Posted by: hdemott | March 31, 2010

Who Can Win At Local

It seems almost axiomatic that there is a huge prize for anyone who can crack the local code. The traditional media guys – the radio stations, television stations, yellow page guys and newspapers have had a good run in this space over time – but they are being picked apart by a combination of locally directed ad companies (Yahoo local, Google local, Reach Local etc…), local shopping programs like Groupon and local review sites like Yelp.

So who can win this game long term? And what are the key ingredients for the victory?

It’s pretty clear that the future winners are either going to have to deploy a local sales force in the markets they want to enter – or get locals to act as a sales force – either by making their business viral – or co-opting their users in some way to make it work. If you look out at all the local sales forces out there – I would argue that both radio and television stations deal with too narrow a group o advertisers to really make great partners on the sales side (although their reach makes them great marketing partners). Newpaper sales forces might be a bit better – but the real gem of all the sales forces is likely the yellow page guys – who have been cold calling and pounding the beat for years – meeting local businesses.

Now are these guys then taking that data and using it to make a better business for themselves – pretty clearly not – they are getting killed.

If you look at Groupon or companies like that – they are getting their sellers from places like medical sales people and very non traditional sales channels. Which makes some sense. If you don’t want a spoiled apple – get it off the tree (to quote Sean Connery in The Untouchables)

If I were running a daily deal company and needed to reach restaurants – I would go to the liquor and wine reps – the vegetable sellers – the Sysco people  – who are in and out of restaurants every day. I might try the Pepsi and Coke drivers – the Frito Lay folks who are in neighborhoods with a ton of stops and know the cities block by block. Or I would try to get super fans of a category. Why not set up an affiliate program to make it easy for patrons to become sellers for you. If I am already a big fan of a restaurant and am known to the management there – why shouldn’t I approach them about helping their business and help myself in the meantime – I get paid a commission and I probably pick up a coupon – so I win twice – and if the ROI on these programs is good – my restaurant does well and everybody makes out.

These guys can win at local.

It goes without saying that Yahoo and Google and Bing will all do local search well sooner or later (and with the data being fed to them by the Yellow Pages guys – god are these guys dumb)  – they will have a better and better product every year – but going beyond that – how do you do local social media – improve local marketing – drive more traffic.

Traditional media might be under attack – but they still have a heck of a bullhorn. I think it is in these last areas that traditional media has the best opportunity to save itself. If they can use their attention grabbing to drive people to local sites that are clean, well designed, and do what they promised (as opposed to just showing you what is on the air now) then there are opportunities.

For example – I get WABC-TV on channel 7 – it is my local ABC affiliate. Now I would never go to its website because it really has very little to offer me. But what if they started breaking the website into subsections – using their news gathering and sales functions to put out a Fairfield county news product on line – selling it to local advertisers. That might resonate with local business owners and the different communities. Within that site there could be content sharing across verticals – and all of this could be accomplished with a very small budget increase at the station.

This is just one idea – and I am sure there are a ton more out there.

The fact is that to win at local – you need to reach the small business – which few have the resources to do – you need to sell them a targeted local audience – which few people have bothered to develop – and you need to market this package to a local community – which most people have written off. I say start big and work your way down the list. All of it is doable and possible – just no one has managed to put it all together.

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Responses

  1. Great analysis Harry – one of the best I’ve come across.

    The local space is a challenging, fragmented market, but the massive potential for revenue and for building a moat is alluring.


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