If you missed the webinar, What’s a website worth? Valuation Metrics for Local Websites, conducted today by the team at Borrell and Associates along with my colleagues Rick Ducey and Mark Fratrik, there will be no milk and cookies for you after school today. Our two firms just produced a study to determine the value of the websites of local media properties. It’s probably not a surprise that these sites, undermonetized as they are, stand to add significant dollars to the stagnating values of traditional media operations.
What’s more revealing to me is the developments in the online marketplace in local markets. For a very long time, all of us on the electronic side of the media ledger have found ourselves casting an evil eye at our main competitor: the local newspaper. I can remember sitting in meetings where our sales management went through the local paper ripping out ads for Clients that we believed should be spending more in radio and television spots. When the internet came along, our focus once again centered on the local daily as the main competitor for these “new media” dollars.
While newspaper websites continue to take large shares of digital dollars in local markets, a new and perhaps more formidable competitor has/is/or will be staffing up in your town: the pure play internet firm.
We’ve seen growth in newspaper website revenues begin to collapse this year due to the overall softness in the ad economy plus a reliance on display ads that seem to be losing share to search nearly everywhere. Their plight is also being accelerated by the downturn in online classifieds for real estate and auto dealers. I do enjoy reading the laments of the Internet ad advocates who are in disbelief that their revenue streams could actually be in line for cuts. I’ve got news for these guys; nothing grows forever, particularly in a tough economy. Like today’s investors, advertisers will run for safe havens when things get tough. However, I do admire the missionary like passion these advocates display for their medium and wish it showed up in others.
The pure plays have set sights on the ad budgets of your Clients and have clear intentions of making their fortunes at your expense. These operators like ReachLocal, MerchantCircle, etc., smell large local ad dollar opportunities and are hiring sales staffs across the country. They are counting on traditional media owners and station management continuing to delude themselves into believing that their overburdened and stressed out sales staffs can adequately sell an increasing inventory of digital opportunities at the local station level while keeping the traditional platform sales demands at top of mind.
These companies have already taken over the top share of local online dollars in a lot of markets and should now be the focus of your discussions and planning sessions on how to capture obscene shares of the growing online budgets of local advertisers. These pure plays would absolutely love to have the promotional power of your traditional media assets to drive traffic to their site. They might also like some of your best sales performers who have existing relationships with advertisers.
They find themselves delighted to find too many local TV/Radio owners that have given short shrift to their own online efforts helping to enable their growth. It’s hard to compete with these new companies when you abandon the playing field. What’s required right now are focus, commitment and investment to fight these outsiders showing up in your town and stealing what should rightfully be yours.
How much more evidence do we need to see to convince us the old way of selling traditional media has forever passed us by? The moves by your customers into these new platforms and the results we’re seeing on our pacing reports should be enough evidence to compel us to rip up the existing playbook. If we’re really convinced that the future growth of our businesses depends on our embrace of the online elements, we need to propel that growth through new thinking about how we recruit, train, organize, compensate and retain our sales talent.
As we all know, a part time effort developing and selling business for local online ad opportunities will result in nothing more than part time results which will be quite dissatisfactory. These pure play guys stealing your share are counting on you keeping the status quo alive. Are you going to give them what they want?
(source: Steve Passwaiter, VP Business Development, BIA Financial Network, Inc.)