Polygraph Media Blog

The Future of News is Now, and it's Tiger Teams

News media has always been an interest to me going back to my time as sports editor of my high school newspaper, The Northwestern, in 1991.  I was deeply involved, maybe even instrumental, in converting Stratfor from a consulting business to a web publisher in 1999.  And our first go-to-market strategy for Notice Technologies in 2009-2010 was to partner with local newspapers and the families that owned them.  So I have a professional curiousity about local media that I can't quite shake, even if it isn't the best business decision.

The other day, I read an update posted by my friend, Scott McKay, Publisher of The Hayride -- a Louisiana-based conservative blog that covers Louisiana & national politics.  Scott was updating his audience on traffic that The Hayride has earned, relative to its major media competitors in Louisiana.  You can check out his post here... it's fascinating.

Scott has gone from nothing to being the #2 most read media property in Louisiana in just two years.  Let that sink in for a moment.

From nothing to being #2 in his market in two years.

Some of you might say, well... I'm sure some Conservative think tank is funding Scott and his efforts.  Nope, think again.

Growth of The Hayride has been ENTIRELY organic, driven by a small tiger team of people insanely focused on developing content interesting to its audience.  And it really hasn't made significant adjustments to its original editorial voice or content.  They've stuck to it, and in turn developed a large, growing, and apparently loyal voice.

Looking around the media landscape, The Hayride is not at all an anomaly.  This era has been more or less defined by the emergence of either bootstrapped or modestly funded (initially) entities that have grown their audiences.  The Drudge Report was probably the original -- one guy curating content for the world's edification has turned into a profitable powerhouse.  Stratfor was one in the late 1990s and continues to thrive despite its recent hacking attack.  The Huffington Post and Breitbart emerged in the middle of the last decade and continue to roll.  Mashable is doing the job today in the tech/social media space.  Henry Blodget's Business Insider is reporting on business and stock market issues, but with a far smaller staff than say CNBC.  At the local level, we're seeing companies like Culturemap, The Magic City Post (Birmingham), Buffalo Rising, The Texas Tribune, and countless others challenge incumbents.  In traditional media, even the venerable Seattle P-I has moved entirely to a Web model and streamlined their team several years ago.

What's the lesson here?  Traditional media reporting is tough, labor intensive, and expensive. Opinion and analysis, on the other hand, can be a lot more inexpensive.  It doesnt' require travel, developing relationships, covering a "beat", or doing deep investigative reporting in person.  It is, however, very tough to do on a consistent basis.  Those properties who have a supremely talented Publisher/Editor who can pump out 5-7 articles per day *and stick to it* are the future winners.  We've seen it time and time again, and we shouldn't be surprised when it happens again.

And if anything, we're in an era where, counterintuitively, less money provides better outcomes for winning niche markets.  The future is being built from the ground up by tiger teams.  It's a long term play.  But if I were building the media conglomerate of the future, I'd find a way to align with or acquire a network of emergent local and vertical blogs.

Groupon, the S-1, and the state of the group purchasing market

A few quick thoughts on group purchasing this morning.  We have a pretty unique perspective on this business because our first launch was a local coupon platform.  We considered adding group purchasing to our product, but we did not initially do so for a few reasons all related to the fact that we didn't think the business was sustainable.  First, we thought the discounts were too high for most small businesses to bear long-term.  Second, there was no apparent long-term competitive advantage as the technology and business process could be easily replicated.  Ergo, millions of dollars would have to be spent on customer acquisition in a business where competition would drive down operating margins.  i.e. bad and worsening economics = no thanks.

Several things happened throughout 2010.  Millions of dollars were being earned by Groupon, LivingSocial, and the hundreds if not thousands of blatant knockoffs built by enterprising developers around the world.  It wasn't easy answering questions about why we didn't take advantage of this opportunity, and we were starting to question ourselves in the process.  Even our partners started to ask about group purchasing more and more as the "lore" of "millions" of "easy profits" became legendary.  We reluctantly added group purchasing to the Lasso platform in early 2011, but not without the reservations that we always had about the economics of the business.

Around that time, we had also been brought in to talk about group purchasing with a few companies who were not making the money they expected to make with it.  We pretty consistently heard problems related to the economics -- either customer acquisition was tougher than expected, the merchants were pushing back, or both things were happening.  I remember saying sometime to someone (can't remember who) in the early spring that the worst job in the world was being an oppressed group purchasing salesperson.

