In the early days of television, the networks needed affiliates in local communities in order to establish scale for their programs and their advertisers. Back then, the networks paid handsomely for this, so the owners of local stations got a huge chunk of their revenue from outside the market. This revenue has slowly disappeared, so the evolution of local television has been, in a very real sense, the evolution of local advertising.
One of my fondest memories is of the day when the production staff at WTMJ-TV in Milwaukee played a prank on legendary weatherman Bill Carlson for one of his live coffee commercials in the early 1970s. They glued the cup to the saucer, so that Bill had to lift the whole thing to take his customary live "sip." It was hilarious, but Bill covered it like the pro that he was. These types of ads "evolved" out of local television as the business matured. Oh, for the days of being a kid.
In today's world, the network model of television's infancy is broken in many ways. What message does the lack of network compensation send if not that the "networks" really don't need the affiliates anymore? Wired solutions have rendered over-the-air signals almost irrelevant. Satellite and cable companies would love programming feeds directly from the networks, and direct-to-consumer programming options via the internet make the future even murkier for local television.
But if local TV is about local advertising, to where will local advertisers turn in a world of diminishing relevance for broadcasting? This is a question of profound implications, but it's one that ought to give all local media companies hope for the future, for the real growth in internet advertising over the next decade will be at the local level. And the evolution of local media on the Web will, once again, be about the evolution of local advertising.
Key to the development of a local online ad market is the identification of the local web, and this offers a remarkable opportunity for those willing to explore this territory today. In the not-too-distant future, everyone will have access to the local web, but this access is unavailable today, because the database hasn't been created. It exists in bits and pieces, but no technology can replace the human research necessary to build the initial database. This is a task that will pay huge dividends to the one who creates it, market-by-market, and there's no reason this can't be done by a local media company.
As the internet matures, many of the applications and tools that helped make our world seem smaller will increasingly make our local communities seem bigger. This will occur in stages and over time, but it will happen, because the URL and IRL worlds can only meet where people live, and that means at the local level.
The enormity of the Web has been at the core of nearly every advertiser-supported business plan since the beginning, but, thanks to social networking sites like mySpace and Facebook, the younger generation of internet users is building their experience from the community that exists around them in real life. You can say what you want about how the Web connects people from far and wide, but to today's youth, it's an efficient and fun way to stay in touch with their real life friends.
This is a new phenomenon, and one that we would do well to watch. Like cellphones, social networking sites allow people to share news and information about each other with each other, and it's not all about friendships that are web-only. This means the Web is increasingly becoming a local animal, and this bodes well for local retailers and others who are interested doing commerce with their neighbors.
The internet pure plays all recognize this, and there is a race underway to see who can seize local territory first.
It's no secret that local ad dollars was the prize that drove Google as it leveled the playing field by giving small advertisers access to search results just like everybody else.
The quest for local dollars was at the core of Yahoo!'s thinking when it announced an alliance with newspaper groups to merge online jobs classifieds and build content partnerships. In a Newspapers & Technology sidebar story about the arrangement, are these key statements:
"Industry analysts agree with us that the local advertising opportunity is tremendous," said Hilary Schneider, senior vice president of Yahoo Marketplace, about the site’s alliance with eight major newspaper publishers.
The new partnership will make a big difference in the way companies advertise and the way they interact with consumers, she added.
"We believe the local segment is largely untapped and provides significant opportunities to expand audience engagement and grow local advertising."
Already, the world of internet advertising is showing signs of a shift to this "untapped" segment, and this is both good news and bad news for local media sites. It's good, because money is finally beginning to open up to support local websites. Agencies and advertisers at the local level are experiencing the awakening that took place at the national level during the past decade, and this is promising for local media companies and other entrepreneurs. It's bad news, because, as the education process for local advertisers shines a spotlight on web analytics, a dirty little secret about advertising on local sites is being illuminated: much of the traffic on local media sites comes from outside the market.
This the natural fruit of networked media sites driven by third-party providers, whose business model is the creation of scale to deliver ad impressions to national advertisers and special section sponsors who don't care where the eyeballs come from. Deals these companies have made with the major portals brought the news from local communities to the rest of the world, and that meant significant traffic for local sites. A big story in, for example, St. Louis will flood the local media sites with eyeballs from outside the market. In Denver, 70% of one station's traffic came from outside the market during a month when a big story originated in the market.
This is not what local advertisers are seeking.
