The battle for local: The players
Don Day August 17th, 2008
With LR’s new focus, I wanted to lay out the landscape in “the battle for local” - and look at some of the strengths and weaknesses of each.
Local TV
In most markets, four to eight television stations compete for on-air revenue. They traditionally knew who their competitors were and focused on on big advertisers like car dealers and furniture stores. While their core business is still fairly healthy, dark clouds loom as the economy lags, viewership erodes and local ad dollars become increasingly competitive. Online, TV stations aren’t known for being very innovative. Stations are running their sites much like they did eight to ten years ago: text news, video, weather and traffic — a direct reflection of what they cover on the air but with a greater emphasis on around-the-clock breaking news.
Local Newspapers
Local newspapers used to subsidize their news gathering not with the ads that ran next to the news stories - but the small text ads in the back of the paper known as classifieds. Now that model is nearly dead, and newspapers are having to find new ways to fund the paper while trying to get agressive online. On the print side a vicious cycle is in place: fewer ads leads to less content — which leads to fewer ads and so on. Newspapers are becoming labs of online experimentation. They usually have much bigger staffs than TV stations and are willing to leverage the body count to try new things. Some of those efforts are working, but newspapers are far from finding the silver bullet on the online side, and as a consequence are rapidly shrinking.
Local Radio
Local radio continues to reach a large number of folks in a place few other media companies do: the car. Morning drive is still a cash cow for local radio folks. But satellite radio, iPods and in-car navigation (with built-in traffic reports) are beginning to threaten that dominance. With Wi-Fi and other Internet sources becoming more plentiful, IP-based devices could become common-place in cars, splitting open the number of choices in your vehicle. As a general rule, radio stations don’t do much online. Some info about its personalities, maybe an audio stream and a blog - but nothing to hang your hat (or ad dollars) on.
“GYM” Google/Yahoo/Microsoft et al
By rounding up lots of small advertisers with small niches, Google and its ilk are taking a huge portion of the local pie — mostly without local boots on the ground. Google does it without generating much of its own content, and offers automated tools to help advertisers mount a very effective ad campaign in a simple way. These companies spend great amounts on R&D and are always evolving and finding new ways to get their hand in the local pocket. Of course, it’s all fueled by search: increasingly the most popular way people research local products and services.
Craigslist and paid classifieds
The classified site takes its share of local revenue not by pocketing it, but through price desctruction. The minimally-staffed free classifieds sensation has decimated the newspaper industry, and only charges for ads in a few markets. As the site continues to grow larger and push into more markets, it will continue to put the squeeze on the print industry’s cash cow. Despite what you read, it isn’t all sunshine and roses. Craigslist is often in the news because its freewheeling ways breed illegal activities. Everything from prostitution to theft and more started from an ad on Craigslist, and some are starting to see it as a seedy part of the Internet. This could threaten dominance if someone comes in with a way to clean up the “junk” so to speak. Meanwhile, the battle continues among paid classifieds, with many newspapers teaming with Yahoo’s Hot Jobs and sites like Zillow making a real run at real estate from a unique angle.
Pure play locals
Small sites like the West Seattle Blog or big efforts like Everyblock hope to become the hub of local information and activity in ZIP code size ares or smaller. They threaten to do a better job covering areas than the local paper or TV station ever will, and could unite hyperlocal advertisers with users in the area. These sites give advertisers a choice beyond direct mail to target a small area, and could continue to draw ad dollars away at larger and larger rates. The sites often do this with no or small staffs, relying on the local community and public sources to provide content. There are also dozens of local niche sites, like Metblogs and Daily Candy, that also capture local eyeballs and ad dollars.
City guides
City guides like CitySearch have been around for a decade or so, but for the most part haven’t had a huge impact. This could change if the hyperlocal revolution we’ve been talking about comes to pass. If they aggressively aggregate into smaller and smaller (even neighborhood size) areas — and gain traction selling local video — they could begin to draw away traditional ad dollars. Yelp, meanwhile, is growing very quickly in reach and performs very well in many strategic search keywords.
Yellow pages and other directories
Everytime one of these stacks of paper-waste lands on my doorstep, I get annoyed. I lug the dumb thing to the recycle bin, and marvel at how strange it is that I get four or five a year. The Yellow Pages publishers have done a nice job of convincing advertisers that they must be in every book to reach the market. Of course, most folks now get their phone information online or on a mobile device. YP publishers are beginning to get aggressive online, capturing strategic search keywords and leveraging their large local sales forces to sell both print and web products. And directories like Local.com and Angie’s List are making progress, as well.