Now after reading Groupon's S-1 in detail, I am a little stunned at just how bad the economics of group purchasing are playing out even for the "market leader".  I thought second-tier competitors faced a much bleaker situation than the market leaders.  But if Groupon is suffering, who isn't?  Maybe the entire group purchasing industry is just a big money burning machine.

Folks in the local media business have taken a lot of criticism over the last decade for failing to modernize their businesses -- more or less for focusing on revenue and not on new business models.  That criticism is pretty fair, but it is what it is.  Local media companies have operated profitably for many years by doing the same things -- so why would they change significantly especially when executive management just has to keep chopping wood to sail into the sunset for a very comfortable retirement.

But here's what's a bit horrifying for technology folks -- critics at local media companies may just be correct to ignore group purchasing.  Unless something changes pretty significantly, group purchasing is headed down a path of other overhyped "technologies" that just don't make economic sense.  Group purchasing was considered to be a "no-brainer" just a year ago.  Now after reading the S-1, do you still think it is a huge opportunity.

Consider a few numbers from the S-1:

• Groupon lost $420m in 2010 and $117m in Q1 2011.
• Groupon earned $713m in 2010 (far less than the $1-2 billion reported elsewhere), but did earn almost $700m in Q1 2011.
• Marketing + SG&A was 178% of Gross Profit in 2010 and 143% in Q1 2011.  Yowza.

So all the numbers say at present is that you can make billions of dollars in revenue if you spend billions and more.  I can walk around my neighborhood and give away $1.25 for $1 all day long. :-)

But in all seriousness, the S-1 was really the first time the general public got a look under the kimono of the world's leading group purchasing provider.  Here's what it told me:

1. Groupon can't continue as is forever.  They'll have to get more efficient and/or eliminate some competition.
2. They'll have to become considerably more innovative.  Groupon Now is one such innovation, but even that will take considerable marketing funds and great execution to work.
3. Being a group purchasing provider is a really terrible business at scale.  I don't doubt that smaller companies can be profitable winning a niche, but local group purchasing done at scale all around the world is tough especially as competition intensifies.
4. Group purchasing, as it currently exists, cannot win the local advertising market.  In a business where nobody involved in the transaction truly wins -- the provider or the local business -- interest will fade.
5. New media companies that thrive in the coming decades will effectively combine content, local advertising, and services for advertisers as an agency would.  I particularly like the work that our partner, Culturemap, has done with their "hybrid" new media play.

Deal data has always been the name of the game -- and will define the future of this business.  This is why I like aggregators who rise above the fray -- Yipit is one such company.  It's also why I think Facebook has gone the aggregation route as well.  More to come on this as it all plays out.

AOL, the Huffington Post, and the assault on local

Today is a watershed day in new media, whatever it is that we're calling it in 2011.  Why?  Because AOL is now truly doing something interesting in the content business by buying one of this cycle's best content properties, the Huffington Post, for $315 million.

Sure, AOL spent 40% of its available cash on the property.  Yes, there will be a culture clash as HuffPo is integrated into AOL.  And of course, we've heard of issues with AOL's integration of TechCrunch.  

But this isn't the same AOL that distributed tons  of these discs via mail for more than a decade.  It's a company led by someone with experience at a market leader who has a vision for the future.  That vision requires that AOL repeatedly produce profitable content -- something that old media has certainly struggled to do lately.

The TechCrunch and now HuffPo acquisitions, however, tell me that AOL has determined that it is a better strategy to buy great properties than to build them.  Why?  I'd posit three reasons:  1) these are properties that have discovered how to create quality content sustainably, 2) these properties make money, 3) AOL's experiments with Patch and Seed likely have not succeeded as they've hoped.

But the last reason isn't necessarily a criticism of AOL.  If you look at business across the United States, one megatrend that we're seeing is that big, relatively antiseptic brands are winning the war for $$ and mindshare against local businesses with local/regional flair.  Like it or not, eyeballs and attention flock to Chili's, the HuffPo, and the NFL instead of Billy Bob's Bar & Grill, the Smalltown Gazette, and high school football.  The American experience is homogenizing right before our very eyes, and as such brands that specialize in products with mass appeal will likely win in the long-term over local providers that struggle to effectively reach a local audience.  Niche businesses will survive, but a vast majority of local businesses are going to continue to suffer as the local experience gets more corporate.

I'd argue that these trends are driving the content business and will continue to do so.

We will see what happens with AOL's play -- one that puts it in Demand Media's neighborhood and clarifies competition with old media.  It's on.  I think the early advantage is in companies like AOL & Demand who are driven by the unit economics of creating content far more than old media as a generalized whole.

