Finding the 'Ultimate' Local Ad Model
An interesting panel today at the SMX Local & Mobile conference attempted to find this elusive animal, although Ingenio CMO Marc Barach warned the audience at the onset not to expect the question to be answered because an answer doesn’t exist.
Barach and other panelists nonetheless hit on important issues such as reaching a fragmented local marketplace; closing the loop on the disconnected online-offline purchase funnel; and getting lost in the alphabet soup of ad models — CPC, CPM, CPA — that are appropriate/desired by different verticals and market segments.
Also on the panel were Krillion CEO Joel Toledano and Steven Chuck, director of strategic alliances at Yahoo!. Toledano’s Krillion, as reported yesterday, just launched an inventory data/in-store pickup feature, and his big-box advertisers largely jump at the opportunity for CPA models. But with Intuit’s StepUp — a similar product that instead targets small businesses — a flat fee or subscription model is largely preferred.
“[SMBs] want something that is closer to the Yellow Pages model, which they know,” voiced StepUp CEO Kendall Fargo, who was unexpectedly called on from within the audience.
Grokking the Sales Channel
The all-important and perennial question of sales dominated a good chunk of the panel, with the underlying notion that the SMB marketplace is fragmented and contains varying levels of resource availability and technical savvy.
“Just because SMBs are small, it doesn’t mean they are DIY,” said Yahoo!’s Chuck. Asked a question from the audience about acquiring a Yellow Pages channel — the same question he’s probably been asked 56,000 times — he didn’t beat around the bush.
“Direct sales force partners are important as an avenue to reach small businesses. As far as having our own sales force to reach below the advertisers we have today, that’s not going to happen.”
Local.com’s Peter Hutto asked a question from the audience that really is the nut of this issue: Given the fragmentation and resource/savvy constraints, who is going to step up to play the role of educating the SMB marketplace? The answer was alluded to then left on the table given the wide range of issues the panel hit. The answer of course is Yellow Pages sales channel.
That is to say the opportunity is there for Yellow Pages to play this consultative role to the SMB marketplace, to educate and deliver leads across all platforms. But will it happen? The “platform agnosticism” that has become the pedigree of overused Power Point terminology is — in actual practice — what needs to happen.
Taking It to the Street
How it will happen is more the question. Right now there is an undercurrent of inertia for publishers to do anything more than talk about this — given the pragmatic protection of core offline revenues that are doing a good enough job eroding on their own, without the assistance of being undermined by their benefactors.
Some of this “how” question could come down to things Local Insight Media’s Scott Pomeroy said in his keynote at DDC. Specifically, that this could be phased in, starting with recruiting of sales reps. Reps who are more tech savvy and in tune with online opportunities to provide this holistic consultative roles, could be a start.
Lastly, the size of this opportunity for publishers and online pure-plays alike was voiced by Barach. This comes down, again, to the sales channel and also to the Webification issue we’ve raised before. Essentially getting more small businesses online with low barrier Web site development or landing page tools can expand the addressable market of small-business advertisers.
“In the century or so that the Yellow Pages has been around, the industry only has about a 30 percent penetration of the small-business marketplace,” says Barach. “There is an opportunity to grow this with new products, but these products will take a while to take root.”
________
We’ll pick up on lots of these issues at the upcoming ILM/SES Local conference, happening Nov. 28-30 in Los Angeles. Hope to see you there.
