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Digital ads ain’t about banners and boxes

The web atomizes news, shatters it into its smallest pieces, and forces each and every one of them to pay its own way, to compete in a massive, unregulated, freewheeling marketplace.

Most of our bits can't. Compete, that is.

The basic economic model of most newspapers is based on bundling — content and audiences. We  bundle disparate content (bridge columns and court reports)  in order to bundle a larger audience (card players and voyeurs) for delivery to advertisers. This is a model that's worked extremely well for over a hundred years; the incremental costs of adding new content - and thus new audiences - to the bundle is slight, once you have your presses and trucks and newsroom and business department in place.

By now we're all familiar with how hard that model has been hit on the news side: we now that the barriers to publishing information are minimal, the cost is virtually nil and the supply of information has swamped demand. The not-surprising result is that it's damn hard to sell news and information.

Less talked about - by journalists anyway - is how this atomizing effect of the web has hit advertising just as hard.  Oh, we all know about Craigslist and Kijiji and the amazing shrinking classifieds, but when I talk with journalists and ad sales folks and even some publishers, there's an almost willful blindness about what's going on: No one can deliver local advertising like newspapers; Google can't hand out flyers with block by block precision like we can; Yahoo doesn't have the local relationships our sales staff have; Most of our clients don't even have web sites; etc. etc. etc.

All true. And all beside the point.

The truth is all the advertising jobs the newspaper did for its community have also been atomized by the web - each and every one of them must now stand on its own and compete in a massive, free-wheeling, unregulated marketplace that has exploded the supply and taken a pile driver to the price.

Digital competitors - brand new businesses keenly focussed on just this one bit of advertising - are being built every day. And many are succeeding.

Search advertising is the most successful because it's coming the closest to really meeting needs — you're looking for flycasting reels? Have I got a deal for you — with a phenomenally low entry cost for advertisers. But much of these are new businesses, middlemen that sprang into being to take advantage of the opportunities this new medium presented.

Slowly but surely other forms of digital advertising are emerging: recommendation-driven directories (Homestars.com); coupon clipper sites (Save.ca); deal sites (RedFlagDeals.ca); and of course a hundred, a thousand different business directory sites. (These are in addition to the obvious job, auto and real estate 'verticals'.)

Community newspaper chains have been the quickest to realize the money in digital doesn't lie in selling space on news web pages - it lies in using digital technology to meet very specific needs.  Metroland has a clutch of these new digital products: Flyerland.ca, DailyWebTv.com, and their Yellow Pages competitor, Goldbook.ca. Transcontinental is aggressively rolling out it's own local directory - offering local businesses a web site, video, locator maps and customer feedback for one low monthly price - at LocalWeb.ca.

One concept I see enjoying real growth is the daily deal, services offered by sites like Groupon.com and TeamSave.ca. Subscribers receive daily graphic emails offering pretty attractive deals on (usually) discretionary spending - buy $50 for of food and drinks at Steak House X for just $25. The deal is offered for one day and there needs to be a minimum number of takers for the deal to be  "unlocked", which encourages subscribers to spread the word. TeamSave.ca is paid a commission - typically close to 50 per cent of the coupon price, and the advertiser gets a very clear return on investment. 

This is an area most newspapers could excel in; they already have the relationships with local businesses and with readers, they just need to quit selling banners and boxes and see the opportunities that all these new digital competitors are finding every day.

Worth Reading:  NewsPaper Next - An American Press Institute research project offering new business model, and non-traditional growth opportunities. 

Tool Tip of the Month: Creative Suites 5 - If you're spending time and money doing close crops and blow-outs and any kind of photo illustrations, the newest release of Photoshop is one upgrade that will pay for itself in productivity. What used to be a high skill task is now, if not child's play, then many, many times faster and simpler than it was before. 

Cross-posted from my Newspaper's Canada column, Shift Lock

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