Deal Site Shakeout – Should Local Media Throw in the Towel?

In one of my previous blog posts, I discussed the 10 tips to compete in the deals space.  Now I’m talking about throwing in the towel.  What gives?  Ok, a bit of tongue in cheek to get your attention.  Actually, I think now is the time to double your efforts in the deals space. Let me explain.

The deals industry is going through a shakeout but not because revenues are declining or even leveling off.  Instead, the big deals sites are continuing to grow and consolidation is beginning.  There are only so many deal sites a market can support and unless you have differentiated your product it’s tough to keep up against the big guys marketing spend.  Take a look at the overall spend by consumers on deals, the revenue in 2010 is expected to be $873 million growing to $4.2 billion by 2015.  Local media has to be a part of the dollars spent on deals or keep losing ground. These are dollars that would normally have been spent with newspapers, magazines, radio and local websites.  It is the ultimate pay for performance type of advertising.

So, it’s the time to double down, otherwise you jeopardize the opportunity to be a big part of advertising dollars spent by local advertisers.  Groupon and Living Social are off to great starts but if you look at local media sites in the deals space, in many cases they are doing well.

Three Strategies for Local Deal Sites

What is it that keeps these sites competitive?  I believe there are three key strategies:

1. Packaging

Local media can offer advertisers a much more robust advertising opportunity than just the deal itself.  Local media can put together a package that includes the deal itself marketed via email, front page print advertising, website ads, on air mentions, advertorial and even editorial discussion.  These are unique advertising and branding elements that the deals-only businesses cannot duplicate.  Local advertisers receive branding value they might not otherwise be able to afford if it weren’t for the deal offering itself.

2. Local Sales

Local media employs local sales people.  These sales people have relationships with advertisers in the market.  They live and work in the market.  The competition in many cases is calling into the market with telesales.  Local media knows it is relationships that will drive sales.  Advertisers want to deal with people they know and trust.

3. Brand Loyalty

Local media brands are already established in the market.  Unlike competitors who need to spend hundreds of thousands of dollars on advertising their brands for awareness.  Local media can spend their precious dollars growing their email and social databases instead of advertising for brand awareness.

Now What?

It’s time to ignore the naysayers and take advantage of the strengths mentioned above.  Add more deals. Segment deals into categories.  Become more effective in geo targeting of deals.  Hire more sales people.  Grow your list.  Utilize the assets you have and recognize competitors aren’t going away and they will innovate so pay attention.  Deals represent a critical battle that local media needs to win or at least participate in at a high level.

Check out one of our deal sites here.

HTML5 or Native App: What works best on mobile and tablet devices?

The mobile market has grown rapidly over the past couple of years and with the addition of tablets we will continue to see double-digit growth for quite some time, as reported by eMarketer in a recent report.

With all this growth comes a tremendous challenge. Which mobile platforms should a business pursue to optimize growth of audience and revenue, while keeping in mind associated development costs? Should you develop mobile optimized websites, native apps or most recently web apps?

Along with the mobile evolution comes HTML5.  This evolving web technology is a cornerstone of the growing Web App development effort.  Many publishers like HTML5 because it costs less than developing a native app for each mobile platform/Operating System (i.e., iOS, Android, Blackberry, etc.).  With HTML5 web apps, essentially, you build your app once and it will work across all mobile devices.

So, what is HTML5?

It is important to have a layman’s understanding of what HTML5 is  in order to assess the most optimal utilization.

Wikipedia describes it

“A language for structuring and presenting content for the World Wide Web, a core technology of the internet and as of August 2011 is still under development.”

The promise of HTML5 is cross platform development.  It is designed to deliver as close a native app experience as possible but deliver it via the open mobile web.  Since it is the web it does not matter what platform you are using. It can be accessed by any device without going through a proprietary app store front operated by a manufacturer or any other third party.  Just for clarity sake, a native app is an application specifically designed to run on a proprietary platform, taking advantage of its native platform functionality. Without the need to be connected to the Internet.  There is much more to it than that but I did say layman’s discussion.

At present, HTML5 has several strong attributes but it doesn’t offer the same functionality – and doesn’t work as seamlessly – as a native app.  For example HTML5 doesn’t allow deeper integration of the device accelerometer, camera, video and GPS capabilities.  Shown below is a table I borrowed from Worklight. It identifies specific features and shows no single approach is capable of delivering all of the benefits all of the time. Choosing the right approach depends on the specific needs of the organization and can be driven by parameters such as budget, timeframe, internal resources, target market, required application functionality, IT infrastructure and many others. Most companies today face an obvious tradeoff between user experience and application functionality on one hand, and development costs and time to market on the other.

