Editor's Note: Tonight, in New York, MediaSpan Network will host the Interactive Advertising Bureau Innovators Roundtable, "Uncovering Value by Developing an Online Local Media Strategy."
Dawn Anfuso: How big is the local online media market?
Mark Zagorski: According to Borrell Research, if you include search and display ad sales, local websites (newspaper, radio and TV) generate over $7B from local online advertising and are growing at a 30 percent-plus pace per year. Local online is already a significant factor in a local retail and services advertiser's marketing mix and will soon be so for national advertisers looking to geo-target.
Anfuso: Local offline advertising seems to be in turmoil as newspapers continue to lose advertising and radio sales are flat. Can online replace those lost revenues?
Zagorski: It is going to be a challenge for local media to make up for the losses in revenue driven by media fragmentation since their offline products have been garnering premium CPMs for so long. The internet has leveled the playing field and increased marketing competition, making the ability to trade a print or on-air dollar for an online dollar at those high CPMs a challenge. But, it is a challenge that local media has to embark on, or else risk losing their market to Google and Yahoo!, who would like nothing better than for them to roll over and cede the market.
The key in really driving the segment will be differentiating the local property from the "locally targeted" portal, and making it easy for national advertisers to buy locally. That's where there is real money. It is something that broadcasters have done a great job doing through national ad reps for years. They just need to drive that same concept online. It is their market to lose.
Anfuso: What difference does it make to an advertiser if they reach local audiences via Google or via a local media property?
Zagorski: As they say in the real estate business, it's all about location, location, location. In the case of local online advertising the location has to do with context, geo-relevance and environment. The big portals do OK with the first, marginal with the second and poorly with the third.
Local media websites have trusted brands that have been around for decades, and have audiences that are truly "home grown." People in Youngstown, Ohio going online to read the Youngstown Vindicator at Vindy.com are people who live there, shop there and transact most of their business in that area. The advertisers that can associate themselves with the local media brand enjoy the positive brand association and true local relevance to an audience that is almost 100 percent determined to be in the DMA. Additionally, with the growth of local ad networks, advertisers can get the massive reach they want without the waste of geographically misdirected impressions.
Anfuso: What kinds of advertisers benefit the most from being able to target locally?
Zagorski: National companies whose services are either delivered locally or whose promotions vary from market to market can really benefit. The real power of local online networks is in the ability to easily deliver multiple campaigns/creative simultaneously to different geographic markets and adapt these on the fly. Good examples of these advertisers include: cable companies that have different offerings in different regions, fast food companies that engage in regional promotional roll outs and packaged goods companies doing product trials. For example, with the targeting that local online networks enable, McDonald's can promote the McRib sandwich at noon on a Wednesday on 50 local websites in the South East and a Breakfast Burrito at 9AM Saturday morning across 25 local sites in the South West-- all through a single point of contact and one I/O.
Anfuso: What makes networks like MediaSpan different from the geo-targeting that has been available to advertisers for a while?
Zagorski: Geo-targeting by portals in most cases up to now has been "fuzzy" at best. Who in the online business doesn't remember the "geo-targeting" by IP address a few years ago that had most of your online audience living in the metropolis of Vienna, VA?
Just because I am looking at a map of Pittsburgh or doing a search on my favorite team, the Steelers, doesn't mean I will be jumping in a car anytime soon to drive eight hours to sample the Roethlis-"burger" at a South Side restaurant. The ad and context are related, but the target is not relevant because I am not local.
What MediaSpan and other local networks are able to do is provide advertisers with real geo-targeting in the same way they have been buying radio and TV spot for years-- on locally branded, managed and edited properties that, due to the nature of local media promotion, attract 95 percent of their audience from the local DMA. A single point of contact can deliver multiple local media markets easily, and advertisers have the ability to slice up the audience anyway they want and deliver various messages to an audience that can act on them. They are in the market.
Anfuso: Offline, the spot business has played a part in media plans for years. Why haven't more advertisers migrated to targeting online campaigns locally?
Zagorski: Although it is getting better thanks to the education efforts of groups like the IAB, NAA and consultants like Gordon Borrell, the fact it hasn't made a greater impact to date is really due to the nature of how the segment emerged and the subsequent lack of any real history of "local online spot" buying from the media buyer side. In the broadcast world, media buyers and planners grew up with spot and working with national reps like Katz and Interep and including local in addition to network in their plans. The industry itself started locally and only later was rolled up into "networks" and "affiliates." Online has always been about mass first, with the drill down coming later. Also, up until the emergence of independent local media networks like MediaSpan and buying agents like Centro, local online was cumbersome to buy. That is all changing.
Anfuso: What are the latest trends in the local online advertising space?
Zagorski: In order to truly differentiate themselves from "geo-targeted" portals, local media sites have developed more robust sponsorships that integrate offline promotions with integrated online multimedia-- ideas that go well beyond a locally targeted text link or banner ad.
For example, Radio One, an urban radio group (and MediaSpan client) recently did a great online promotion for its annual "Dirty Awards." It involved some of the top hip-hop and R&B talent in the country and was promoted across nine local stations on-air and online. In addition to an offline awards show, they developed an online site that included photo galleries, videos and contests, all which could be sponsored by local advertisers and national advertisers looking to reach a local, urban market. Advertisers could become part of the fabric of the promotion across multiple media -- web, on-air and in-stream -- and it was a huge success.
Also, many local sites are using sports promotions like Fan Frenzy Sports games which enable national advertisers to associate themselves with local sports communities online. Basically, the trends are heading toward more online/offline integrated sponsorships that can be easily scaled so that advertisers can reach as many or as few consumers as they demand.
Anfuso: How is the user-generated content craze changing the local advertising environment?
Zagorski: If you think about it, user-generated content is really the ultimate example of the "local stringer"-- except in this case, the media doesn't even pay them! User-generated content is all about getting down to a grass roots level, to the things that matter to an individual interested in a specific niche of content or located in a specific corner of the world-- which is what community reporting has always been about. Adding the local, local, local layer to the content -- camera phone video shot of a music act at a block party, student pics of the touchdown celebration at the high school football game, et cetera -- creates a highly contextual environment for advertisers that can allow them to hyper target their promotions.
Dawn Anfuso is senior editor for iMedia Connection. Read full bio.
