The competition for local online ad dollars doesn’t take place on a strictly local playing field. This is a significant threat to local business communities and especially to their media players, who continue to behave as if their competition is only the other media companies in town.
If you’re a TV station, for example, why limit your potential market to roughly just 11 percent of the overall online ad market? That’s what all the TV stations together tend to get from the average market, according to Borrell Associates. TV is king of the mountain in the world of offline advertising dollars, but that doesn’t (and won’t) translate to the Web.
Half of the money spent in the typical market goes to outside pure-play web companies, such as Google, Facebook and Yahoo. Think about that for a minute. They pull that off without, in the vast majority of cases, a single pair of feet on the street who have the contacts, local knowledge, and insight into the unique needs of the community. In order to appear competitive, most local media companies have formed digital divisions that offer services for local businesses that are available only through deals with these same pure-play companies, which guarantees that a certain portion of the business we generate will always end up in their hands. There simply has to be a better way.
One of the most important writers of the early 21st Century is David Weinberger, the Harvard Philosopher and Berkman Fellow whose expertise in the area of knowledge has given us enlightening books such as The Cluetrain Manifesto, Small Pieces Loosely Joined, Everything is Miscellaneous, and Too Big To Know. David is also the author of many wonderful and thought-provoking quotes about the network. My favorite is that filtering information “on the way out” always beats filtering information “on the way in.” It’s why search (filtered outbound) dominates any portal with an “inbound” navigation system.
“(W)here there’s an abundance of access to an abundance of resources, filtering on the way in decreases the value of that abundance by ruling out items that might be of great value to a few people. Filtering on the way out, on the other hand, increases the value of the abundance by locating what’s of value to a particular person at a particular moment.”
These two sentences demonstrate an understanding that life in the network bears no resemblance to life in the analog world. This includes business opportunities for those with eyes to see, and there’s one in particular that deserves discussion — defining the Local Web and enabling commerce within.
Many years ago, a private media business owner (both television and newspapers) scoffed at my suggestion that it might be smart for “local” business to compete with Google. “Google?” he responded with raised eyebrow, “Impossible!” I’m sorry, but it’s absolutely possible and mostly because a “local” media business has what Google wishes it had: real people who live, breathe, and have roots within the community. This is a substantial competitive advantage in an effort to create a better, more accurate database than Google can create at the local level.
The ability to search a local database begins with the database, and my strong recommendation for local media companies — even if it means working together — is to create such a database. Here are five reasons why:
- We must create new value for our companies, for our old value won’t sustain us in the network. The number one use of the Web is and will always be search. That’s because every node in the network is simply one node away from anything within the network. It is a network of abundance, and as Weinberger says, filtering on the way out “increases the value of the abundance by locating what’s of value to a particular person at a particular moment.”
- Communities aren’t franchises; each has its own identity. Despite the homogenization of suburban America through the franchise model, the truth is that the roots of every community tap unique waters, and even though the most successful online businesses have a global reach, their use is primarily local. This begs the not-so-little question of how a business in Silicon Valley supports the needs of, for example, Oshkosh, Wisconsin. The answer is it doesn’t, and every year that the local business community ignores this, it puts another bullet hole its own foot.
- A “Local Web” database business employs local people, pays local taxes, and supports the local community chest. The power brokers in your community, with its business leadership, public sector, and business development groups have no idea how much money is leaving your market via outside pureplay companies like Google, Facebook and legions of others. Get your local spending numbers from Borrell and do the math. You’ll be shocked. Spread that number throughout the community and see how long before it’s recognized as a serious local problem.
- Person-to-person contact produces a richer, deeper and more accurate data set. The real weakness of a top-down approach to fetchable information is accuracy. For all the sophisticated targeting software used by the ad industry — and it is impressive — it produces mixed results, because the data sold to these companies is simply inaccurate. It’s getting better, though, and so is the overall search business. We can do as well or better at the local level.
- Local media companies — especially television — can promote it many ways and without enormous marketing expenses. Google would kill for this advantage, to say nothing about feet on-the-street for sales. The competitive advantage we have over Bing or Google is that as long as we have local mass media muscle, we can actually drive people to a local online experience. This dramatically accelerates the process of ramping up the new online value we so desperately need.
The technology to do all this already exists. In fact, I was able to build Nashville411.com for WKRN-TV in 2005 by borrowing a simple directory software. Within weeks, we were averaging between 2-3,000 searches a day, but this was before the ability to store that data for subsequent use in advertising. In a very small way, this was the precursor to a functioning local web search. One thing we did learn is that it didn’t take long before our results began showing up in Google results, so Google was forced by its own technology to work for us or on our behalf (NOTE: the site no longer exists in its original form).
We look at this and say, “That’s a lot of work.” Indeed, but that’s why it would be so valuable — and most of the work is upfront anyway. We also look at it and say, “Cough-cough, but that’s not our business.” Well, it really is, for local media companies aren’t in the content business (as we think); we’re in the advertising business, and advertising is changing. There’s the old saw about how the railroad companies would’ve owned the airlines, if they had only understood what business they were really in. Same here, and the local marketplace is just waiting to be tapped by someone with local interests.
Why not us?
Terry Heaton is President of Reinvent21, a consulting company specializing in business reinvention for the 21st Century. He’s an internationally-recognized creative expert on all things web-related, especially as they relate to local media.