Why Local Media Firms Are Banking Big on Marketing Services to Grow Revenue

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In an under-the-radar move to grow their revenue substantially, local media companies are putting major resources into developing a broad suite of digital marketing services (DMS).

That’s the main message from a new survey by the Local Media Association that includes responses from 50 of the LMA’s 80-member “Innovation Index” panel, whose executives are tasked with growing revenue at their media companies.

“Digital marketing services is a big bet for many local media companies,” says Jed Williams, chief innovation officer at the LMA and co-author of the report with association president Nancy Lane. “High performers are seeing DMS comprise upwards of 40-50% (or more) of their overall digital revenue.”

“For many local media, the successful expansion of digital marketing services isn’t an option—it’s a strategic imperative. It’s apparent that digital display advertising won’t carry the day, so revenue diversification must come from somewhere. DMS is often the likeliest candidate.”

This chart shows just how important a position marketing services have come to occupy in the revenue strategies of local media companies—29% rank them as their No. 1 growth strategy, and 60% put them among their top three.

In large part, media companies are making this pivot as B2Cs rethink their own marketing goals, aiming not just to reach potential consumers but to convert them into paying customers, closing the path to purchase. Increasingly, heavy reliance on Facebook and other social media is being de-emphasized in favor of a broader range of strategies to target consumers in a variety of ways to guide them through the six stages of the “marketing funnel”—from awareness to interest to consideration to intent to evaluation to purchase.

If local media companies are to prove successful marketing partners for B2C brands, they need to do more than provide a platform for advertisements. They need to demonstrate their worth in moving customers along the path to purchase.

This does not mean retailers and other consumer-focused businesses are abandoning Facebook. The platform can deliver a huge range of targeted customers right down to a Zip Code or neighborhood, and it can do this at prices as low as $100 or $200 a month. Many Facebook-focused ad campaigns will, no doubt, continue to meet the test of return on investment. But as targeting built predominantly around Facebook “likes” reaches saturation points—the conclusion of an increasing amount of advanced customer analytics—businesses are making their pivot to a broader, more sophisticated range of marketing to put more customers onto the final stage of their journey: purchasing a product or service.

Kitewheel CEO Mark Smith broke down this shift in a recent “The New News” column. Commenting on his company’s new report “The State of the Customer Journey,” Smith said, “Forward-thinking brands are [taking] a holistic approach to the entire customer experience across digital and physical channels.”

Customer targeting isn’t being scuttled; it’s just being aimed at potential customers in different and later stages of their journeys. In some cases, targeting morphs into re-targeting, which designates the stage when businesses take a second crack at potential customers who weren’t converted early on, perhaps via Facebook.

It’s at this juncture of today’s much more elaborate customer journey that local media companies are hoping to sell their array of marketing services. The new LMA report pinpoints no fewer than 15 services, which are displayed here.

The LMA report is not Pollyanna-ish about the revenue that local media companies can glean from marketing services. It says DMS “has its challenges, from sales structure to product mix to fulfillment strategy. Ultimately, the name of the game is profitability, and that has proven to be a ‘long game’ for local operators.”

While 63% of local media companies say their marketing agencies are making money, it didn’t happen fast. Some 35% said profitability took more than a year, and 30% said it took more than two years.

Local media executives contributing to the LMA report also cited the range of competitors they face as a factor in how successful they’ll be with their DMS.

The LMA says its Innovation Index panel “represents a diverse mix of large and medium-size local media companies including many of the top 25 in North America, such as Sinclair Broadcasting, GateHouse Media, Tribune, Graham Media Group, McClatchy, Nexstar, Gray Television, E.W. Scripps, Metroland Media Group, TEGNA, Swift Communications, Cordillera Communications, Saga Communications, Entercom Communications, Meredith Corporation, WRAL / Capitol Broadcasting Company, Deseret Digital Media, and Raycom Media,” among others.