Alt weeklies and local magazines
Traditionally weak on the web, alternative weeklies are showing some signs of life in many markets, especially in the local music niche. The Stranger’s “Slog” in Seattle, for example, is the market’s most popular blog. Local magazines are beginning to realize their “best of” features extend naturally to the web as local online directories. While many magazines are rich in many advertising segments in print — such as travel and condos — they’re not converting those advertisers very well to the web (and may not want to, given the fact local magazines are less impacted by the internet than other print forms of media).
Outdoor
Billboards are undergoing a digital revolution of their own - but it has little to do with the Internet. Old paper signs are increasingly being replaced with giant TV screens that can be used to display multiple messages to the cars and pedestrians zooming below. The messages can be day-parted and place much more quickly, often at a smaller cost than buying the old paper style board. Plus, advertisers can change their message at a fraction of the cost. As long as people venture outside, billboards will likely to continue to be a force in the local advertising market.
30 Comments Add your own
1. Mike | August 17th, 2008 at 12:20 pm
Radio, as a medium, is a bit stronger than you give it credit for. 90+% of all Americans listen to broadcast radio every week. Satellite radio is not the threat. With only about 25 million total subscribers, Sirius/XM continues to bleed and there’s no current profit prediction. The most popular channel that satellite has, XM’s 20 on 20 has according to an XM commissioned Arbitron study, about 1.3 million weekly listeners—nationwide. That is less than half of New York top 40 station, Z100, which the new PPM shows has in excess of 4 million weekly listeners…and that’s just in New York. The explosion of online listening in the US over the last couple of years is due mainly to the full compliment of stations from Clear Channel and CBS becoming available online. So listeners have flocked to their favorite terrestrial station’s stream…not to internet only broadcasters, who usually have no commercials, but offer not much else. Sure there are those niche, genre stations that occasionally generate some listenership, but the big increase in online listening according to multiple tracking services has come from over the air broadcasters’ streams. And the agressive moves both Clear Channel and CBS has made (CBS/AOL parternship, for example including their iPhone app) are indications that radio is starting to understand, that in the future, stations will be brands, not just an over the air signal. When WiFi become ubiquitous in the car, radio stations content will be ready to follow them from fm receivers to WiFi receivers.
2. mako | August 17th, 2008 at 2:49 pm
TV stronger too, as it has spectrum and a mega bandwidth digital pipe–much of which is about to newly be put to additional use and newly monetized. As witnessed in the FCC 700 MHz auction proved, many of the (not TV) players above want/need/desire what broadcasters have–spectrum.
3. Don Day | August 17th, 2008 at 2:55 pm
I actually think that radio is the strongest traditional media - and I also gave it a ton of credit. But there is a BIG threat out there from several fronts… and in many markets, the “big” local websites reach more people than any radio station.
4. tdc | August 17th, 2008 at 3:08 pm
just stopped in for a minute before heading out to dinner…
WOW! it looks like you put a load of effort into this post, don!
nice job!
i’ll look forward to reading it after some gyro and saganaki.
opa!
5. Emmett Flatus | August 17th, 2008 at 3:14 pm
In Local TV graph…please change there to their.
6. Amanda E. | August 17th, 2008 at 4:43 pm
Local TV isn’t going to make any great strides online and will trail behind until there is a cultural change and station groups realize there is a difference between developers who can create all these gee whiz web sites and web producers who can manage them. You cannot have one without the other.
I see ads online from TV stations all the time looking for folks “walk on water” when it comes to their online goals without understanding what they are really looking for - most want both a back-end developer who knows every language under the sun and journalist in the same body.
You are not going to find those mythical people and the rare ones who do exist are not going to work for starvation TV wages when they can take their skillset elsewhere. To put it in TV terms, most stations (not all of course) treat online development of these websites that you all lust over that are featured here like taking a broadcast engineer, handing them a microphone, notepad and a photographer and saying “guess what, your job description now including reporting on-air”.
Not to mention the fact that most web developers out there do not even have college degrees - keep on harping on that required J-school degree in your online ads and folks who can produce the content backends you dream of are not going to bother applying.
(disclaimer, yes I am a web developer, and yes I work with a local TV station on a freelance basis)
7. Dan | August 17th, 2008 at 5:12 pm
Amanda,
I believe you hit the nail so directly on the head,
you are the Michael Phelps of this comments section.
