||Local Media Get Wise on Digital Services
It's becoming an almost common sight in convention halls and conference centers all over America: Dozens, sometimes hundreds, of small business owners packed in rows, sipping coffee and listening to a passionate presentation about how to grow their brands online.
These gatherings are among the most visible aspects of a fast-growing trend that's fueling the vast and potentially-lucrative digital marketing scene. It used to be that local businesses turned to a print publication, a phone directory or a few minutes on radio or TV as an advertising vehicle. Now, those same businesses want to use a different platform -- the Web -- but they need help to do it well.
The result is a big-money competition for local digital advertising dollars, with legacy publishers, national pureplays, small-town startups and local search providers jumping in with both feet. It's too soon to say who will be the most successful, but one thing is certain: Digital marketing services will be a big part of the local media business for years to come.
"Everybody should have these services at their disposal or they’re not in the game," says Mike Blinder, who provides digital consulting to local publishers through the Blinder Group. "I think, though, that there are different ways to bring it to market."
While there's no single path to digital marketing success, there are plenty of options for buyers and sellers alike. The most common services include website design, social media marketing, reputation management, search engine optimization, video production and mobile product development. Others extend the definition to online contests and coupons; yet others predict that media-rich native advertising could soon become part of the mix.
Here's a shorter definition: Digital marketing services are all the things local businesses want to do online but don't know how. And they're willing pay big bucks for someone with the technical skills to show them how.
Just how much? A report from Borrell Associates released in October concludes the average U.S. business spends $17,000, or 72%, of its online marketing budget on services. The total size of that online services pie, Borrell reports, is $390 billion.
"It changes so fast," says Joe Weir, VP for digital at Belo Corp. "You have to make sure you're always on your toes."
Like online video, virtual communities and many other aspects of modern publishing, the concept of digital marketing services has been around for nearly 20 years. When local newspapers, radio stations and TV stations launched their first websites in the late 1990s, many also hired teams of tech-savvy developers in hopes of providing Web design and other services to advertisers.
Those efforts were stymied, though, by financial and technological obstacles. It was expensive to maintain in-house development squads, Web publishing was still hard to streamline and too few local businesses were interested in the new services. But all that has changed in the last two years.
Websites are quicker and cheaper to design, social media is more sophisticated and consumers are more wired than ever before. Larger legacy organizations such as Belo Corp., GateHouse Media Inc. and Hearst Corp. have launched their own digital units. Smaller publishers, meanwhile, have discovered a booming market of independent digital agencies looking to provide technical services to traditional newspaper advertisers.
"Our industry has discovered that there are specialists out there to provide the services," says Tim Weddle, advertising director at the St. Joseph's News-Press, an independent daily in Missouri. "We don't have to be the gurus who know how to build all of this. We just have to have the contacts with the people who can."
It has been about four months since the News-Press started offering digital services in partnership with Milwaukee-based Guarantee Digital. The agency, with launched nearly two years ago, is a good example of the type of organization emerging to make a grab for digital marketing dollars. Its founder and CEO, Daryl Hively, has a background in newspapers, working for the digital arm of the Milwaukee Journal Sentinel before striking out on his own.
Guarantee launched in early 2012; now, it's operating in 26 markets. Although Guarantee can, and sometimes does, sell services directly to local businesses, Hively prefers to partner with media companies that are already established in a market. A typical small business receives more than three dozen sales calls a month, and many of those come from digitally focused companies. Hively says an affiliation with a known institution can make a big difference.
"It's tough work cold calling and coming into a market with no relationships," Hively says. "That's why these...partners are so important."
Still, there's no lack of national pureplays that are vying for local digital dollars. The list is long and changes often, but some established brands include ReachLocal and Yodle.
Another group of important players is digital entities launched by legacy media organizations. While in-house digital services don't make financial sense for small, independent publications, big chains such as Hearst, Gatehouse and Belo hope to find economies of scale by operating digital agencies. Some of the big players include Hearst's LocalEdge, Belo's ScreenShot, Gannett's Pointroll, Cox Enterprises Inc.'s Kudzu and an agency that LIN Media acquired when it purchased Red McCombs' Media in 2009.
The specifics vary among each company, but most of these spin-offs are separate organizations tasked with providing digital services to both new and existing customers. At GateHouse, which launched Propel Marketing last year, digital teams have been hired by outside publications such as the Chicago Sun-Times and have found themselves in high demand in many GateHouse markets.
"Most of our markets are small to mid-sized markets in the Midwest, which are really under-penetrated for these types of services," says Peter Newton, Propel's president.
Companies that have traditionally provided advertising through the Yellow Pages and other similar directories are also making big moves into the digital marketing space. Neg Norton, president of the Local Search Association, which represents many of those companies, says his members are already providing search engine optimization, website design, local search and other related products.
The local businesses that have traditionally advertised in phone directories need guidance, Norton says, and his members want to be able to be the ones to provide it.
"It's just gotten incredibly more fragmented and complicated," he says. "There are more choices now than ever before. As a result, the small businesses in the market today are badly overwhelmed and underserved."
The Local Search Association's member guide provides an interesting snapshot of an industry in flux. While plenty of traditional services like print ad production, tear page services and publishing systems still exist, an increasing number of members are offering website design, reputation management, mobile app development and other digital services.
"You really need to have a diversified plan," Norton says. "Consumer eyeballs are all over the place now."
One place where customers are surely looking is their smartphones, which is one reason why San Francisco-based Insequent is so busy. Insequent, which launched in early 2010, specializing in developing mobile sites for small businesses it serves by partnering with local publishers including Digital First Media and McClatchy.
In addition to mobile websites, Insequent provides SMS services and is preparing to launch an instant app builder that will allow local businesses to sell their products and promote their companies through the Apple and Android app stores. Founder and CEO Mark Porter predicts demand for this type of service will continue to grow.
"You're putting those marketing dollars where they're going to be most effective," he says. "Certainly a mobile phone is going to be a great place to put that."
The question of who will dominate in digital marketing services is on everyone's mind, and it won't be easy to answer. It's apparent, though, that the competition will be fierce. Along with the Local Media Association and Borrell Associates, the Local Search Association is hosting a mobile/social workshop in late August. Companies like Propel are hiring sales reps in markets all over the country. And Hively recently led a digital marketing seminar in Virginia that drew 135 local businesses.
"It's a great kickoff," he says. "We were signing people up immediately."
(Source: NetNewsCheck, 07/31/13)