Can Renewed Coordination Prevent a Rollup in Local Media?

800px-Rolling_Out_Red_Carpet_-_Pride_of_India_-_Exhibition_-_100th_Indian_Science_Congress_-_Kolkata_2013-01-03_2592Last week, Google made news when the search giant struck a deal with the Local Media Consortium to power a private advertising exchange — among other services — for the industry group’s 800-plus local publishers. During the Local Online Advertising Conference in New York on Tuesday, Christian Hendricks, the Consortium’s chairman and a McClatchy executive, pitched the plan to a room of media executives, and in a separate interview, made the case why the new consortium could succeed where it has failed in the past.

The effort is a take two for a struggling local media industry, which has seen its share of local marketing spending collapse over the past decade. Compounding the increased competition in local markets, a growing demand among national advertisers to buy ads programmatically has left local publishers struggling to provide both the technical expertise and scale needed to compete against national media.

The consortium, which counts The Boston Globe, McClatchy as well as a host of smaller local broadcasters and publishers as members, aims to streamline a fragmented and often combative local media marketplace in the U.S., creating efficiencies and standards to help legacy companies better compete with a range of new competitors. The key initiative in play today, and the one which the Google deal works to solve, is to pool member inventory into a private exchange, allowing each company to access the necessary scale and targeting technologies need to sell to national brands.

“From the perspective of McClatchy, we knew we were big but we’re inconsequential in the scope of of what’s happening in national and how its scaling up,” Hendricks told me in an interview. “There’s a recognition of the value of [the Local Media Consortium] in the industry, but executing it is very hard — saying, ‘hey, we’re all basically the same and we should rationalize everything against that sameness.’”

The consortium isn’t new. The organization originally launched in 2006 as a partnership with Yahoo, but its influence waned in the intervening years, before Hendricks and others relaunched the organization last September. The industry has found more success in its collaborative efforts recently, with projects like Wanderful Media, a joint venture between a number of large media conglomerates that digitizes circulars, demonstrating a newfound willingness within the industry to work together.

What’s changed, says Hendricks, is a growing urgency among media executives to adapt their businesses in the face of a deeper, more ontological threat. “That’s the overriding thing, and it’s driving a lot of the conversation,” said Hendricks, referencing Samuel Johnson’s oft-quote truism that knowledge of death tends to focus one’s mind. “It’s not necessarily ‘death.’ But the recognition that it’s tough and that there a lot of dollars that are out of reach.”

In many ways, the pooling of inventory is just the beginning for the consortium. In order to make the marketplace valuable to national advertisers, many of whom increasingly rely on deep data analytics to buy and target messaging, these local media companies will not only need to adopt common standards but will have to share data about their readers as well — an increasingly critical, and prized asset for publishers. The consortium has worked to implement a set of standards to allow advertisers to segment by content type today, and Hendricks says the leadership is carefully working to lay the groundwork for data management platform in the future

The consortium is, in part, an exercise in corporate politics. In order to succeed, the leadership will need to strike delicate balance between the need to implement standards to ensure consistency within the platform and members’ desire to protect their own autonomy.

“In our case, you’ve got some fiercely independent firms with different styles and different everythings. It’s like Battlestar Galactica: formidable in size, but, man, it’s a rag-tag bunch,” said Hendricks. “There’s some people in the consortium that think the organization will get too big. But you don’t want to get bogged down in those debates.”

For Hendricks, and others in the media industry, the question is whether the renewed coordination is too little, too late. While upstarts like AOL’s Patch project have struggled to demonstrate a clear alternative, the legacy companies face a local media market, which has seen both a fundamental shift in consumer behavior and a complete transformation in the needs of the advertiser.

In many ways, all signs point to a rollup in local media. The addressable market for local media has shrunk considerably, and the market increasingly wants the benefit of scale. The question for the industry is whether the consortium will provide enough coordination to stop — or at least slow — the bleeding.

Steven Jacobs is Street Fight’s deputy editor.

  1. GoBirdGo
    March 5, 2014

    There’s a significant problem with this approach. National advertiser A has a huge range of options to reach people, and local ads are not that much more valuable to them. So National Advertiser will pay a competitive rate, not a premium. Local advertiser B on the other hand really benefits from the local nature and will pay a premium. The local publisher has a lot to gain from local ads, but not as much from the national ads via the consortium. I don’t see how the consortium brings much to the local publisher other than typical 3rd party ad revenue for excess inventory. And there are plenty of services that will deliver that. Allowing local publishers to sell to national brands is a fools mission. They should stick to selling locally as that’s where they can benefit most.

    1. Good to Go
      March 5, 2014

      The effort is a response to national and international advertisers wanting an efficient path to buying local audiences in a brand safe environment. It would be a fool’s mission if demand did not exist but it does. Believe what you want.

      1. GoBirdGo
        March 5, 2014

        It sounds like you have the problem solved. Congrats!

    2. March 5, 2014

      The one thing these big local publishers have going for them is being able to sell to under-served local advertisers at premium rates. And yet they go in search of “scale” because it’s easier and it holds the false promise of allowing them to avoid grappling with the fundamental issue that they need to scale down their business model to match the economic realities of digital publishing.

      Programmatic ad buying and ad exchanges are hastening the death of legacy advertising and publishing firms. And yet they seem so confident that it’s the future. Like pigs to the slaughter…

      Look at how smart companies like Vox and Buzzfeed are serving advertising clients — that, if anything, is the future. Not going after the lowest common denominator.

      1. GoBirdGo
        March 5, 2014


      2. TotalPaas, Inc.
        March 11, 2014

        Yes and yes, I can’t agree more. I haven’t seen the revenue model for the local media companies with this consortium. If the problem is to meet the shift in modern consumer behaviors and local advertisers demands, why is pulling national advertisers and bring it down to the local level the answer? What problem are we solving?

    3. March 5, 2014

      Very well said, we’ve observed this in our business as well. There is more value delivered and more profit to be had by helping the local business who has effectively no other viable way to reach their local market.

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