Old media has two other distinct disadvantages: 1) significant overhead, and 2) traditional "journalistic" standards.  But as an industry it is much, much larger than AOL or Demand Media and can still compete if meaningful changes are forthcoming.  And you can argue that neither AOL nor Demand Media have quite yet figured out how to scalably create great content for profit.  It will be an interesting battle to watch in coming years.  Consider also that of the major tech players only Apple, Yahoo, and Amazon have made major content plays.  Are Google, Facebook, and Microsoft next to jump in?

It's possible that as old media continues to be disrupted, that content is the next bubble.  We'll see how the industry responds.

Analyzing eMarketer SMB stats on useful social marketing tools

Those of you who have followed this blog for awhile and some of the guest posts we've written on Mashable, ReadWriteWeb, Forbes, and other places know two things about me:  1) I'm a data junkie, and 2) I don't really have a lot of respect for "spin" in the startup world.

It's why I questioned the utility of location-based services last year and asked for meaningful metrics (which we still haven't gotten).  It's also how yesterday's guest post on Mashable came about -- we're seeing metrics that indicate that although group purchasing as a sector is alive & well, it has peaked for individual providers and certainly local businesses.

I am not naturally a curmudgeon.  I just think that if you really want to know what is happening, you have to look at where the numbers are and how they are trending.  Metrics trump all -- the coolest technology, the best PR team, the best venture capitalist.  All win and lose most of the time based on numbers.

So I was interested to see some great numbers from eMarketer this morning on what small businesses  think of different marketing outlets.  Here's the chart in case you missed it.

This is great data.  I'd prefer a slightly larger sample size than 752, but it is good enough to draw inferences.

I think the way the data is presented is a little misleading -- so I did some basic number crunching of my own.

Specifically, I wanted to understand just what local businesses really think of each one.  For every person who likes each service, how many dislike it or find it ineffective.  I also wanted to correlate the numbers other criteria -- specifically what the service provides a small business, whether or not they sell directly to the small business or have a low-touch model, how large the audiences are, etc.  All of these things play into something that local businesses can regard as good opportunities for advertising/marketing dollars and attention.

First, I wanted to 
determine awareness/usage.  To do so, I'm making an assumption that anyone who comments one way or another on the utility of a platform for marketing is definitely aware of the core features of each platform, probably has tried the platform, and has *possibly* used it in a business context.  These numbers pretty much make sense to me, although I was surprised to see that people have an opinion of foursquare almost as much as Yelp or Groupon.  That isn't a stab at foursquare, but LBS adoption overall (foursquare + competitors) is something like 5% worldwide, yet 26%+ of local businesses feel qualified to opine on its usefulness for marketing.  So the concept of LBS is known more than adoption at the moment.

Next I wanted to understand what's known in quant research/customer satisfaction parlance as "the top two boxes"... i.e. what are the % of folks who think that something is either excellent or very good.  In this case, it's "very beneficial" or "somewhat beneficial."  See below for the results.  Column E is the % of all polled SMBs who regard each platform in the top two boxes.

But that isn't the end of the story.  These web services cluster into 3 groups when you look at the percentage of people who aren't users.  Facebook is more or less ubiquitous, but still almost 1 in 3 SMB owner/operators have not used it.  Roughly half SMBs have not used Twitter, YouTube, LinkedIn, and MySpace.  And roughly 3 in 4 SMBs have not used Groupon, Yelp, LivingSocial, or foursquare.  So we must normalize the data to give us a clearer picture of what the people who have used each tool actually think.

The chart above is really astonishing to me.  81.5% of SMB Facebook users think it is effective for marketing.  That's an amazing number.  On the opposite end of the spectrum, a little more than half of SMB users of Yelp, MySpace, Groupon, LivingSocial, and foursquare (in that order) think those products are effective for marketing.  Now let's look at the other end of the spectrum -- of SMBs that use all of these tools/services, which do SMBs think are relatively ineffective for marketing?  To assess that, we'll need to analyze the "Not Beneficial" numbers:

The "Not Beneficial" numbers in Column H all look similar across the various platforms -- but they have a hidden meaning when compared against the total % of respondents who have an opinion about each platform.  Of SMB users who responded to the eMarketer survey, almost half of the actual Users question the effectiveness of MySpace, Groupon, LivingSocial, and foursquare for helping them achieve their needs.

