Hyperlocals Diverge on How to Mine Rich Lode of Digital Ads

The explosion in digital advertising has resulted in a lot of buzzwords — like “targeting,” “customization,” “premium publishers,” “owned, earned and paid media” and “real-time bidding.” (The meanings of the more esoteric terms are here.)

But the buzz isn’t producing much business for top news sites, according to a new Pew report. Even though digital advertising is estimated to grow 40% by 2015, according to Pew, the research center said few major sites were capturing any share of this new cornucopia. If that’s the story with bigger sites, what, I wondered, was happening among the more than 3,000 hyperlocal news sites, which, by my estimate, reach 25 million people — a big chunk of the consumer market that advertisers covet. How are they responding to new digital approaches that merchants and other businesses are beginning to use to connect with consumers beyond banners and other now-ancient display ads?

What I found among my check with a handful of independents and one national network were pro and con attitudes about new approaches like targeting and networking.  But there was one issues the indies were firmly united on — going after only local ads.

Here’s Ben Ilfeld, COO of the Sacramento Press, on his site’s ambitious but local-only advertising strategy:

We started the first independent local online ad network: The Sacramento Local Online Ad Network. SLOAN presents a uniform platform to buy local niche and hyper-local placements across the Sacramento region. We have over 60 sites involved, including the local NPR affiliate and both local university newspapers. We can serve millions of impressions a month and reach over half a million unique visitors. We have sophisticated targeting capabilities, including demographic, geographic and behavioral filters.

Second, many of us do not want national advertisers on our sites. This is not just a naive stab at bringing back hope on ‘main street,’ it is critical to business. One of the top selling points we have is that we are a local small business and we work exclusively with local businesses. This appeals to our clients. In addition, we have higher click-through rates than our larger competition without the noisy and distracting ads. That’s because we recognize that our ads are content. So if we have interesting locally relevant ads paired with interesting locally relevant editorial content we are more likely to see user engagement with those ads.

Third, we feel that the best way to move forward is to find solutions that bring us closer to our ideal customers, local small and medium sized businesses—rather than entering a scrum of those wishing to commoditize advertising and aggregate audience. Therefore, we are building a new platform to directly address this problem on a national scale.

Mike Shapiro, editor/publisher/founder of the 15-site The Alternative Press network in New Jersey, emphasizes the importance of giving advertisers multiple places and ways to create a presence – and  surrounding the advertiser with quality content:

Only three years old, TheAlternativePress has over 150 advertisers and our renewal rate is over 85%.  I attribute part of our success to the fact that content is king. Regarding advertising, it’s not just having a banner.  Press releases, event listings, business listings, guest columns, featured columns, as well as email newsletter sponsorships and Facebook and Twitter promotions.

Regarding targeting, we have specific homepages for each town as well as statewide sections for topical areas (like Health & Wellness), so that advertisers can target geographically and in vertical markets.

Sometimes there are technology gaps.  From Justin Carder, vice president, business development, at Instivate, publisher of CHS Capitol Hill Seattle, one of the 12 indies in the group reaching 200,000 users in the Seattle Independent Advertising Network:

Seattle Indie Ads serves a special, fuzzy target group that the currently available targeting schemes can’t approach – people that live in and/or love central, urban Seattle neighborhoods. But we eagerly await responsible improvements in targeting from third parties that will (hopefully!) raise the value of partner delivered campaigns. I expect a long wait.

Howard Owens, publisher/editor of The Batavian in update New York, has 122 l business – all local – under contract. He offered these contrarian thoughts about aiming at advertisers beyond his 100% local universe:

Any ‘expert’ who believes there’s a future in targeted ads on local news sites has no real experience running a local news business or selling local ads. Unless you’re in a major metro area, there is no logistical way to do targeting and remain profitable.

Among locally owned businesses, there is no demand for the kind of targeting so-called experts are so infatuated with. At the local level the only targeting a small business owner cares about is: “You serve local news/information to a local audience, and it’s a big audience, I want to reach that audience.

Mark Josephson, senior vice president  of revenue at AOL Local, which publishes the nearly 900-site Patch network with 10 million unique visitors, says:

Most regional and national media is bought via agencies.  Agencies need to make buys that achieve their metrics and those of their clients.  This means that small, one-off buys are rare because they take too much time for the agency to plan and manage.

Aside from regular spot or specific campaign buys, most national and regional dollars are spent via a request for proposal (RFP).  Agencies send these out to multiple publishers or networks and try to negotiate and compile the best program.

Only publishers with scale, as defined by “how much money can I place on your site?,” will be successful.

(Patch carries a modest number of ads for WeightWatchers, Sprint, Zipcar and other regional and national accounts.)

Ron Blevins, vice president of digital strategy at the Novus subsidiary of the Omnicom global ad giant, guides national accounts down to the hyperlocal level. He says:

We’re seeing premium CPMs in this space which is driven by low inventory levels resulting from smaller audiences. In terms of sophistication, they’re winning the race, but still need to generate meaningful scale to have a large impact on this industry.

Novus’ digital believes it’s our responsibility to help publishers create ad programs that drive results for our clients. Sometimes this requires partnering to create a new ad product, sponsorship or utilizing inventory that’s not currently ‘for sale.’ There is a very large opportunity for news publishers to capitalize on an audience they already attract and hold, but like all companies in the process of adapting to a new world, it takes time and new thinking.

Blevins had this cautionary about targeting: “The Pew study put a lot of emphasis on targeting users based on their recent browsing sessions. Not only is this impractical for most news publishers due to the scale of their audience, but stating that it’s more lucrative and enticing for advertisers is misguided. This practice was started by ad networks to make remnant inventory more valuable and drive margins. I’m a firm believer in using data to drive media decisions. However, that data must come from somewhere and news publishers are supplying a ton of it. Without content, there would be no way of inferring user interest. Content is still the most important driver of relevant communications.”

In other words, there are a lot of opportunities for hyperlocals to make innovative connections in the digital ad space, but no silver bullets.

Tom Grubisich authors The New News column for Street Fight. He is editorial director of LocalAmerica, which is developing a Web site to rank communities on their livability across 20-plus categories. The rankings will be dynamic, going up and down daily as they are updated through a combination of open data, journalism and feedback from local experts and users of the site.