It may sound like HTML5 is long on promise but short on actual results, while a native app delivers a better consumer experience but is more costly and takes longer to develop.

The Hybrid Approach

I believe the best way to pursue a mobile strategy in today’s environment is a hybrid approach.  A hybrid approach takes advantage of the best of both HTML5 and native app technologies to deliver apps with the optimum blend of user experience and cost/time to market.  HTML5 based web apps have exciting possibilities and it’s critical for an organization to developing expertise in this new and fast evolving technology.  But because of its current limitations it is too much of a risk to fully embrace.  The consumer experience may suffer and as fast as the market is moving you could cause harm to your business by not looking savvy to your audience and/or advertisers.

So what is a hybrid app model?  It is merging native app capabilities and functionality with an embedded browser inside the app that runs some of the user interface.  This is all transparent to the user.  You can be assured they don’t care how we get it done, they just want a great user experience.  A benefit of a hybrid app is maximum audience reach.  A hybrid app will be accessible via web search, as well as through app store distribution.

Shown below is a graphic that shows the correlation between a great user experience and the cost and time it takes to create an app.

                                                    Credit Worklight

The hybrid approach allows an organization to develop apps that employ native capabilities and functionality and leverage existing resources to minimize development cost development cycle time. So instead of rewriting code for each proprietary platform which is time consuming and costly, you can write some of the app in HTML or JavaScript (web technology jargon), and re-use it across all platforms.  This type of development opens a whole host of opportunities for the app.  You can now have an app load pages from a web site or even have some or the entire user interface in HTML 5.  Since this is a hybrid app it is still native and needs to be downloaded.  The portions of the app requiring an embedded browser will act and feel like a native app but the user will need internet access to make it all work seamlessly.

From a strategic standpoint I am an advocate of the hybrid approach.  It is not suitable for all app development needs but it does provide a cost effective solution for a wide range of apps.

Here is an article on Web vs Native App development you might find interesting reading.

http://www.informationweek.com/news/development/web/231500197

Deal Sites Galore: 10 tips on how to compete in the deals space

Not a day goes by without yet another article on deal sites: new launches, billion dollar valuations, or how they are garnering local ad dollars. For a media business, it is hard to figure out if we should be excited about deal sites or scared to death. Clearly there are some tremendous opportunities — and risks — associated with the deals space.

Groupon and Living Social have changed our world in the coupon or deals space. The numbers speak for themselves. Still, a local media business has the opportunity to become a viable competitor to Groupon and Living Social in their respective communities. Several competing deal sites will be available in most ALL communities soon, and many will be legitimate competitors for local advertising dollars. In response, local media must take what has been learned in the deals space and build a stronger differentiated deals presence in the markets served.

Finding deals that will work is the hard part. Advertisers selling food, entertainment or personal services such as spa treatments work the best. Patio furniture, mattress stores, replacement window and lawyers do not work. You will also find that in many cases the advertisers offering deals don’t currently advertise in the traditional local media space.  They tend to be businesses using Google ad words deeming the local newspaper, radio and television too expensive.

10 Tips on how to compete with in the deals space

How will your business best compete in the deals space? Here are 10 considerations that should help guide the decision process:

10. Realize that Groupon and others will be calling on businesses in your markets.

9. Differentiation: The number one thing is to differentiate your offer to local advertisers by bundling your ad space along with access to the database of names you have built.  Push the fact they get branding as well as immediate sales versus just sales from the likes of Groupon. If you don’t have ad space to include then come up with something that delivers something the advertiser can’t get from the big guys.  Also Promote you are part of the community and you want to help them drive loyal customers and not just one time visits.

8. Know going in that you need a dedicated salesperson who owns deals, and in most cases the sales are done over the phone.

7. Remember that you will be calling on lots of small businesses that can participate without plunking down one dollar upfront – a huge selling point compared to advertising without exact knowledge of what they get in return.

6. You don’t have to do a deal every day.

5. You need a champion that knows what deals will or won’t work and can say NO to sales if something doesn’t make sense.

4. Deals and the dollars associated with them are dollars often taken out of the local media budget.

3. You must create in your face marketing to let advertisers know you are in the deals business.  The big guys spend lots of dollars promoting their deals and although your business cannot compete on dollars spent, you certainly can make sure your community knows about your business.

