A Tumultuous But Tantalizing Future For Local Media

by Dave Morgan, Jan 20, 2011, 5:15 PM

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Newspaper ad revenues continue to decline. Local broadcast and local cable finished the year strong, thanks in large part to an unprecedented political spend. Groupon, the two-year-old social couponing service, apparently turned down a $6 billion dollar offer and is rumored to be talking to bankers about an initial public offering that could value the company at $10 billion to $15 billion. Has the local media scene ever been crazier?

Everybody, from Google to micro-bloggers to smartphone companies, wants a piece of the local ad market, and a share of the $150+ billion annually that has typically been claimed by local newspapers, TV and radio stations, yellow pages and direct mail. That's nothing new. Lots of folks drooled over the local ad market 20 years ago, too, but without getting any real traction.  Today, however, it looks like we're finally going to see a changing of the guard in local media. Here is why:

Decline of local media monopolies. For decades, local ad dollars were dominated by local distribution monopolies: newspapers, broadcasters, phone companies and post offices. If you wanted to reach local consumers with your ads, you paid whatever tax they charged you.  Fortunately, digitization of news, information and advertising undermined the powers of analog distribution and their monopolies. We are now watching these companies and their franchises crumble.

Digitally enabled promotion services. Local promotion has always been a big business. All of the local media made a lot of their ad money promoting local stores, services and events. It is rumored that Groupon is at a $2 billion annual revenue run rate, distributing these same kinds of promotions, but for less money than the media used to cost and with less risk -- and the company is only two years old! What will the digital local couponing sector look like in five years? I don't know, but I'm sure that it will be bigger than $20 billion annually.

Mobile devices and social data. Today, mobile phones are a critical part of almost every U.S. consumer's life. They are with us everywhere, always. These phones talk to networks and tell them where we are. More and more of these phones are powerful computers providing an incredible range of other services, from travel alerts to weather tracking to delivering driving directions. Clearly, this data can (and will) enable the delivery of much more relevant local advertising. We don't know exactly what it will all look like (and who will deliver it), but we know it's coming.

National media chunked locally. It used to be that if you bought an ad on a national media property -- like a TV network or a national newspaper -- you had to deliver the same ad to everyone everywhere in the country. No more. Whether it is cable and satellite operators making their footprints "localizable," or The New York Times or The Wall Street Journal "localizing" ads, this capability is coming to virtually all national media, particularly those that are electronic.

Media solutions packaged locally. It used to be that local media buying was all about "price and competition" and almost nothing about "cross-media solutions provisions." Even if you wanted to put together a holistic local media program, the audience measurement data was so bad that it was still an exercise in guesswork and intuition. No more. National buying systems and audience measurement data are all getting smarter, more locally granular and easier to use. In a few years, I suspect that we will see dramatically better tools and platforms in this area.

I don't know what the local media world will look like in five years, but I know that it is going to be dramatically different than today -- and just as big. What do you think?

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0 comments on "A Tumultuous But Tantalizing Future For Local Media".

1. Paula Lynn from Who Else Unlimited
   

   commented on: January 20, 2011 at 6:08 p.m.

   Some of the best rewards I received from accounts was when they called me to tell me how well their ad did in regards to increasing sales and when am I going to do it again That was from the newspaper and mostly from the local sections and how I arranged placements rather than just sales and coupons, under the paper's parameters.

   Presently, there is a growing cacaphony of opportunities. I see consolidations and confusion coming. Small local is not the same approach and measurement fastidicies of multi-local locations and not the same as regional or national. It will depend upon how the media meshes and works with $500 per month ad budgets.

2. Dave Smith from Krux Digital
   

   commented on: January 20, 2011 at 7:04 p.m.

   What will be really interesting to watch is how quickly local advertisers migrate to online purchases to meet their promotional needs. The greatest asset of the established local players is their relationships with the advertisers and their touch of those advertisers.

   This will erode over time with those advertisers migrating toward more self-serve models. In the interim, the established players will dominate, even if it is as a sales channel for some of the newer outlets like Groupon.

3. Fj Rich from chase media group
   

   commented on: January 20, 2011 at 10:25 p.m.

   Interesting predictive model when you put the pieces together. Some questions:

   1. Why will sellers prefer "group" coupon delivery over direct delivery via text?
   2. Are you suggesting that Main St retailers will disappear, because today few of them are doing anything in this model; fewer understand any of the developments you've modeled?
   3. Where is the face-to-face in local commercial exchange bet. seller and buyer?

4. Dave Morgan from Simulmedia
   

   commented on: January 21, 2011 at 6:36 a.m.

   FJ, My thoughts: 1) Not sure why, but the social dynamics of group coupons and shared actions seem to appeal to consumers more than solitary targeted offers. 2) I do think that Main St. retailers are now participating in this new mix-they're certainly not buying newspaper ads at the rate that they used to. 3) While I do suspect that we will see group couponing companies begin to use face-to-face sales forces, I'm not sure that local businesses have really gotten that much value from many of the local media order takers that they have had to deal with in the past.

5. Elizabeth Kulin from ZEDO
   

   commented on: January 24, 2011 at 2:39 p.m.

   Newspapers will always be one of the most valuable inventories in media - people just want it online now. We wrote earlier this year about how political ad spend would benefit: http://www.marketwire.com/press-release/ZEDO-Sees-Political-Advertising-Dollars-Primarily-Benefiting-Online-Newspaper-Sites-1338072.htm

   Elizabeth Kulin
   Marketing Manager; ZEDO, Inc.

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