And I believe you can extend the comment to include
newspaper and radio sites too. Radio sites are the
worst sites I’ve ever seen with little or no idea what
they want the web viewer to actually do.
Dan
8. Rex | August 17th, 2008 at 5:53 pm
Good post. One quibble:
I would have broken down “Pure play locals” into three categories:
+ Local one-offs (West Seattle Blog, Minn Post, etc.)
+ Large local blog networks (Gothamist, Curbed, Metroblogs)
+ Aggregators (Outside.In, Topix, Everyblock, HuffPo Local)
Clearly, my thinking is that several of those sites have the best chance of breaking through with models that could overcome the others.
9. Rob | August 17th, 2008 at 6:45 pm
I think this sort of fits in to what Rex was saying about breaking out pure plays. To his list I would add:
+ Niche Social Networks (Mom-centric sites)
+ Niche News (LIN’s political sites)
Also where should local universities fit into this mix? In my market area we have five universities, all with journalism departments, all of which have an online presence. There are occasions where we’ve gotten video and updates from college crews (Especially @ party and riot prone WSU). Do we count - or discount - college journalism sites in the local markets?
10. George | August 17th, 2008 at 6:59 pm
We are naturally a progressive society which means the internet will progressively steal market share wherever it can compete with an offline product. Every business owner will need an internet marketing plan.
Jippidy.com - Video Yellow Pages
11. Safran | August 17th, 2008 at 7:36 pm
Well said, Don! An excellent recap. I will say that I am impressed by the CBS Radio sales efforts. (I listen to radio in the car - just not music.)
Amanda has very succinctly put into words the difficulty of innovation online at TV stations. Previously, we were willing to work for peanuts, because we all wanted to “work in TV.” So a person with a college education AND a Master’s would take a starting salary of $20,000 (or less) to produce, report or direct. If you wanted to be “in TV,” the system was set up this way. It wasn’t like you could go work at Bank of America at $100k and then get a job as a business reporter. (Although that would have made perfect sense)
But with the Web - it’s different. Skilled Webbies want to work “on the Web” not “on the Web on TV.” And the Web is willing to pay actual, real going salary rates. So a talented, creative Web person looks at their options out of school and sees companies willing to pay 3x what TV stations, newspapers and radio are (or more) - for the exact same work.
Explain to a 22-year-old Web genius why she should pick you over a different online company. And the answer has to be more than “we do better journalism.”
12. Tony Courtwright | August 17th, 2008 at 7:44 pm
Good job Don. I think Mako makes a great observation too.
I agree the digital spectrum will strengthen our opportunities to extract new revenue from home, on mobile and over the Internet.
I also have my eyes an on entirely new field of players that provide local consumer experiences and compete for local dollars. Telcos, cell providers, device manufacturers, cable, dbs, Muni Wi-Fi/Wimax, and VOIP services. All are in the same battle to deliver local data & video. All have platforms that can provide local advertising and subscription based revenue models.
Don - Remember the good old days when the paper kids across the street were the only bad guys in town?
13. nico | August 17th, 2008 at 8:33 pm
great post and feedback.
in the online space there is untapped leverage for radio stations to take advantage of the fact that thier audience is primarily local (their stories dont get picked up by drudge, fark, etc) and thier demos are strong and easy to target (ie hip hop, country, oldies, conservative, liberal, etc). Radio does not have to worry about competing with the internet so they got a late start but they will figure it out. in tv our demos are broad and audience roughly 50% local. if i were selling local radio online this would be my story.
satellite, ipods and whatever comes next will continue to erod drivetime radio #’s….there is no apples to apples analogy but what is happening to radio today is similar to how cable came in and began to take audience share away from network tv.
I am 31 yrs old and have both satellite radio and ipod in my car and have not listened to local radio in over a year…many of my friends and family are now doing the same.
14. Ethan Stock | August 17th, 2008 at 11:08 pm
Nice stab at a complex space. You might want to include couponing (ValPak etc.) as a multi-billion dollar segment of incumbent media that you skipped; and also in the ‘unmentioned billions’ category among incumbents is local cable, distinct from local TV/broadcast — they sell their own ads for a % of slots.