2. Innovate and determine how you can grow beyond daily or weekly deals and into instant deals.

1. Remember that this a social media business. You need the deals shared with friends and discussed in a viral nature.

Finally remember that people are always looking for deals and local businesses are finding that using daily deal sites really does work.  If you are a local media business or just an entrepreneur looking to start a business the deals space is lucrative if you can really drive customers to a local business.  It’s not about the deal for the advertisers.  It’s about building a new, loyal customer.

photo: dealiciousfinds.com

Five steps to selling mobile advertising effectively

Mobile traffic is growing at incredible rates and advertising is following suit. A recent report from BIA/Kelsey stated that U.S. mobile ad spend is expected to skyrocket to $4 billion in 2015 up from $790 million in 2010. Who is spending all these ad dollars? According to the same report, by 2015 targeted local ads will account for 70% of mobile ad spend or $2.8 billion. It is anticipated the mobile ad spend will migrate from traditional media but also from standard online display advertising. Read more about the report here. Needless to say, anyone selling traditional or online ads better be prepared to not only sell into the mobile advertising space but also deliver products that generate results for advertisers. Continue reading

Measuring digital success beyond the “click through”

I had an interesting conversation with an ad reseller we do business with this past week. They called to check in and see how our partnership was going. Specifically, they asked why our sales seemed to be lagging year over year. When taking a closer look at our revenue, it’s apparent we are mostly selling run-of-site ads with geo targeting. Our behavioral targeting ads (which allow advertisers to focus on a niche audience based on previous website activities within a section or topic) have greatly diminished.

A common objection I’ve heard to selling behavioral targeting is that “it’s expensive and results aren’t much better than run of site or our own inventory.” When asking what metric is used to determine success for banner ads, the overwhelming response is click-through rates.

Several interesting articles have been written lately on click-through rates and how they’re given too much relevance in measuring the overall success of an online ad campaign (Click Through Should Not Matter).

The problem runs deeper than just ad click throughs.  Today most content companies measure success of the individual journalists based on uniques and page views.  Both criteria driven by ad sales.  In reality most of a content site’s traffic is driven by a small audience.  The old 80/20 rule.  Building new and expanding an audience are more critical than driving page views.  Here is a paragraph out of Columbia School of Journalism I think is really relevant.

This shows how misguided current measurement systems are. Today’s obsession with the “Unique Visitor” metric drives the advertising market —and competition among news sites. Such fixation encourages an arms race in which, by all means necessary (games, fake URLs), news sites will shoot for an increase in their numbers of UVs and for the resulting ranking improvement. This is short-sighted: loyal readers—roughly the top 10% that will generate 80% of the page views —should be the measure of choice.” (Full Article)

Some facts about click-throughs: a small percentage of people actually click on ads, and in many cases they are clicked on by mistake. Even in cases where click-throughs are expected, the ads often do not have a clear call to action to encourage such activity. When click-throughs do occur, true success should be based on actions taken, such as time spent on referred site or a purchase on a deals page – and not the click-through itself.

In the case of our partner, we are primarily using click-throughs to determine the success of behavioral targeting instead of stressing the value in delivering quality brand impressions to an audience our advertiser seeks – even if people do not click through to their website or make a buying decision right at that moment.

If a person is going to Web pages that relate to buying a car, for example, then we know behavioral targeting ads about cars will be relevant to that person. And we know these people will be more valuable to advertisers.

Getting the right people to see your ad is critical, which means we can’t give up on behavioral targeting. In other words, it’s the overall quality of audience that matters most – and not quantity of clicks. Advertisers are already shifting their ad dollars. For now, ROS display ads still rule, but according to Borrell Associates, by 2015 the lion share of local online ad spending will be going towards targeted display advertising.

It comes down to the ability of my company and the entire ad industry to change the metrics used to measure success. It won’t be easy, but it’s necessary. So how can we address the problem?  We need to identify a core group of advertisers that are forward thinkers and see the world as something more than traditional page views and uniques.  We then focus on engagement factors with an audience they seek.  We create metrics around time spent with content and driving interaction.  There will need to be specific actions we seek that relate to an ultimate purchase or interacting with brand.  Ultimately we will need to show the advertisers insight about the audiences they are seeking.  As long as we show a level of engagement and specific actions were driven, we should not get into a page view and uniques discussion.