All in all, eMarketer's report was fascinating and gives us a good idea of what SMBs think.  Granted, SMB in and of itself is not a segment.  SMBs are in hundreds of types of businesses, many of which are not suited for individual local, social, or mobile platforms.  So the numbers don't necessarily tell the entire story.  But they do tell us who is winning so far and what constitutes a platform or platforms that SMBs should pay attention to.

One final note... it would be very interesting to compare these numbers to old media means of advertising:  yellow pages, billboards, newspapers, radio, television, etc.  I'd love to see how these "new media" services compare to old media.

Latest Mashable Blog Post - LivingSocial & Amazon

Yesterday around 1:20pm, I succumbed to the maelstrom of social media wonderment and became the 645,773rd person to buy $20 in Amazon merchandise for $10.  I reacted much like I'm sure you did -- "it's a no-brainer!"  I will use the proceeds to buy a book or two for my wife on our Kindle.

I thought I'd share some additional thoughts on the guest post Mashable was so gracious to post -- it is the second time they've done so for me.

Quick administrative note/disclaimer first... posts for places like Mashable have to be a little edgy and controversial to get shared, commented on, mentioned, and read.  The end product was a little different than my original thoughts.  They always are.  :-)

And the Mashable team changed the title... the focus of the article was really more about why the LivingSocial-Amazon deal is really the beginning of Social Commerce 2.0.  No worries.

Now, to elaborate.

First of all, what a clever way for Amazon to maximize the value of their investment.  I don't know the terms of the revenue split between LivingSocial and Amazon, but I imagine this was part of the plan all along.  Amazon makes an investment & sets aside a little extra money to cover a planned group purchase.  They use the strength of the Amazon brand among consumers to create a no-brainer deal that would help both LivingSocial and Amazon acquire new customers.  They made the amount of the transaction high enough for people to share & care, but not so high that it was a total loss for Amazon, which runs a pretty tight ship as it is.

LivingSocial gets inexpensive customer acquisition and tons of new accounts.  Amazon uses its strength in the marketplace to dramatically increase the value of its investment.  Everybody plays, everybody wins.  It was *brilliantly* executed by all involved.

As CEO of a company in the social commerce space, I can tell you that this very much fits in to the broader picture of trends we are seeing with group purchasing and social commerce:

1. The increasingly crowded group purchasing landscape has made it tougher for the various competitors to attract the top local advertisers in almost every market.  Consistent deal quality has suffered tremendously.  So there are more tanning beds, teeth cleanings, and acupuncturists -- and all of them are more "niche" businesses that are by definition less interesting to the mass market of consumers.

2. Group purchasing has therefore gotten less effective at the local level, and leading providers are now seeking top national/international brands to do group purchasing deals (e.g. Gap, Amazon, etc.).  Late entrants have struggled as, well, they're late to the game.  Margins shrink for all the "technology providers."  Advertisers aren't as happy and are getting pitched frequently as sales pressure intensifies on group purchasing providers.

3. However, consumers still respond to group purchasing as long as the quality of the deal is very, very high.  The Amazons/Gaps/best restaurants/best retailers of the world do a lot better than your aforementioned neighborhood acupuncturist.  So group purchasing (as it has been defined thus far) is less special and looks more like any other marketing tactic with every passing day.  i.e. if you are running marketing for an established and/or successful entity, you're at a huge advantage over someone who isn't.

4. Despite what a deal like this may make you believe, consumers have *no* loyalty to individual group purchasing providers today.  Consumers just want to save a buck at places where they know they'll shop anyway.  The Gap and Amazon were successful because of who they are, not because of the plumbing (Groupon and LivingSocial) that allowed people to buy gift cards.

5. Brand/corporate advertisers and their agencies can effectively run these types of campaigns themselves and they will as they get more savvy.  They'll also do so for the cost savings.  The technology is there for companies to take matters into their own hands.  Most have captive audiences already in Facebook pages and e-mail lists, among other assets.  All you need is a great deal to offer and the right social commerce middleware (which we have - yes I can say that because you're on my blog).

6. Ergo, brands and people with big audiences ultimately get more and more competitive with time, and they win in the end.  It may take ten years, or it may take two.

Whether we're talking with big, recognizable brands, major media companies, or major companies, it's all the same.  Inertia is out.  Action is are in.  Audiences are again the key. Technology helps major players tap into the audiences.

And most importantly, this LivingSocial/Amazon deal just higlights that there is no brand affinity in "deals".  Consumers will go where they can save money at places where they want to spend money. The company to scale this capability wins and becomes Groupon 2.0.

