For the past couple of months I’ve been testing a new targeted local online advertising product as part of my fellowship project at the Donald W. Reynolds Journalism Institute. The test has essentially been to sell the product to regional businesses within a given market.
The pilot market was Orlando, Fla., and we used an outside sales team to sell to businesses that we knew were already spending money on marketing (for example, running TV, radio, newspaper, online, or billboard campaigns). Because the average order size was going to be about $2,000 a month, we didn’t want to sell over the phone. We did the math to understand how many meetings a sales rep would need to set a week and what his or her close ratio would have to be to make the venture profitable, using formulas from other organizations we’ve been a part of that have sold locally.
So we hit the streets, and it turned out that our close ratio was great: When we could get a meeting, we could close the deal. The problem was we just couldn’t get enough meetings. I had two different sales executives with backgrounds in selling local online campaigns for large media companies review our sales process and make changes. It helped, but not enough. And at the end of our two-month trial, after calling on more than 150 businesses multiple times, I came to a conclusion: Selling local sucks.
Now this doesn’t mean that you shouldn’t sell local or that this product won’t work. But I do think that if you are going to try to sell local, you will need to have one or more of the following:
A Locally Recognizable Brand
I’ve always said the most valuable thing newspapers have are their brands. (Local TV stations already understand this.) This concept was reinforced when I was cold-calling SMBs without a recognizable brand behind me. It was easy to identify the decision maker, but getting past the gatekeepers or being able to arrange a meeting proved next to impossible. One small business owner told me I was the fourth person to call her that day and it wasn’t worth her time. Even if you are an independent hyperlocal news site, it only matters if the person you are calling has heard of your site before. Bottom line: No one cared what I was able to do for him — only that he didn’t know who I was.
A Low Entry Point With an Inside Sales Team
When I did get ahold of the decision makers, I had quite a few who flat out said (although some just alluded to it) that if what I was offering cost $250 a month, they’d try it. With an entry point that low, you can’t really justify an outside salesperson, but having an inside salesperson makes sense. This is what DataSphere does for local TV stations (oh, and by partnering with the TV station, it meets my first criteria as well).
A High Entry Point With a Long-Term Contract or a Physical Device
If your product has a high entry point, having an inside sales team try to sell it probably won’t work. We knew that $2,000 a month would be a lot of money for someone to agree to over the phone. Instead, what works is ensuring that if you are going to invest the time to get a client to sign up, it should be treated more like an enterprise solution with a longer-term contract. The two examples that are in the market today that work really well for SMBs are OpenTable and Seamless. Both involve longer-term contracts and offer SMBs a physical device.
Sell Customers, Not Marketing
With our efforts, it became clear that there are lots of folks out there that sell SMBs marketing solutions, which might involve display ads, SEO, a new website, agencies and everything in between. What works, however, is charging them for new customers. This is essentially what Groupon (and other daily deals sites), Restaurant.com, and pay-per-call companies do. Regardless of the parameters of the deal, a business owner feels more comfortable when their marketing efforts directly result in someone walking through the door.
When All Else Fails, Use Existing Distribution Channels
It always amazed me when I was working at Tribune how many calls I would get each week from different companies trying to get our sales team to sell their product. It amazed me because our sales team really wasn’t that great (except for any of the salespeople whom I worked with who are reading this column). Clearly these companies understood the value of Tribune’s established brand when it comes to selling local. A great example of a company like this is PaperG. Its product doesn’t need to be attached to a newspaper or TV station. But the company clearly understands the difficulty in building out a national sales team that sells local and is instead choosing to partner with existing sales forces. Local newspaper and TV stations need to exploit their brand recognition in the marketplace to help them drive more revenue. This is why you are seeing some newspapers open their own digital ad agencies.
I have a much greater appreciation not only for local salespeople but also for the brands in the marketplace that can sell local. This isn’t just local newspaper and TV brands but also folks like PayPal, Groupon, Constant Contact, Intuit — and, of course, Google and Facebook. While we may see a few more companies show up over time, the fight for the dollars of local SMBs, I think, will be mainly a fight between these existing companies.
Matt Sokoloff is a 2012-2013 Reynolds Journalism Institute fellow working on a project to help local independent websites and bloggers gain additional revenue opportunities. His background is in building digital products for media organizations. Read more about his current work here and respond in the comments or to email@example.com or @MattSokoloff on Twitter.