State of Local

As prognosticators go, I find Jeff Jarvis hits the mark only about 20% of the time. But when he does get it right, he’s really worth reading.

Jarvis has long argued that when it comes to online advertising, “small is the new big.” In other words, while national advertising is obviously important, it’s also vital to reach and encourage local advertisers. Particularly those small clients who couldn’t afford a major local campaign on TV or in print. But could afford online ads, if scheduling ads was easy enough and cheap enough.

His latest post was sparked by Tuesday’s Wall Street Journal article “Local Papers’ Web Scramble.”

Now, for the first time, pure-play Web companies have the biggest share of the local online-ad market. In 2007, Internet companies had a 43.7% share of the $8.5 billion local online-ad market, while newspaper companies had a 33.4% share, according to the media research firm Borrell Associates. Just three years ago, newspapers had 44.1% of the local online-ad market. (Directories such as the Yellow Pages have 10.1%, and local television outlets 9.3%.)

Jarvis argues that newspapers handed what should be their local market over to Google and other online companies that set up efficient means to sell a lot of little ads, which equals big revenue.

I saw this first hand in many companies. Print sales teams didn’t know how to sell online. Oh, they’re trying to catch up now, but it’s often too late, for advertisers are already using their competitors; newspapers lost the opportunity to usher small advertisers onto the internet. Even the online sales teams at newspaper companies didn’t how now to sell small; they were — as I once put it in a meeting — putting all their effort into saving the old $100,000 advertiser and saw getting 1,000 $100 advertisers as a distraction. The new-media divisions had already become big and old. They weren’t nimble. They lost out. If it’s not too late, here’s my long-standing (now free) advice: A newspaper (or, for that matter, TV or radio) company needs to set up a new, hyperlocal company that is designed to go after those 1,000 $100 ads. Let the big, old newspaper and online divisions keep serving and saving those big advertisers. Start a new company that makes small, local advertising its sole focus.

That means they need to set up automated systems to accept and place highly targeted local ads and directories. That means they need to come up with new means of selling without on-the-street sales staffs: outbound phone sales, direct response, even local sales network (instead of citizen journalists, citizen sales people), making aggressive use of the promotional power of the newspaper while you still have it. That means they need to have lots of targeted local content without large editorial staffs. That means they need to set up networks with local bloggers and others and they need to encourage more people to join and the way they will do that is by sharing revenue and so these need to be both content and ad networks. This is unproven but I know that this won’t happen in the existing structure from print or even online staffs. It’s hard and its new but — as the Journal now well proves — if you newspapers don’t do it, your online competitors will. I’m not convinced that his approach is the right one, but enabling ways for small advertisers to reach your readers is a given for the future. My hunch is that we’ll see a hybrid model roll out in the coming year or so. The ability to reach national advertisers combined with an element of hyper-local sales.

I should say that anything I talk about here is strictly theoretical. I don’t have a direct connection with the Internet Broadcasting sales department. So I don’t want it to seem as if my comments are any reflection of the IB sales philosophy. But I do have experience in general with hyper-local sales and the challenges of selling both nationally and locally. So take my comments with whatever grain of salt you need.