Can Renewed Coordination Prevent a Rollup in Local Media?

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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.