Local Advertising Hits A Tipping Point

“(W)e’ve reached the end of the Golden Age of Advertising,” says pioneering media researcher Gordon Borrell in a new report that paints a very realistic picture of the state of local advertising. This report — Local Advertising Hits A Tipping Point — is a 5-year follow-up to a report published in 2010 and tracks the opinions of 7,228 small and mid-size advertisers (SMBs).

While there is a lot of between-the-lines conclusions to be drawn, here are just a few of the report’s findings. Remember, these are advertisers speaking, or it would be more appropriate to call them “the people formerly known as the advertisers.”

  • 82% of SMBs have established their own media channel in the form of a website or social media page.
  • Since 2007, spending has skyrocketed to the point at which businesses last year spent 72% more on marketing services and promotions than they had spent 10 years earlier. Meanwhile, the annual expenditure on local advertising was 22% less than it was a decade ago.
    Screen Shot 2015-06-10 at 12.41.44 PM
  • 72% of those are purchasing digital services to support those channels, spending far more on those efforts than on basic advertising.
  • By examining IRS tax records, Borrell concludes that “if businesses were devoting the same percentage of this year’s gross revenues to advertising as they were 10 years ago, the advertising economy would be $56 billion richer.”
  • Online media appeals to the largest percentage of local advertisers and takes the largest share of ad budgets of any other media. This is a pedestal newspapers have occupied for over 300 years! “Over the next 12 months, the gap will almost certainly widen to the point that all traditional advertising channels — print, broadcast, outdoor and mail — begin to look like niche support mechanisms to a local businesses’ digital marketing plan.”Screen Shot 2015-06-10 at 12.33.49 PM
  • Traditional media has devolved into an option, selected by habit or by preference but certainly not by necessity.
  • Online is so strong that by 2020, Borrell projects that all traditional media will scramble to maintain a small set of advertisers who will spend small shares of their budgets with them.
  • Local businesses, on average, get 20% of their sales from online, versus 13% by the old standby, the telephone.
  • These businesses have just begun to become digitally savvy, according to a new metric from Borrell. 85% of SMBs fell short of a line considered “very active” in digital activity. What this means is that they are novices that somebody can teach and that the more savvy they become, the more disruptive they’ll likely be.
  • 82% of respondents maintain a social media page with an average of 2,123 followers, though 61% have fewer than 1,000. The report notes that growing their own audience base equates to real customers for SMBs, which is radically different than buying ads based on somebody else’s reach.
  • Native advertising (a.k.a. Content Marketing) is another area of satisfaction for SMBs, although its use is low. This equates to a growth opportunity for those providing a service.
  • Mobile is another BIG area of interest, although not in any traditional advertising sense. The projected spending categories for mobile relate almost entirely to SMBs own web franchises and include things like Responsive Design (mobile-friendly), search, SMS, proximity, apps and video.

With all Borrell research, it’s useful to take a step back and try to get a 30,000 foot view. What this report doesn’t say directly is that the levers of commerce in our world are shifting to the hands of businesses themselves due to the growth and development of a networked culture. The beauty (or evil, depending on your perspective) of the network is that it is a 3-way communications medium, which allows human beings to by-pass filters that the network deems inefficient and, frankly, now useless. This includes our entire cultural infrastructure of expertise divided into silos, the first of which is how we communicate. There will be others.

This Borrell report tracks empirically the shifts relating to the way money changes hands in the levers that grease of the skids used by businesses to reach customers and sell their wares. Those businesses are loudly telling us now — along with their customers — exactly how THEY want things done, and clearly that doesn’t include traditional forms of getting the word out. It’s too expensive. It’s too haphazard. It’s out of control in ways that we tend to disregard in the name of profit.

While I certainly respect the crisis that journalism may face in all of this, we’ve been our own worst enemies in the assumption that we could simply shift our model to the Web. It’s too late to effect any significant change in that strategic blunder, but it’s not too late to shift our focus to what we’re being given and away from what we want. That, I’m afraid, is the only logical path for the days, weeks, months and years ahead.

Meanwhile, Gordon Borrell will continue to apply his fascinating research to helping us understanding not only what’s going on today but also where that’s all headed.

Just sayin…

Dear people.

Once upon a time there was a writer who tried to present logical views of tomorrow in a rapidly-changing media universe. His words were rejected, and the reasons given were usually based in the idea that this prophet’s projections were a) not our business model b) too negative or c) my favorite: too out there (in other words, crazy). This was one of them: “Creating Spectrum Within Spectrum,” published in September of 2007.

