The following is a guest posting from Peter Krasilovsky, program director for The Kelsey Group. NAA executives attended Drilling Down on Local: Marketplaces earlier this month.
At the Kelsey Group, we have just concluded our latest conference dedicated to the future of local advertising: Drilling Down on Local: Marketplaces. Held in Seattle April 29 through May 2, the three day extravaganza attracted 476 executives, including a larger number of newspaper executives than usual – maybe 20.
It is always interesting to us that these high level conferences never get very many newspapers to attend. It might be because they tend to focus on subjects that don’t have immediate currency to newspaper revenue streams, such as the development of local search and multimedia, and best practices for online sales.
But this conference was more of a direct hit for newspapers: In addition to the usual suspects from search engines, directories and Web 2.0 companies, it featured a number of newspaper leaders, including Rob Barrett of The Los Angeles Times, Patricia Lee Smith of The Seattle Times, as well as a number of people who have been closely associated with newspapers throughout their careers, including Mitch Golub of Cars.com and consultants Merrill Brown, Greg Swanson and Jim Townsend.
Additionally, the theme of the conference was certainly newspaper friendly: the transition of classifieds into “marketplaces.” Kelsey is forecasting that 24 percent of interactive advertising will come from verticals and classifieds by 2012. Especially critical to this trend is the de-evolution of single products into verticals, singled out by Gannett’s decision earlier this year to break up The Cincinnati Enquirer into 244 vertical units.
How we get there, and who gets the dollars – they won’t all go to newspapers – is where much of the discussion headed.
Barrett set the tone from his opening comments. The Times hasn’t always stood out in its online efforts, conceded Barrett. But he sees online accounting for half of The Times’ cash flow by 2011, and 20 percent of total revenues.
The key will be to leverage the newspapers’ natural skills in community and storytelling to create local mash-ups germane to the “800 neighborhoods” in the L.A. area, as well as big topics associated with the paper’s editorial specialties, including entertainment, car culture, the environment and immigration.
Barrett noted that each of the local and vertical subjects will be driven by a super focus on search engine optimization. “If you see our content, it’s probably because you Googled something,” he said. “Hopefully, in the future, you’ll see it because you went there directly.”
Golub, president of Cars.com, also hammered home the vertical theme. Generally speaking, Golub noted that vertical sites have a major advantage over other publishers: “Consumers love our advertising.”
Golub was especially delighted that newspapers are finally betting big on vertical sites such as Cars.com. But it might have been better if all along, they’d been investing “3 to 4 percent of their revenue” in R&D. “The L.A. Times didn’t do this three years ago,” he said. “They didn’t have to.”
The focus on newspapers is also insurance for newspapers against the likes of Google, Golub said. He noted that the search giant doesn’t constitute a real threat to newspapers because it isn’t really positioned to do much selling at the local level.
The challenge for Google is the sales component. It can do back-end reporting, but won’t get far without local sales staff,” said Golub. This is something that newspapers and their affiliated verticals can really take the bank. “We don’t have 700 sales people because we want to have 700 people,” he said.