It will be a very interesting 2011 as this next phase of social commerce begins to shake out.

Social Explosion and 2011 -- Local Business edition & Groupon 2.0

More from the lessons learned department -- today I'll talk about trends we are seeing in local marketing as all the "new" approaches mature.  If you think back just 18 months ago, things like social media marketing, couponing, and mobile marketing were all relatively new.  Today, many of these things are top of mind for local businesses, especially those more comfortable with marketing & technology and those that are by their nature hungrier.  They're also increasingly working their way into marketing budgets for bigger companies in the form of fan page execution, Facebook ad management, and other tactics.

I think small and big businesses will continue to evolve in 2011 although around different things.  Small, local businesses will grapple with the realities of Groupon & knockoffs.  Bigger companies will increasingly investigate opportunities to redefine their relationships with agencies.  Today, I'll talk about what local businesses face in 2011.

I am not sure the world has ever seen a faster growing company than Groupon.  Often confused for a technology company, Groupon is more of a fascinatingly well-executed business process.  The trouble with Groupon is that modest success has to date been relatively repeatable, and now there are at least 150 known group purchasing knockoffs and maybe more.

I think you're already seeing signs that group purchasing as a sector is unsustainable and on the decline.  The increase in competition has had a significant dilutive effect on group purchasing.  Deal quality is suffering even for the leader in the market, so more or less all providers of group purchasing are struggling to guarantee a flow of great deals from compelling businesses.  It's why you see more acupuncturists and fortune tellers and laser hair removal offers from the leading group purchasing vendors.

All of this is why I think Groupon has raised significant funds to create its next trick as much as it is to appease anyone inside the company who wanted to sell to Google.  We'll know soon enough if Groupon can actually innovate and whether it is Microsoft or Google... either able to create new tricks or a one trick pony (although I think Android is Google's most feasible attempt at a 2nd trick and likely to succeed).

But back to local businesses, Groupon taken to its "nth" degree is inherently deflationary for all the businesses it serves.  i.e. if you as a consumer know that a business will discount products/services eventually, you'll delay purchases.  That's the very definition of deflation -- mass incentives for consumers to hold cash because they know cash will go farther later.  If Groupon is the future of marketing and if you can only drive traffic to your store by creating a Groupon, then the local business world will just get that much more competitive and cutthroat.  If it extends to other sectors and grows significantly, you have a major deflationary force at hand.

So how will local businesses respond?  To date, they've basically paid Groupon & the like for the convenience of making marketing easy.  Local businesses seem mixed on whether or not group purchasing is a good thing.  Those that are jaded are really, really jaded.  Folks who break even seem to fall in two camps -- those who desperately need more awareness in their local community & those who don't.  Local businesses who have an awareness problem tend to think of group purchasing more favorably because it is an added benefit.  But others, especially tried & true businesses in the community, are not as concerned about awareness and are thus probably less likely to use such a service.

However, any business that blames Groupon for the situation is probably misdirecting their anger.  Groupon is just a way for local business to throw money at lead generation without developing the skills necessary to conduct modern marketing.  People will always pay for convenience in every market, and this is no different.

A lot of people out there are looking for a Groupon 2.0 -- a next iteration that is the same lightning in the bottle that Andrew Mason found a little over 2 years ago.  It is hard to know exactly what that will be, but the characteristics are becoming clearer as business models emerge and fail and as consumers vote with their pocketbooks and their usage patterns.  More on that later.  

In Part II of this blog post next week, we'll talk about trends in mid-market, brand, and corporate marketing.  Have a great rest of the first week of 2011!

Lessons Learned from the SMB "segment"

Having worked in the SMB segment with a variety of newspaper partners over the last six months or so, I thought I'd share some thoughts on what we've learned from the small & medium business "segment".  I use air quotes for the "segment" because it is more like a catchall... a bargain bin at the grocery store where you're as likely to find onion powder as an overstock of mango chutney.

Lesson #1 - small and medium sized businesses really are not a "segment" but rather share the economic commonality of being more or less owner operated.

Many of these small businesses are successful outside of the context of the Internet.  The business owner opens a retail store on the right corner.  A restaurant has the best salsa in town.  A plumber is on call all day, every day, and has a great reputation for providing excellent service even on holidays.

Lesson #2 - Internet marketing makes a lot of sense for small and medium businesses, but it isn't what built many surviving businesses.  So it is a "nice to have" and not a "must have" for many established SMBs.