I’m waiting (but not holding my breath) for an arrangement between all incumbents that allows them to move their competition between each other to a single platform on the Web, to operate as they wish within this specialized platform. Think of it as moving their existing spectrum to cyberspace and operating therein. If you want network television, for example, you go to the network television platform. If you want movies, you go to the movie section, and so forth. This could actually be done — and it would be useful for “consumers” — but it would require individual companies within these industries to work together, and that is very unlikely to happen.

For local media, the same thing could be done. If users wanted access to local news video, they would go to one place, where all local news video was available. This would create a form of spectrum within the whole, where individual players could duke it out just like they do in their own universe today. The problem, again, is that it would require separate companies to work together, and that’s highly problematic. The number one station would tell the others to go to hell, because they think they can a) do just fine on their own and b) it would “cheapen” them by putting their work on the same stage as their competitors.

Would this station prefer their work to stand alone as a blip in the overall spectrum of the Web or be a part of a bigger blip, a piece of spectrum designed specifically to better enable users to find their work? And this same number one station is stratching its head, trying to figure out how it can attract a larger audience.

For the answer to this dilemma, let’s go back downtown, to that piece of closed retail spectrum. As people moved to the suburbs, the retail world understood that it had to be where the people were. It could not expect the people to come to them.

And so the suburban shopping mall was created, and what is a mall but a group of competitors banded together for the convenience of shoppers? Would the number one department store refuse to anchor the mall, because its chief competitor was on the other end? Of course not!

Fast forward to today, where my friend Harry Jessell of TVNewsCheck and NetNewsCheck fame published an article: TV News Groups To Offer Local News App.

“In the ideal world, we aspire for it to be an iconic destination for people who care about local news,” says Louis Gump, the CEO who developed similar news apps for CNN and The Weather Channel.

“You can see multiple stations potentially in the area where you live and you can also get content from other places you care about, either because you are from there or you have friends who live there.”

…The charter station groups insure a large initial footprint for the service. Collectively, they operate 112 news-producing stations in 84 markets, including eight of the Top 10 and 17 of the Top 25. There will be multiple stations in 21 of the markets.

That’s just for starters. NewsON intends to sign on other stations or “affiliates” to stretch the footprint across the entire nation. “I would be ecstatic to see one station out of every market. We would like to serve everybody in the U.S. with content that it relevant to them. That a big audacious goal.

“I’m not assuming that every last station group will participate, but I want them to know that everybody is welcome to participate in some form or fashion.”

And so, once again, the writer rests his case. How do you judge a prophet? If the things he says come to pass.

Just sayin…

The Referral-Driven Web

referral

The vast majority of online consumers of news and information connect with content through what Google calls “referrals,” and in my experience and study, second place isn’t even close.

This phenomenon has been growing for years, but the rise of social media has accelerated it to the point where it cannot be ignored. In fact, we’re at the place where it’s safe to say — with a great deal of certainty — that for traditional media companies, online distribution is referral-driven. Our online strategies and tactics, therefore, need to be centered around this reality, and that includes making money.

I like to use Google Analytics, because it provides an apples-to-apples comparison with most of the Web, including local businesses. If you’re going to use data to sell your services, you might as well use a reference that your customers understand. There are many other analytics systems available to media companies, but understanding your web usage through Google’s eyes provides standards accepted by our real online competition — the pureplays. We can only gain.

Session Acquisition is a key component of website understanding: how and where do our “eyeballs” come from? Google identifies people who visit a site by rules-based groupings known as “Channels,” which is their way of quantifying sessions. These involve several types of referrals, including social, search, email, and others.

Of the limited sites I’ve studied, around 3/4 of traffic comes via referrals. They tend to view one page and leave via that same page. Contemporary media websites have become mostly mobile, as shown by shrinking numbers of sessions recorded as originating from desktops. This is important, because the vast majority of those sessions are acquired via referrals.

The top referrer I’ve seen is Facebook, and its dominance is enormous. A recent site I studied revealed over half of all traffic (52%) came via Facebook, and most of those (68%) came via mobile.

This strongly suggests that people themselves are showing media companies how they want their content served, and our response is crucial.

Will we force them into an infrastructure built upon our wants and needs, or will we create an experience for users that will encourage them to come back? Remember, this is a world of abundance, not scarcity, and that means it’s entirely a pull medium.

Attraction works better than promotion. People don’t have to tolerate our interruptions anymore, because they can find what they need elsewhere. Oh, there are occasionally “must see” pieces of video, for example, but exclusivity is an advantage only where distribution can be controlled.

People can find them almost anywhere today, even down to just the core scene or scenes. Trying to protect this offline advantage online forces us into relentlessly playing defense at a time when we’d be better off adhering to the new rules being written by the people formerly known as the audience.