You also skipped nearly every interesting startup in the local space, but I assume that’s coming in a separate post
- Ethan
15. TR @ WSB | August 17th, 2008 at 11:15 pm
Nice overview. Another suggested addition for the future - it’s sort of in the vein of your “outdoor” at the end - video screen advertising in indoor venues. We have done a bit of advertising through Ripple, which offers availabilities in a few local coffee shops. Also regarding other comments about how to break out the category our site is in, “pure play locals” - the interesting thing is that some of them are dependent on the rest of us. For example, outside.in would have almost no content for its pages in our zip codes if not for us. (We’re not a “single zip code or smaller” by the way - ours is the geographically largest “neighborhood” of Seattle and we actually cover four zip codes!)
16. Rod Overton | August 18th, 2008 at 12:07 am
Great overview — and an excellent primer for some of our GMs and publishers who throw around terms that we have to then pretend to not laugh at…
You know, they make such ridiculous errors, but you are trying to win them over, you don’t quite want to correct them (or laugh out loud).
Good reading for all. It will become a “most emailed” item — and a key for follow-up visits where GMs/pubs clearly don’t get it, but you need to “guide” them a bit (without ever saying they are wrong — that sadly never works).
17. Bob W | August 18th, 2008 at 5:45 am
Echoing the other comments — great summary of the local media landscape.
Four suggestions to consider for future updates, two of which you touched on briefly:
1. Vehicles/cars/autos
2. Housing
3. Jobs
4. Online citizen journalism
Vehicles, housing and jobs may each be worth a separate paragraph in future updates because of the amount of money involved in those categories and the importance of each category in most individuals’ lives. Many larger newspapers in the past had separate classifieds sections for each of the three categories.
The online citizen journalism topic may be worth a paragraph because of its potential for capturing large number of visitors who are in the target market for many advertisers.
Looking forward to future blog posts!
Bob W.
18. kenc | August 18th, 2008 at 6:20 am
“…Of course, most folks now get their phone information online or on a mobile device…”
Not sure what you used ot form that opinion as they werte referenced nearly 14 billion times last year. Why wouldn’t a small business want to advertise where there ready to buy customers are looking???
19. Elena | August 18th, 2008 at 7:17 am
Now that its possible to buy and target internet radio ads with the same ease of paid search or other DIY online platforms, doors open for advertisers who might not want or need broader reach of terrestrial or just prefer to do it all online. Very important for local.
20. tdc | August 18th, 2008 at 7:18 am
it’s deja vu all over again…
local tv is about where local papers were 3-4 years ago. remember when mcclatchy thought buying knight-ridder was the cat’s(|)? sam zell didn’t buy the tribune because he wanted a heart condition, did he? and dean singleton’s buying spree was heralded as reinforcing the ‘value’ of franchise. remember?
yes, it’s about time we see local tv station groups buy some stations around the country at over-inflated prices just to justify their own.
we’ve been here before.
and what’s with that follicly-challenged caucasian jz billowing about a ‘watershed moment’?
i guess it’s his version of whistling past the broadcast tower.
21. wtf | August 18th, 2008 at 7:37 am
wow.
@Mike & mako: LOL.
@Amanda & Safran: Hallelujah!
One side note to Amanda though, we don’t really care about journalism. It’s all about the Benjamins. That whole journalism thing is (a) marketing to make us still seem relevant (b) justifications from newsroom managers not to have staff cut.
Aside from that, I’d like to re-post your message again here because it’s that important:
======
6. Amanda E. | August 17th, 2008 at 4:43 pm
Local TV isn’t going to make any great strides online and will trail behind until there is a cultural change and station groups realize there is a difference between developers who can create all these gee whiz web sites and web producers who can manage them. You cannot have one without the other.
I see ads online from TV stations all the time looking for folks “walk on water” when it comes to their online goals without understanding what they are really looking for - most want both a back-end developer who knows every language under the sun and journalist in the same body.
You are not going to find those mythical people and the rare ones who do exist are not going to work for starvation TV wages when they can take their skillset elsewhere. To put it in TV terms, most stations (not all of course) treat online development of these websites that you all lust over that are featured here like taking a broadcast engineer, handing them a microphone, notepad and a photographer and saying “guess what, your job description now including reporting on-air”.
Not to mention the fact that most web developers out there do not even have college degrees - keep on harping on that required J-school degree in your online ads and folks who can produce the content backends you dream of are not going to bother applying.
(disclaimer, yes I am a web developer, and yes I work with a local TV station on a freelance basis)
22. Jim Carr | August 18th, 2008 at 10:19 am
Amanda: You hit the nail on the head! BTW, are you available for contract development work?
