One big trend we’ve noticed for both Yellow Pages and newspapers is a renewed emphasis on the dynamics of cities served. We used to worry all the time about local dynamics as city guides and others tried to figure out which cities had “the most cyber-savvy residents,” “the most recreational activity,” etc. As the Internet has become universal, local dynamics have become less important (aside from growth). But now it’s back.
McClatchy’s shedding of The Minneapolis Star Tribune for half of what it paid for it in 2001 is one example of this. The reasoning there, in part, seemed to be “The Twin Cities ain’t growing. Rather be in Miami.”
Some of the analysis is on the large city/small city differential. Deutsche Bank has a lot to say on the subject. “Characteristics of small markets that contribute to the small market/large market divergence include less competitive market dynamics, less exposure to national advertising, better circulation and a lower exposure to large national retail chains.”
Analyst Lisa Monaco at Morgan Stanley, meanwhile, has issued a “MetroTrends” report spelling out the best cities for media and commerce publishers, at least in terms of growth. According to the report, Seattle, San Jose, Miami, Chicago, New York, Boston, Philadelphia and Miami are “up.” Meanwhile, Phoenix, Dallas, Atlanta, Charlotte, Los Angeles and Denver are “down,” while Houston is “neutral.”
To Monaco’s team, that translates into Belo, Journal Communications, New York Times Co., RH Donnelley, Scripps and Tribune being “up.” And McClatchy, Lee Enterprises and The Washington Post Co. being “down.” And Gannett and Journal Register coming in at “neutral.”
I am not always sure how this stuff applies to the local online ecosphere. But I find it fascinating.
Major metro areas get the press, but don’t forget the “Wal-Mart” effect of succeeding in smaller cities with less competition.
My previous company published 390 directories, all but a handful were in suburban and semi-rural markets. I have no doubt that we would not have been able to compete in major metros. We didn’t have the skill sets necessary to be compete at that level.
But in our smaller markets, we were very successful. It’s the same online. You have to be committed to a strategy. The Big Apple may have the bright lights, but there are just as many opportunities in Peoria.
Up and down we go, but I think Lisa Monaco’s ratings misplace the notions of best places for print publishers. In fact, as you point out McClatchy evacuated the Twin Cities because of its “slow” growth. Curiously, the Twin Cities has always been slow growth, well-known in newspaper circles for its slow but steady growth and ability to withstand recessions better than the rest of the country. That used to make it an enviable newspaper market. Now, I think the whole Northeastern/Midwestern tier looks problematic to newspaper companies. Why? They need high population growth markets in the South and West. There, the growth mitigates and masks to a degree the growing disfavor of print advertising. So they’re countering structural downturn with some short-term local market growth. It’s a good strategy in the short (2-3 year) term, buying some time until they can deal with the larger issues.
An understandable strategy, but it fails to recognize the long tail aspect of local search. The combined searches of all the second and third tier MSA’s collectively outweigh what we call the “power metros (Miami, NYC, Boston).” In print, it’s not possible to chase the long tail efficiently. Online, the rules are different, if not inverted. As Dick Larkin said above, “there are just as many opportunities in Peoria.” Our experiences online bear this out as well.