For ideas about how to create a favorable pull experience for users, we need to look to new media companies, those who aren’t bound by the concept of competing online as an offline company.

Click on any link from ESPN or Digiday, for example, and you’ll find the piece you’re seeking is at the top of an infinite scroll. I mean, how smart is this? If users are going to view only one page via referrals, why not make that page into something that allows (not forces) them to scroll on beyond a single story? We’re the ones who believe the one-page equals one-story model is what we need. despite the evidence that people don’t like to click, especially via mobile.

The question hounding media companies since the dawn of the Internet and its World Wide Web has been “how can we use this invention to further our business model?” Newspapers created a response that was identical to its offline products and even carried the same language with words like “pages” and the “fold.” TV stations responded initially with the newspaper model, but when we finally got around to video, we brought with us the 30-second spot. Brand extension has always been our goal, for it’s the power of those brands that fueled the business of mass media, a scarcity that only those with a license or a printing press could provide. We had the levers that those with money could pull to grease the wheels of commerce, and it was a heady thing.

As we’ve learned by now, however, the Web is nothing like what we imagined, and evidence is now coming forth that offers a very clear understanding of how users connect with media content. We owe it to ourselves to look at this with a clean whiteboard. Our future depends on it.

The lesson of Bill Simmons and ESPN

bs_report_300The always astute James Andrew Miller, writing for Vanity Fair, makes an important observation for all media in his “Inside the Shocking, Abrupt Divorce of Bill Simmons and ESPN.”

In the end, one could say with minimal originality, but considerable accuracy, that Bill Simmons simply flew too close to the sun. He miscalculated how much value ESPN put on him and on his unique abilities and talents. He might also have forgotten a cardinal company rule that remains sacred whether it’s ESPN’s Old Guard talking or its new one: Nobody, but nobody, can be bigger than those four initials.

On the other hand, it could be said that Bristol forgot a kind of cardinal rule itself: In an era where fans can get not just scores but highlights, and a ton more, on their smart phones, distinctive and original content is the way to engage and hold onto an audience plopped in front of big 99-inch screens. That content often comes with a big price tag—and with a requirement that the people with unique abilities and talent who create it be treated like the stars you’ve paid for.

In a world of mass media, the single brand of the company rides atop every other marketing concern. This is a core Madison Avenue concept and the truth behind Miller’s statement that “nobody can be bigger than those four initials (ESPN).” In the next paragraph, however, he describes the truth of Jay Rosen’s The Great Horizontal, which is the newer and greater reality of today and, especially, tomorrow.

So allow me to restate what I believe is obvious. Media is increasingly about personal brands, because those are what’s permitted in the revolutionary conversation taking place among the people formerly known as the audience (another Rosen witticism). Even where brands are able to “act” like people, they are not, and this is the harsh reality of doing commerce in the age of the consumer. Harvard’s brilliant Umair Haque noted long ago that companies should be spending money on products instead of marketing, and his justification was this very thing.

This is why I encourage students and people already in the media industries to expend the energy necessary to create and maintain their personal brands. In the end, it’s the only thing that really matters in a networked world, where exchanges of knowledge and information occur at the personal level. The age of slick marketing is drawing to a close. You won’t be able to buy your way into anything downstream, because the process for doing such is slowly disintegrating. In 15 years of trying, Madison Avenue has returned to an old stand-by — one that empowered consumers have already dismissed — the pop-up ad. It’s truly amazing that, just like The Odd Couple, this tired old irritant is back with a vengeance. How true is the old saw that if your only tool is a hammer, every problem looks like a nail.

Commerce in the Great Horizontal will require great products and services and people willing and able to pass them around. There’s already the idea that “influencers” at the personal level are what product manufacturers need to buy, but that’s merely wishful thinking from the hammer known as Madison Avenue. I don’t have a map with the route from here to there charted, but the laws of attraction will be more useful than the laws of promotion.

Free Range Content Consumption

flytvsmHere is the latest in my ongoing series of essays, Local Media in a Postmodern World.

Free Range Content

Facebook’s wish to put media content inside its own application is potentially self-destructive to those providing the content. Moreover, for Facebook, it smacks of the days of AOL. All of this would be irrelevant, if media could bring itself to release its content into the wild of the Net, but that appears more and more to be an impossible task.

To media companies, their competition is and always has been other media, which is an absurd proposition online. When a TV station, for example, behaves online only as it does in the linear world, it has already lost in the battle for relevance.

Broadcasters and Aereo: sometimes winning means losing

We have a lottery game here in Texas called “All or Nothing.” The point is that if you get ALL the numbers on your ticket, you win, but you also win if there are NONE of the numbers on your ticket. Hence, “all or nothing.”

