Block-by-Blockers Respond to Borrell’s Revenue Prescription

Local research guru and Borrell Associates CEO Gordon Borrell infuriated some hyperlocal publishers earlier this month when he said “advertisers don’t want to be around local news.” It was a provocative statement, to be sure, prompting The Batavian’s Howard Owens to reply that Borrell was “100% wrong.”

With hyperlocal publishing conference Block by Block 2012, set to take place on Sept. 13-15 in Chicago, I got back to Borrell to see if he had any advice for independent local publishers as they prepared to grapple with their increasingly urgent issue of how to generate revenue. He did indeed:

“People are beginning to figure out that the display advertising model is a bad carryover from mass media. You can hardly sell enough banner ads to support the staff needed to generate and manage the content. Worse, people don’t see display ads, and they don’t click on them very much at all. What does that mean for the future of hyperlocal websites? I think there’s value in them, but I honestly don’t think there’s enough value to sustain the business model in any single market beyond being a very small niche.

“True as it may be, nobody in the hyperlocal Internet space wants to hear that message. So here’s how to go beyond that and build a real business: Sell your Internet marketing expertise. Just about everyone I know who runs a local Internet venture is savvy about how to use the Internet to market their own site, or even themselves. Advertisers are willing to pay for that. And the fact that you might have a well-trafficked local website only magnifies your value proposition to the advertiser. It’s an imprimatur on your business card, and it gives you a leg up against the collection of village idiots who are working from their garages trying to resell Google keywords to local merchants.

“The Internet is not really an advertising medium. It’s an advertising utility that proves the efficacy of any advertising that a local business might place. If you can master all the various facets of the Internet as a marketing medium, you’ll morph from being a hyperlocal website to a digital marketing company. And there’s far more money in the latter.”

I went to a few of the conference’s participants for reactions:

Scott Brodbeck, founder and editor/publisher of ARLNow, which, after only two and a half years years, is going great guns covering the inner suburb of Arlington in Northern Virginia, and pulling in a respectable amount of advertising:

“Gordon is right — at the moment, most truly hyperlocal news sites are only generating enough revenue to support one or two full-time employees and some freelance help.  [But] what Mr. Borrell calls a “very small niche” we call our homes — proud and thriving communities that we work hard to serve. … They’re just the kind of people that small businesses in our community want to reach.  Online display advertising can be effective, if publishers do it right.  That means advertising as content — well-designed and well-positioned ads for local businesses that are relevant to our local audiences.  From my experience, and the experience of fellow hyperlocal publishers, I can tell you that online display ads are still effective and continue to provide value to local advertisers.

“Mr. Borrell argues that hyperlocal publishers should provide a wider range of internet marketing services. [But] if local publishers were to dive in head-first to the time-consuming business of  consulting, then why should they be publishers at all?  think consulting and publisher are separate businesses and that  anybody who tries to do both is going to end up succeeding in one and failing in the other.”

Denise Civiletti, co-publisher of the lively, ad-packed RiverheadLOCAL in urban-suburban Suffolk County on Long Island:

“I’m not interested in ‘the collection of village idiots who are working from their garages trying to resell Google keywords.’ And Borell’s suggestion that I need to find ‘a leg up’ on such characters underscores his disconnect from community online news publishers. I’m sure there are plenty of easier ways to make money online than getting local-advertiser support for community news, but that’s not the point. I don’t want to be a marketing consultant any more than I want to be an event planner.

“What I am interested in is how to sustain online community journalism. Banner ads are generating low six-figure revenues for my family-owned community news website. I see the potential for growing revenues another 25-40 percent, and that’s our goal. Our company’s net income may not sustain the kind of newsroom that analysts like Borell think about when they talk about enterprises he refers to as “real” businesses. But what it will support is OK by me — though I find Borrell’s condescending and judgmental blow-off offensive. It will, in fact, support the “the staff needed to generate and manage the content” for a viable community news site. I know it will because we’re doing it at RiverheadLOCAL.

“If someone like Borrell were interested enough to ask, he’d learn that our advertisers find being on our site a very effective way to reach the local community. They get clicks on their ads and customers through their doors.”

Susan Mernit, executive director and editor/publisher of Oakland Local, which gives a digital voice to the “underrepresented communities” of her predominantly black city on the east side of the Bay:

“Gordon Borrell’s message has some truth. At Oakland Local, the cost of sales is always an issue, because our ad targets are often small businesses with limited ad budgets who need hand-holding and education.  On the other hand, these community members desperately need viable marketing that gets them click-throughs and customers at a fair price – and we do that. On the other hand, Oakland Local is increasingly offering packages of ads and consulting services to clients as the best option. In fact, there’s been so much interest that in September we’re launching Oakland Local Business Academy, a program of education, consulting and social marketing services for local businesses to better market themselves This program has a newsletter, classes, ad packages and consulting services; we have six clients pre-launch and hope to have 11-15 at any given time.”

Justin Carder, vice president of Seattle-based Instivate, a place-based content and advertising company, and founder of Capitol Hill Seattle:

“Totally agree with Gordon. Except this part: ‘Nobody in the hyperlocal Internet space wants to hear that message.’ Well, he’s right that I don’t want to hear it. Please shut up about it, actually. But, yeah, that’s why I love my little business.”

Tom Grubisich authors The New News column for Street Fight. He is editorial director of LocalAmerica, which is partnering with InstantAtlas to develop sites built around how communities rate in livability. Local America is featured on Reynolds Journalism Institute’s Pivot Point site.

  1. August 30, 2012

    Tom, my apologies for not getting back to your e-mail regarding this. But let me add my two cents here:

    I agree with Denise, and think the problem has to do with what people like Borrell believe a “newsroom” is. Many of us are not trying to build a business with a staff of 30 or 40 reporters. Most of us in the “hyperlocal” world cover small communities and two or three reporters can produce enough reporting to sustain the informational needs of their coverage area. Display ads aren’t the only revenue source, but they sure can provide enough to stabilize our small businesses.

    That said, I really do oppose Borrell’s claims that display advertising doesn’t work simply because no one clicks on them.

    The truth is, in the online and mobile world of cheap, action-oriented advertising that often puts curious ads next to junk content, consumers don’t know who to trust. There’s simply too much clutter and noise.

    Having branded ads on trustworthy websites, and display ads in local newspapers and buses and tv and wherever else – all of these things build trust for a brand name. And, when the advertiser does turn to keyword ads or mobile ads or social coupons or whatever else, they have some level of name recognition with the consumer, and that increases the effectiveness of those ads.

    Advertising is not an either-or proposition, and what publishers and web marketers need to do is educate SMBs on the relationships between ad platforms so that their campaigns complement each other appropriately instead of cannibalizing each other.

  2. August 31, 2012

    I know everyone involved with this story including Gordon. I have a question for Gordon: in the last year, five years and ten years how has display advertising fared? Is it growing, stagnating or falling as an industry? Are more dollars being spent on online display ads this year than last?

    I ask this because Gordon is an analyst. He says here that the internet is not an advertising medium. I would love to hear how it is currently performing as a medium for display advertising.

    How about targeted display advertising? How is that faring?

    How about local-to-local targeted display advertising? Is that a growing segment or is that stagnant?

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