A Tumultuous But Tantalizing Future For Local Media
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?