I think the Supreme Court’s pending decision in the broadcasters versus Aereo case is a similar proposition for the broadcast TV industry, although the other way around. They will lose even if they win.

Historically, when given the opportunity — which this case does — to come down on the side of culture, the high court cannot resist, and culture — whether we like it or not — is moving to a one-to-one model of communications. There are exceptions, certainly, but the use of government resources, like spectrum, to enable old school thinking is up for grabs in the hands of the high court. What most people don’t realize is that one-to-one can mimic one-to-many in certain necessary situations, but one-to-many cannot mimic one-to-one. This is the essence of Jay Rosen’s “Great Horizontal,” and why this case is so fraught with danger for the status quo. You see, it isn’t about my ability to receive; it’s about my ability to send, and that’s why a whole host of laws have to be modified, including the use of the spectrum that’s owned by the people.

TVNewsCheck’s Harry Jessel published a piece last week that examined the question of what happens if the court sides with Aereo. As informative as the essay is, the comments are not only entertaining but also revealing regarding how broadcasters think in terms of defending themselves in the case. Here are six general themes:

  1. Its “unnegotiable” civil defense mission is what will sustain broadcast spectrum. The Telcos even now are working to develop a new system of civil defense warnings and assisting the government in real time and beyond.
  2. The question before the court can’t produce a loss for broadcasters. Since when has the “question before the court” prevented the Supremes from deviating? Sorry, I don’t view this as protection.
  3. Local bandwidth is too small to permit any significant competition to high quality OTA broadcast delivery. This is the same argument used by broadcasters when cable first came on the scene. Quality follows what culture wants.
  4. The most likely outcome would be for Congress to intervene, revising the Copyright Act to bring systems such as Aereo’s within the purview of the transmit clause. The Supreme Court doesn’t need Congress to make law.
  5. There is a finely balanced economic ecosystem going on here in which everyone thrives. But it’s an ecosystem that can be damaged if something disruptive, like a Supreme Court win for Aereo, took place. Nobody cares about our “finely balanced economic ecosystem,” except where it impacts their wallets, and that is a biggie that the court could impact.
  6. If the Supremes give the decision to Aereo, then broadcasters’ spectrum is safe, because Aereo depends on a broadcast signal in order for its antenna farms to work. Well, yes, and that’s a possibility, but Harry’s piece fully explores how that could be a net loss for broadcasters anyway.

If the broadcasters were to win, however, there’s a significant chance, in my view, that the price of winning will be its spectrum, because there is widespread and significant pressure to shift TV stations to cable in the name of spectrum use for the one-to-one world of the Web.

It is the law that gives broadcasters the spectrum. It is the law that says cable companies MUST carry the broadcast signals. It is the law says that broadcasters have a right to compensation for cable carrying their signals. And now broadcasters want the law again to boost their business model. Live by the law, die by the law, for the Supreme Court is the final arbiter of what is or isn’t law, and that’s why this case was such a crap shoot from the beginning.

Broadcasters are already acting as cable companies, and here’s the rub. If broadcast signals become cable channels, then must-carry laws are irrelevant, and retrains fees become renegotiable. Without the weight of law behind the broadcast companies, there’s little doubt in my mind that the networks will by-pass the local money tree in making their programming available via cable. Hence, the losing even if they win.

The problem for the Supremes — and the key reason I think they took this case — is the profound necessity of rewriting what copyright means, absent the immense Congressional lobbying power of the status quo. “Intellectual property” is an oxymoron created by the entertainment industry to give itself the weight of law in conducting its business throughout the world. It works fine in the one-to-many world of mass media, but it makes no sense in the Great Horizontal, and this is the conundrum for the court. Personal use of products must include sharing in a one-to-one universe, and every one of the old industries that thrived in a one-to-many paradigm must face this reality. It will take something like a court ruling to give the people formerly known as the audience (thank you, Jay Rosen) what they deserve.

The supermarket can’t charge me twice for a meal I share with neighbors, yet this is the absurdity of current copyright inside the network. The network is a cultural shift that’s here to stay, and its advancement is the duty of those in positions to make it so, such as our Supreme Court justices. Neither side in this case gives a ripple chip about consumers, the people, and that’s what the court will be forced to consider.

Folks, there’s much more riding here than the question before the court. In attempting to right what they view as a business wrong, broadcasters have opened Pandora’s box, and the chaos unleashed will likely produce a deleterious result for anything “business as usual.”

BONUS LINK, also via TVNewsCheck: Michael Berg’s legal view of the case (although tilted by an admitted bias towards the NAB).