Gordon Borrell has been driven by a passion to track and position media’s digital transition throughout his career. We worked together in the early years of his consulting firm, Borrell Associates (2001-2004). He and his team have continued to build, sort and analyze key local data and provide strategic help to many of the key media and digital players. They also put on a great annual event, Local Online Advertising Conference, which takes place this year March 12-13 in New York. Here’s a Q&A we did via email:
LocalOnliner: On a scale of 1-10, where are we now in the transition of local marketing? We keep watching for signs that advertising is being truly supplemented by the sale of services (data, scheduling, promotions, lead gen etc.)
GB: I’d say we’re at a ‘5’ or ‘6’, so midstream in that evolution. You’d be hard-pressed to find a traditional media company (radio, TV, newspapers, yellow pages) that isn’t selling some sort of marketing service. For some of the more aggressive ones, it accounts for one-fourth of their total revenue. Companies such as Dex or hibu might be getting a bit more out of service-type products like social media management, video production, SEO, reputation management because the pain in their once-core revenue (print advertising) has evaporated so quickly.
LocalOnliner: Companies like Gannett and Nexstar stress that SAAS sales have less churn and are move valuable than media accounts in the long term. Gannett has positioned for this change, acquiring digital players such as ReachLocal, SmartIQ etc. Can we expect more buy outs like this? Would local media companies be good acquisitions for larger digital companies?
GB: I think we’ll definitely see more, only because the pace of change for tech products is so swift that the stuff they bought 5 years ago may now be outdated. The value proposition for media companies, I think, is at a tipping point. They have four valuable things — brand, front-line salespeople, content, and a customer list (advertisers). All of those things have been slipping to some degree, but especially one of the more valuable ones — the customer list. It’s shrinking, which is why so many local media companies are supplementing their offerings with digital services.
LocalOnliner: We had been talking about media players becoming effective partners for tech players. (Facebook, Google etc.) In some areas – news links on Facebook — it seems like they are beginning to be cut out. How can they regain their value in the ecosystem?
GB: That’s one helluva question, and I don’t think I have a good answer. Google, Facebook and Amazon frankly don’t need anything from local media companies. I think they regain value by one simple thing: Becoming the go-to marketing experts for local businesses. The DIY marketing stuff is fine, by 74% of businesses are marketing novices (according to Borrell’s SMB survey of 3,500 local businesses). They’re going to make gaffes. They’re going to hurt their brand, or see sales suffer as a result. Why not engage a company that has a powerful channel that it owns, plus a mastery of digital marketing on top of that, to get the message out? Makes perfect sense to me.
LocalOnliner: Companies like YP Dex are going after a whole new set of advertisers they have not traditionally served in Yellow Pages….With the THRYV platform, they are moving from “main street” service advertisers to retailers and other brand related advertisers. They say it will be bigger than their traditional YellowPages market. What is your view?
GB: I absolutely agree. Under Joe Walsh’s leadership they’ve adopted an aggressive approach to build a new business instead of engaging in a two-armed swordfight to maintain print customers by peddling some digital products to them. The fact is, SMBs spend massive amounts of money on digital services and related marketing products, and the tide continues to rise like a tsunami is behind it. I’m glad they’re focused on being a growing business rather than managing the business down.
LocalOnliner: As you predicted years ago, Video has become increasingly important in the ecosystem…not only with YouTube, but with video games, etc. Are media companies able to participate in this boom? It seems they are mostly out in the cold. Will the new breed of video oriented players start to look like media companies?
GB: The problem with a lot of video content that people are watching is that it doesn’t allow the heavy commercial load you see on regular TV programming. I think the bigger opportunity for local media is going to be outside the realm of video “advertising” and more richly in the field of video storytelling for local businesses. You can see an example of this at youtube.com/yellowpages. Dex has been mining this opportinity for years, and we’re now seeing quite a few newspaper companies and a few others follow suit. So many SMBs are eager to spend a few thousand dollars to have a well-done “infomercial” of themselves on YouTube, on their website, and on their Facebook feeds. And once they do one, they’re hooked.
LocalOnliner: LOAC has been designed as a state of the art conference reflecting media’s transition. Last year, a key theme was how to resell Facebook. What are some of the key things media companies can expect to see from it? And how about tech executives, hoping to learn and meet with media execs?
GB: We’re doing something this year that we haven’t done in the past. We’re looking at new things that don’t seem to have a proven business model just yet. We shunned those types of things in the past. But this year we’ve decided to look at OTT, voicebots, and interactive outdoor signage because we seem them maturing at a much faster pace than other nascent platforms. Everybody’s hands are full trying to sell things that make money, but these new things have the potential to bit them in the ass if they don’t pay attention. (If you’ve seen our ads, you’ll notice that we are sticking to our no-nonsense approach. The ads say “Cut the Crap,” which means you can trust Borrell to keep the hype off the stage.)