Specific to our own efforts with an iPad app we are seeing high engagement, especially with our feature stories, which are unique for the iPad.  We consistently see users spend more than 2 minutes per feature.  There are several studies that suggest people spend a lot more time with content on the iPad, here is one of them as reported by PaidContent.com.  As it relates to ad engagement on the iPad, the story is the same.  Here is a case study about a successful iPad campaign for Land Rover as reported by MobileMarketer.com.

I know it sounds foreign, but if we don’t move in this direction then we will forever be selling at a lower cpm ad unit.

(Photo courtesy of Davide Cassanello)

Can Traditional Media Companies Ever Become Non-Traditional?

How many times have you heard about traditional media companies having their lunch eaten by digital start up companies?  How can this be? Shouldn’t “traditional” companies be well positioned with an established business and loyal customers?

The primary reason is they focus too much on tradition and business models of the past.  Start ups look to fill in gaps that traditional companies leave exposed because they are usually not core pursuits.  Once the start up steals business the traditional business tends to think of the lost business as a small subset of the overall business.  The vicious cycle begins and the business begins to erode first by incremental losses and ultimately leading to significant losses.

So how does a traditional media company become non-traditional?  My hope is to discuss the many aspects of this effort over the course of several blog posts.  This particular post will be discussing an acquisition strategy versus a transition strategy.

Acquisition strategy versus transition strategy

From the late 90’s up to today most of the strategies related to digital content have been around re-creating experiences of core print products online.  Even with the advent of smart phones, much of the same information in print still act as the base for efforts online and in mobile.  Many of the new iPad products coming out of newspaper and magazine businesses are closer to replica editions of the print product than they are truly innovative.

Here’s what Damon Kiesow from Poynter Institute had to say:

So far those opportunities have gone largely unexploited as media companies try to figure out exactly what tablets are good for. As I noted last month, most of the U.S. newspaper apps to launch recently on the iPad are replica editions — basically PDFs of the printed product. While there may be a small audience for these replicas, this is a transitional model at best and will do nothing to build new audiences on tablets.

Likewise, many interactive newspaper apps are a lot like print products — but not necessarily in a good way. Apps from USA Today, The Wall Street Journal and The New York Times are well designed, but they still offer the same type of content as in print, with a similar look and feel.

The Augusta Chronicle ipad app from Morris Communications is an example of a replica edition.

With the ever declining subscription base of business and the disdain for newspaper and magazine print products by our youth, focusing on transition is a one way street with an uncertain ending.  I believe traditional media businesses need to use digital strategies as a way of acquiring a new rather than transitioning old audiences.  I’m not saying that transition isn’t important, but it does not address the need for new audience.

The pursuit of a younger audience

With the launch of the iPad, a major opportunity has presented itself in terms of gaining new audience .  The primary age group purchasing iPads is 35-45.  The second largest group is 25-34.  Both of these age demographics are not large users of print products especially newspapers.  Building a content experience around the iPad and a younger audience is exactly the pursuit required in traditional media.  If successful, it rationalizes building products based on an audience and not around a one size fits all strategy.

Elements of an audience acquisition strategy

So what does it mean to pursue audience acquistion strategy?  Without getting into every detail, there are two key areas to pay attention to.

Content:

The most important item is content.  Our research has shown that the younger demographic likes much of the same information as an older demographic but the level of importance is different.  Subjects like things to do, celebrities and photos are much more important than local politics.  Traditional topics such as commentary, classified ads and obituaries don’t even have a place in the product.

Once you have the content in place for the audience you seek you now need to make sure it is written with some text but in many cases a photo library or video will do more to tell the story than printed words.  It should also be noted that in many cases the type of content required may not be readily accessible from your own content centers.  You have to be willing to license content from other sources if you really want to build content specific to an audience.

Technology:

Another area that is critical but sometimes overlooked is the experience the audience has with the technology.  If we are talking about iPad, the expectation is for a robust experience inclusive of video, audio, photos, text and interaction with content.  A pdf just doesn’t cut it.

As mentioned these are just a few high level considerations, but just thinking through the impact to a traditional media company is complex.

In the end, the most important aspect of any strategy is business growth.  Growth has to include increasing audiences.  In these early days of the tablet, moving people from print to online and tablets is important but not as critical as grabbing new audiences. We have a clear opportunity to be the first mover before the well funded startups get going.