Why big digital won’t win local business advertising

If you are a local business and you want to advertise, where do you advertise these days?

It’s a great question. And one that many people are rushing to answer, because your advertising dollars – dear readers who are local businesses — represent billions of dollars in revenue for  advertising agencies or  media companies.

But for the small or medium sized business owner, this question is daunting. While you’re minding your business and budget, your advertising options are rapidly changing.

Your mission is to find out where your customers are hanging out these days and why.

Nearly every day of the week, you can see the knowledge — and confusion— advancing in this sphere.

This week, much-read newspaper world observer Newsosaur, issued a warning to local media companies that digital giants such as Google, Amazon, Facebook and Microsoft will be making a fierce push into their territories. Meanwhile, just today The Pew Internet and the American Life Project released its complete report on Where people go to learn about restaurants and other local business. I reported on an earlier phase of this research in October.

Among Pew’s findings:

People looking for information about local restaurants and other businesses say they rely on the Internet, especially search engines, ahead of any other source. [51% of the 55% of adults surveyed who say they seek this info.]

Newspapers, both printed copies and the websites of newspaper companies, run second behind the Internet as the source that people rely on for news and information about local businesses, including restaurants and bars. [31%]

And word of mouth, particularly among non-internet users, is also an important source of information about local businesses. [23%]

Let’s not forget the ·8% who rely on local TV, either broadcasts or websites. The study also found that a rather upscale 60% of adults say they get news and information about local businesses other than restaurants and bars. Of these, 47% say they rely most on the internet, ·30% turn to newspapers, 22% rely on word of mouth from family and friends, 8% rely on local TV and 5% listen to the local radio.

So this data shows that folks are looking for local businesses first on the Internet and then with traditional media, i.e. newspapers. [And hey! Google could be taking fun-seekers to a news site or listing] But that doesn’t mean that the big digital players are necessarily the winners in the advertising game, says Gordon Borrell, head of Borrell Associates, whose expertise is  local advertising.

“There’s never been a case where an out of town media company – somebody without a physical presence in a local market – has been able to get and sustain a significant share of advertising dollars, “Borrell says.

“They can make the predictions all they want about Yahoo and Google coming in and stealing market share,” Borrell says. “ But in the end it will churn out. “

The big digitals are the bogeymen, and they won’t win the game,” says Borrell, who admits with pride that his firm “is pretty steeped in following the money.”

One  winning trump card is physical presence in the local market vs.  telemarketing.

Did you get a call from Facebook last week? I did. They are willing to stand at my side, virtually, and hold my hand for a full month so I can better learn to build my business on Facebook. All I have to contribute is – cough! – $2000.

And those telemarketing calls will be their downfall. Borrell says that local advertising tends to be sold, not bought. Big digital’s ideas of self serve and telemarketing just won’t pan out.

He attributes that to local businesses and their bad case of the John Wanamaker syndrome: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”

Local businesses don’t know what kind of advertising is going to work. They’re too busy flipping pizzas, selling haircuts and facials and in general paying the bills.

So they might try the next new thing — buying keywords etc — for a while, but Borrell says his experience tells him these forays generally don’t work.

That makes sense to me. I’d rather toss my dime to the ad rep who reads poetry on his Friday night at my local café than to the ad rep calling from Mountain View, Calif. It’s always been the case that local connections are more persuasive. We like our neighbors to have food on the table .

Borrell cites two other reasons Big D will fail.:

1) Self-serve ads don’t work.

2) The big digitals would need a massive workforce.

Of the 91,000 local ad sales reps in the country, about 27,000 work for newspapers, Borrell says. Pure play Internet follows with 15,000, Radio follows with 17,000 and behind radio are directories like the  Yellow pages with 14,000 sales reps. Reps for Cable, TV and misc. sources make up the 18,000 difference. [Figures revised 12/15/2011]

Sources: U.S. Bureau of Labor Statistics, November 2011 © 2011 Borrell Associates Inc.

These 27,000 sales reps walk the walk and talk the talk of local, because they are local. As such they are trusted and highly influential. Over time, despite their ups and downs, local media brands are still the most trusted. And they are rapidly adapting to the Internet.

“I was talking with Warren Webster , the CEO of Patch, when he was on a panel I had set up,” Borrell said. Borrell asked Webster what local media companies have that he wishes Patch had.

“Webster said: ‘I wish I had their brand,’ ” Borrell says. Despite Patch’s physical presence, none of its sites are profitable, he added.

Borrell believes that in the digital sphere, events will roll out as they did with cable, with TV and with radio. In the end, local media/newspaper companies are adapting to the digital world and will win because of the strength of their brands.

“History is repeating itself,’ he says.

That’s one opinion, at least. More to come.

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