Local advertisers want to reach local consumers, and historically, this hasn't been easy online. The web offers so many options and so much flexibility that the numbers of users at the local market level just haven't been there to make an advertiser-driven business work. Technology is changing this, however, because the Web — and especially in the Media 2.0 world — is much more about direct marketing than it is mass marketing. If advertisers know where local users have been, they can reach them anywhere they might go.
Smart local media companies will invest resources in this area, because this is where the real growth will be downstream.
In order to achieve scale, internet start-ups have historically had to take a global view of the Web. Investors have always wanted to make money off their investments, and in the early days of the Web, that required a big, big picture. Whether the revenue model was advertising or B2C, the ability to put lots of eyeballs in one place — or in many joined places — was a necessary component of success, and that meant an application that served with broadest possible reach.
As a result, we've come to know Amazon.com as a global bookstore, Google as a global search and advertising engine, mySpace as a global community and Yahoo! as a global portal to everything. In many ways, we've been able to overcome the prisons of time and space to interact and do commerce, but this is an artificial reality — a romantic, wormhole-esque illusion that feeds human nature yet sucks the life out of it at the same time. Don't get me wrong. The global village aspect of the Web is certainly one of its charms and one that will have permanent influences on global politics and economics, and it's been pretty cool to order something from Japan or interact with my family in the Middle East.
But most of my shopping still takes place at the mall or the supermarket, and the need to hug my loved ones doesn't change just because I can see them via a web camera.
Ask anyone in Atlanta who's had an online "relationship" with someone in Los Angeles, and you'll get the same story: it was good for awhile, but he wouldn't move — or she wouldn't move — and eventually distance killed it. Or worse yet, somebody did relocate only to discover that Dr. Jekyll was really Mr. Hyde.
Ask anyone who's had a bad experience with a product that didn't arrive on time, never arrived, arrived damaged or wasn't at all what it looked like on the site, and you'll hear complaints reminiscent of the old Sears Roebuck catalogue days. There's a reason why local grocery-shopping sites didn't work back in the bubble days.
But this illusion of oneness has sustained early efforts to do business, and there are a lot of success stories to that end. Nevertheless, as the Web matures, the emphasis must shift to local, because that's where the people live.
More and more people are shopping online and feeling comfortable in so doing. According to comScore Media Metrics, "overall non-travel (retail) e-commerce spending increased 26 percent this holiday season versus 2005 to a record-setting $24.6 billion." But doing commerce on the Web — at least in its current iteration — will always be just a small drop in the gargantuan bucket of overall commerce, and that's why local advertising is so important.
The opportunity for online local advertising is there, but before it can find its rightful place in the local community, the local WEB community must be defined, identified and nurtured.
Local agencies and advertisers also need to go to school on web advertising, because their ignorance stands as a structural barrier to growth of the local online ad market. In Nashville, the WKRN-TV sales department didn't wait for that to happen. They took it upon themselves to become THE knowledgeable source in the community, and that has paid significant dividends. The advertising community there recognizes their expertise, and that has meant the lion's share (in some cases ALL) of local buys. This, too, is an opportunity for local media companies everywhere.
Some will argue that the illusion of anonymity is one of the real attractions of the Web, and that this illusion is harder to maintain at the local level. But this reveals a mistaken assumption about the local web, one that is only revealed by spending time on sites frequented by local people as groups. The MySpace generation is very much about gathering online with their identities intact (although in most cases — two-thirds, according to Pew — private to outsiders), and this is something that confounds the generation of their parents, whose fear tends to brush aside the more positive attributes of the commons that is shared by their kids. We must always remember the words of the guy who essentially invented the Web, Tim Berners-Lee.
"The Web is more a social creation than a technical one."
The leap from anonymous socializing to named socializing is also an important element of local blogging communities. Sooner or later, these groups will start having meet-ups or other social gatherings, because that's what people with shared interests do. I've been to many blogger meet-ups, and the hugs are very real.
So anonymity isn't nearly the draw for the local web as it is for the global web, and this is just one of the differences between the two.
This is why the exciting new fields of word-of-mouth, viral and pull advertising are where to place your bets for the future. Rupert Murdoch is certainly learning this in the wake of his purchase of MySpace, and so far, they've not made any huge mistakes in trying to monetize the site. He knows that it is the permission of the users that determines the value of any cyber property, and especially where identities are attached to the zipcodes in the database.
Of all of the wonderment that is communications these days, nothing inspires me like the potential of the local web. This is why my work with local media companies emphasizes the achievement of local scale through genuine service and not just the practice of mathematical formulas that reduce the Web to page views and stickiness.
The local web is where the Web itself will find its real value propositions, and that's enough to make a guy want to stick around for awhile.