For local news media, the most crippling disruption served up by the Internet isn’t in news – it’s in advertising.
And it’s not just other players getting the ad spending we used to get, although there’s plenty of that going on.
The more insidious advertising disruption is that local businesses need less and less advertising than they once did.
Because the digital revolution has opened an infinite number of direct channels between consumers and businesses. This is a revolution happening right before our eyes.
In the old, pre-digital days, businesses had to buy space or time in other people’s media channels to reach consumers. The media – newspapers, radio, television, magazines, yellow pages – owned the pipes that went direct to the consumer. They had the audiences; businesses didn’t.
So businesses had to pay the media to push their advertising messages through their channels.
Now audience access is no longer exclusive, and it’s increasingly initiated from the consumer’s end. Virtually every consumer is connected to the vastness of the Internet, and most people are constantly finding businesses by doing direct searches on the Web.
When they need things, they enter a few keywords in a search engine or on Facebook. From the search results, they can click directly to the business’s Web site, and then they can call the store, drive to it, or – on some businesses’ sites – buy online.
This is a new era of direct consumer access without intermediaries. Businesses don’t need to buy advertising to play.
But that doesn’t mean it’s easy for businesses – or free. Businesses can’t be found in this new environment unless they work at it.
Businesses are pretty much out of the game if they aren’t on Facebook, don’t have Web sites, and/or have sites with poor search engine optimisation or sites not optimised for mobile. And even businesses that check all those boxes will lose out to their competitors if their Web sites or social media pages are poorly done.
So this era of direct contact creates a whole new set of imperatives for businesses. They need to do the right things – and spend some money on them – to make sure they are found by consumers and chosen over their competitors.
And, because direct consumer access can go in both directions, they also can develop outbound strategies to communicate directly with possible customers through e-mail, loyalty programmes, contests, and promotions of various kinds. These, of course, cost money.
In all of that, there’s a huge amount of opportunity for local media companies if they’re willing to get into the game and play to win. But they have to venture well outside their old advertising-based business models.
In the media industry, most of these new, direct-access tactics are lumped together under the term “digital services” or “digital marketing services,” as distinct from advertising.
A June Borrell Associates report titled “Local Advertising Hits a Tipping Point” provided hard data to support this massive and growing trend. The chart below, based on a Borrell survey of SMBs, says it all.
Each blue bar represents a digital marketing activity and shows the percentage of businesses that said they intend to spend money on it in 2015. Each yellow bar represents a digital advertising activity and shows the percent that said they intend to spend money on it in 2015.
Note that the top five – Web site design and maintenance, Web site hosting and support, SEO, social media management, and e-mail management – are all tactics to drive direct consumer contacts. And so are most of the other blue bars.
You can see at a glance that SMBs are planning to buy a lot fewer advertising solutions than direct-contact solutions.
Read the description of each blue bar, and you’ll see many of the ways a business can spend money to attract or instigate more direct contact with consumers. Mostly, these tactics involve businesses developing their own media or content designed to be found directly by consumers. Advertising, on the other hand, is designed to be placed in someone else’s media channels.
To show how large the spending is on these digital services (i.e., direct-contact tactics) Borrell’s report also provided a case study on digital spending in Myrtle Beach, South Carolina. I won’t copy the Borrell charts, but suffice it to say that they found local businesses spending US$188 million on local digital advertising – and US$981 million on digital services.
The conclusion is painfully obvious: There’s a huge amount of local spending going into direct-access tactics. That’s where the puck is now and where it will continue to go. The evidence is so strong – and the shift in spending so pronounced – that Borrell is well warranted in calling it a “tipping point.”
If local media companies want a share, they have to skate hard in that direction. That’s why many newspaper companies, including my employer, Morris Publishing Group, have set up their own digital marketing agencies.
We’ve found, as have many others, that it’s very hard to sell digital services from within the core business. What works best – as Gordon Borrell has been telling the industry for more than 10 years – is separate digital sellers and separate digital sales teams.
So, how are you doing?
As one indicator, try doing a Web search on the key words “digital marketing services” plus the name of your town or city. Does your newspaper, radio station, television station, magazine, or directory business show up above the fold? On the first page?
If not, and other digital agencies do, they’re gobbling up this new business.
Time to change your game.