23. David Johnson | August 18th, 2008 at 10:50 am
FOLR (friend of lost remote) adrian holovaty, the closest thing to a rockstar programmer journalism has, once said that the other thing that kept him in journalism aside from journalism itself, was that he would just be a normal programmer in the pure web/tech world. but, in journalism, he had more room to be a star and felt his work had more meaning.
i paraphrase, but hope i represent his sentiments.
adrian is a journalist and a programmer. he’s changed the world with his work. is there an advertising programmer out there who can help make sense of this before it is too far past too late?
24. Rick Ellis | August 18th, 2008 at 1:36 pm
Amanda makes a great point about the number of outlets looking for the programmer/journalist combo. Ironically, what most local news sites need is someone with journalism experience who also understands advertising, SEO and business development.
The bottom line for any site is that it is “all about the Benjamins.” You need to have someone around who has an appreciation of journalism, but can also think of effective (and profitable) ways of respecting the news, but selling the site.
I’ve just begun to dip my toe into some freelance consulting, and that seems to be the strongest need I see in most sites. The need to have someone who can balance the editorial, sales and user interface sides of the business.
25. Amanda E. | August 18th, 2008 at 1:41 pm
The other issue you all have to realize is that these sites such as NewsVine, EveryBlock, Twitter, etc. have been funded to the tune of millions of dollars via grants and outright venture funding. Unlike KZZZ in West Midland, America, they don’t have to worry about making ends meet via advertising.
@Jim Carr
Wish I could say yes, but my other job that pays the bills gives me very little free time to pursue outside interests.
@David Johnson - Holovaty’s interview in OJR pretty much says it all on how to make a major head-way on the web:
“Hire programmers! It all starts with the people, really. If you want innovation, hire people who are capable of it. Hire people who know what’s possible. And once you hire the programmers, give them an environment in which they can be creative. Treat them as bona fide members of the journalism team — not as IT robots who just do what you tell them to do.”
26. eric | August 18th, 2008 at 5:16 pm
you left out one big local player, cable tv. with new technology, addressability targeting, etc.
ive got to believe cable is well positioned for the future.
cable has to get ‘more local’ like everyone else, but with
tv, dvr, cable access, phone and future wimax delivery they
have the spectrum of tools to be very dangerous to
other traditional media.
27. Rod Overton | August 18th, 2008 at 7:41 pm
I think where Adam H.’s argument seems to fall apart is in TV station web staffs in markets over, say, 50.
The problem is that a station can really only “afford” (take that how ever you will — I’d say they should be able to afford more, but this is all corporate digital folks can GET them to afford) is about 3 or 4 staffers for online (that is a mix of sales, tech or journalists)
The problem with 50+ markets is that it becomes really hard — and extremely difficult in markets 80+ — to find the RIGHT (and competent) person that Adam proposes….
The other problem is that job eats up one of the 3 or 4 FTEs. If you have a common/centralized IT “solution” or provider already in place, then do you really need a local IT person taking up one of those precious local salaries?
No.
I’ve seen many, many, many scenarios where GMs are dying to hire the “cool, hip, programmers” that “let us really do whatever we want.”
When in reality, you NEED to be doing more of the fundamentals well. And, hiring more of a journalist — and letting the central/vendor provide technology — will instead amp up your content and drive an audience.
My last personal experience with seeing Adam’s plan not work, is that in markets that are small, you only have one of those web tech “people.” When they leave — and they will eventually — you are TOTALLY dead in the water. Game over. For months. Or longer.
Essentially, in small markets (which make up a LOT of the markets), the lack of overall talent, the depth on the “bench” at the stations and the possibity for centralized/vendor scalable tech “solutions” makes the concept of hiring pure tech guys (who may or may not know anything about journalism) a real problem in reality.
Sadly, I suffered through a great case study and will leave out names and call letters if I need to explain this further…
28. Rod Overton | August 18th, 2008 at 7:48 pm
Oops.. I put “Adam H.” in that entire post when his name is actually Adrian Holovaty.
Apologies to him and the folks who posted his comments.. I obviously meant Adrian…
29. Don Day | August 19th, 2008 at 10:06 am
Names or call letters not needed…
30. Anonymous | August 21st, 2008 at 5:40 pm
Shouldn’t you need to disclaim that you are owner and moderator of Idaho Radio (idahoradionews.com) and work as an internet media specialist for KTVB.com, a Belo station as well being the co-owner of DayPower Media?
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