Microsoft’s Eric Picard has a thoughtful column at ClickZ about how predictions of the death of traditional (local) media are premature:
[Analysts] seem to believe that all traditional media budgets will get eaten by digital media in the next few years. This doesn’t seem like a bad assumption. It sounds logical, after all.
But it’s completely wrong.
The report talks about dollars moving from local newspapers to online display advertising. It concludes that the trend will continue forward with ad dollars from local advertisers moving online because of diminishing distribution.
Another report I read from another analyst this year suggests that radio dollars will move to search.
Both of these conclusions are wrong…
Picard goes on to discuss the various sales challenges and disincentives to work with small advertiser budgets vs. nationals who want to do geotargeting:
Imagine this scenario: You’re a local auto dealer with $5,000 to spend annually, and you call Yahoo, MSN, and AOL. You request geotargeted inventory that will match the newspaper circulation numbers of some local designated marketing area (DMA). You won’t get a phone call or e-mail returned. There isn’t a sales force today set up to go after the local market at any of the majors online, so the salespeople you’re trying to engage with are the same ones handling national budgets that are significantly larger. If you were a salesperson on commission, whose call would you return: Ford’s national ad agency media buyer or the dealership ad manager at Sweeney’s Ford in Greenfield, MA?
Picard is absolutely right that most analyses of traditional vs. digital media are superficial in key areas. I’ve spoken to many Wall Street analysts and my sense is that they often have limited insight into market dynamics when it comes to local. However, I disagree with Picard in some respects and think there’s an irony here that he’s missed.
Picard says that local SMB ad dollars won’t shift online (as quickly as predicted) and portals/engines won’t go after them for the reasons mentioned in the excerpt above. The layer missing from the analysis is what’s happening at the traditional media companies themselves. Indeed, the irony I alluded to is that yellow pages publishers and newspapers, to an increasing degree, are themselves the vehicles of the shift of SMB ad dollars online. I’ve written here many times about the “agency” role of yellow pages publishers (and increasingly newspapers) vis-à-vis SMBs: helping local advertisers buy online media beyond what the publisher itself has to offer.
The publishers must do this to remain relevant to their advertisers, as audiences continue to fragment and migrate online. The publishers’ challenge is to manage the SMB spend and the relationship between all the traditional and online products being sold (as well as margins). Newspapers, for their part, actually can use some of these local SEM products to capture SMB ad dollars they might not have gotten independently.
Some number of SMBs are experimenting themselves with various online advertising options (depends on the industry). But a larger number of SMBs are finding their traditional advertising publisher is the “onramp” to online marketing.