Will ‘Indie’ Hyperlocals Go for National Marketers’ Goodies?
Most publishers of independent hyperlocal news sites steer clear of national ads. They think messages from national brands can be a jarring presence on a page with neighborhood news or ads for the local yoga center and pizza parlor. They also don’t like the low rates that have often come with national ads.
But fast-developing changes in national digital ad marketing have buyers dangling more goodies in front of publishers, including hyperlocal. These goodies can include premium rates – $10 per thousand impressions and up – for placement on high-value pages.
The big changes are in what’s called programmatic advertising. “Programmatic,” in marketing shorthand, is usually associated with automated “real-time bidding” — the auctions where inventory is bought and sold, like stocks. In a market awash with inventory, the auctions have helped drive down prices of many ads to as low as pennies per thousand impressions.
But programmatic is rapidly evolving away from the price-focused “race to the bottom,” say ad industry observers. The industry is giving more attention to premium-priced inventory. That’s closing the sometimes fractious gap between buyers (agencies and exchanges who focus on audience) and sellers (publishers who emphasize content). The new programmatic also ensures that publishers are empowered to say no to ads they don’t think fit with their publications — a right that hyperlocals protective about their neighborhood- and community-centric pages are likely to appreciate.
What’s happening is spelled out in the new and revealing white paper “Programmatic Everywhere: Data, Technology and the Future of Audience Engagement” (produced by the Winterberry Group in participation with the Interactive Advertising Bureau, a major industry group that includes marketers, publishers and important in-between entities like Google). The key words in the paper’s title are “audience engagement.”
Up until recently, national ad buyers primarily sought an audience that was big, especially for campaigns where businesses wanted to send a message about their product or service that would resonate with consumers far and wide. Real-time bidding delivered audience size. But continually improving audience analytics are showing that a focus on size can produce a big fail in closely watched ROAS (return on ad spending) or ROI (return on investment). The price may be right, but the message doesn’t resonate because there are too few engaged users among the millions of assembled eyeballs.
Analytics can now parse consumer behavior down to such data points as number of purchases in the past 30 days. And audience size can be refined down to census tracts, which typically include about 4,000 people. When behavior is scoped to the level of census tracts, hyperlocal publishers become meaningful players in programmatic.
“The promise of programmatic is that it can finally make delivering the ‘right message, to the right person, at the right time’ a reality at scale,” IAB Executive Vice President and Chief Operating Officer Patrick Dolan told me. “By leveraging automation technology and real-time data, it allows the creation of an ‘always on’ customer engagement capability at a hyper-local level.” Dolan did emphasize obstacles to these goals, like “brand safety issues” (e.g., ensuring an airline ad is not put next to an article on an air crash), and said IAB has convened a buyer-seller panel to eliminate the obstacles. But what’s more important is that hyperlocals can now sit at the table where buyers and sellers negotiate where to spend billions of dollars in digital national advertising.
The white paper that Dolan’s industry group helped author reinforces this new arrangement with the attention it gives to audience engagement, which is cited 19 times in the 36-page document, and audience “segmentation,” which is cited 11 times.
Segmentation means drilling down not only to a neighborhood but also blocks within it — to those super-granular census tracts. No publishers are closer to census tracts than hyperlocals that have strong relationships with the people who live there.
But hyperlocal publishers have to decide whether they want to become sellers in the national ad market. Programmatic is making this market more hospitable to any publisher – big or small – who can offer inventory that is surrounded by premium content. Assuming there are no problems with ad size, improving technology has made it much easier for marketers to stitch together a mosaic of census tracts with people of specific demographics, lifestyles and consumer behavior.
A hyperlocal publisher with engaged users could become even more attractive to national marketers by growing into a mini-network in the site’s metro area. I’ve written about emerging mini-networks, most recently in this post about ARLnow in metro Washington, D.C., expanding to a third community.
(On the corporate “pure-play” side, Patch still has a formidable network despite successive rounds of deep cost cutting. It has no inhibitions about accepting national ads, and has run campaigns for Pepsi-Cola and other national brands. But its belt tightening has thinned the editorial soup at many of the network’s sites, and that is sure to have an impact on Patch’s audience engagement. The smaller Daily Voice network, whose 41 sites are concentrated in the Fairfield County, Conn., and Westchester, N.Y., suburbs of New York City, has no inhibitions, either. It too has gone through heavy cost cutting, but the editorial product, from what I can see, has held up better.)
So, what will the indies do? Will they open their mostly closed gate to national ads?
I thought of Scott Brodbeck and his ARLnow sites. His three communities have a total of 49 Nike retail centers or authorized dealers. Nike has moved a lot of its $2.4 billion in marketing and advertising spending out of traditional media (print and broadcasting) into the digital space. It hasn’t, yet, poured big money into hyperlocals. It has, though, brought a strong in-house focus to social media communities organized around Nike’s many sports- and fitness-related products.
I asked Brodbeck if he would accept Nike ads (which, let me emphasize, haven’t so far been offered). He said: “I think our ads are more relevant and useful to readers when they’re from local advertisers, but there’s nothing preventing a national advertiser from coming in and booking some of our availability. So far, though, that hasn’t happened.”
It’s a cautious answer. But when you consider that Brodbeck sits on the board of the Local Independent Online News (LION) Publishers trade association — whose membership includes strong voices against national ads — it’s also revealing.
Tom Grubisich (@TomGrubisich) writes “The New News” column for Street Fight. He is editorial director of the in-development hyperlocal news network Local America that will rate communities on their performance across a broad spectrum of livability. He will present the site’s new demo on Charleston, S.C., at the DIG SOUTH 2014 interactive festival in Charleston on April 9-13, 2014.