the pure-plays, on the one hand, and the two groups with the largest local sales forces: newspapers and directory publishers. Both have feverishly cross-trained their sales forces in the past three years and added “online only” reps to pursue the hottest-selling advertising product in local markets: interactive advertising, including the fastest-growing format of all, online video commercials.

Mark Potts adds

The Journal story lists several reasons for the newspapers’ local online advertising problems, unfortunately well-known to anybody who’s been around newspaper online ad sales operations:

  • It’s hard to get sales reps interested in selling less-lucrative local online ads.
  • Small local advertisers generally don’t buy banner ads favored by larger national advertisers (and still the standard ad on most newspaper Web sites).
  • Strategies of bundling print and online advertising may cause more cannibalization than added sales.
  • Local online ad growth is coming from small- and medium-sized business–which traditionally haven’t been significant advertising customers of most good-sized dailies.

That last point is particularly interesting. In print and online, most papers, by covering a broad metropolitan area, are more attractive to larger local advertisers like car dealers and banks. Smaller advertisers–the pizza parlors, nail salons, mom-and-pop stores–don’t want the broad geographic reach that papers offer, and can’t afford the high rates. And they’re harder to sell to (and the commissions aren’t as large).

So newspaper sales reps traditionally haven’t called on those smaller advertisers. But there are lots of them, and other media are moving in–community papers, local Web sites and blogs, even Google, Yahoo and specialty sites like Yelp. That’s what’s crowding the newspapers out of their own markets, online.

Posted in: Front Porch Forum, Local Online, Small Business Advertising

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