New businesses have a lot to gain by using social media and internet marketing as promotional vehicles.  There's a reason mobile food trucks use Twitter aggressively.  New businesses get a ton of response from things like Groupon.  Awareness is the sweet spot for SMB internet marketing and social media today because the business owners are motivated.

Lesson #3 - Motivation matters, and it's a lot easier to sell an immediately effective solution to a needy customer.

Finally, simplicity and ease of use matter.  For many SMB owner/managers, the ease of use bar is extremely high and probably beyond what most software people should expect.  This brings me to an interesting point -- it is almost impossible to market "software" to local businesses.  If you ask a SMB owner/manager what they want, odds are they won't tell you that they want "software".

As such, our business continues to evolve... smarter and more effective than ever.

 

My 2010 Advice for Newspapers

For those of you who know any history about our business, you probably know that we originally worked to build a way for local businesses to create their own coupons and do their own marketing.  But we realized very quickly that our job was different than we thought - the technology was one part of the problem.  The other part of the problem was putting those offers/discounts in front of large audiences of people.  That thought process is what ultimately pointed us in the direction of local media and purposefully *away* from creative disruption.  More on that in a later blog post.

As we pursued local media properties and newspapers, we secured a few deals and have launched our local offers/discounts platform with several major newspapers -- most notably The Dallas Morning News, The Milwaukee Journal Sentinel, and American Consolidated Media.  But as any other startup experience, that has kicked off more learning and insights that I thought I'd highlight today.

First, a caveat.  Local newspapers are very much like any other industry that is facing disruption.  Threats come in a wide range of forms -- companies, movements, individuals who have some iteration of "self-publishing" capability but don't need a ton of profit (and sometimes no profit) to be motivated to create great product(s).

It is in this creative disruption sense that the smallest, most under-the-radar companies in the world are driving innovations in publishing today.  It is probably why the Knight Foundation recently boosted its funding of new innovation, why "super angels" are the new big thing in venture capital, and why folks like Y Combinator and other small incubators are centers of innovation.  Other people in the blogosphere have covered these phenomena in much more intelligent and much better detail over the last 18-24 months.

Anyhow, newspapers (like other big businesses) don't rush to support innovation because they can't just aggressively turn a dollar into a dime & do so enthusiastically.  So their moves in technology are incremental, and not revolutionary.  And their attempts to do things revolutionary just quite frankly miss the mark.  I'm referring to things like experiments with pay walls, the creation of a "me-too" mobile app strategy, and relatively meaningless partnerships with location-based services.  All of it reinforces the opinion that many people have that newspapers don't really encourage true innovation and that senior leadership typically doesn't understand the Web in a real, intrinsic way.

All of that said, if I were running a paper or in the executive boardroom, here are a few things I'd consider deeply:

• Understand that the business is "local" and not "news" or "content" -- big misconception in most local media companies I interact with.  As late as the mid-1990s, the content was the key to the business.  Fifteen years later, the key is relevance to local audiences -- people, businesses, etc.  Content can be found anywhere.  Great content can be pushed to you by friends, the "curated Web", Twitter, etc.  The key for local media in the future is staying relevant in the local market.
• Recalibrate human resources to skilled Web & mobile personnel -- most newspapers have 10, 20, maybe even 50 writers per developer or Web/mobile product manager.  These same papers may have another 50 people in the supply chain per developer.  Guess what?  The supply chain is different now.  The winners will be people who understand technology, not the route of a paper truck.  Skilled labor is key, but I don't see a lot of urgency in papers to fix operational inefficiencies that put all the pressure on a small number of people to help modernize the business.
• Emphasize social media for brand extension, but not direct selling -- some papers are panicking about their social media offering and are scrambling to find monetizable ways to reach consumers and businesses.  Local media companies have a role to play to help local businesses navigate marketing in 2010 and beyond -- and some of that may involve social media.  But local media companies that seek to monetize social media directly from consumers quite frankly just don't quite understand the nature of the medium and the ill will that will be created by trying.
• Accept the iterative imperfection of the Web -- huge disconnect here and likely a legacy issue tied to years of print deadlines.  Nobody likes mistakes, but programming isn't exactly print layout either.  Give everything its due -- folks at newspapers stand behind their editorial process and the # of people who have to be involved in creating content.  But the same people don't give the same respect of the programming craft, and they certainly don't fund it adequately either.
• Stop making excuses for salespeople -- everyone is being forced to get smarter.  So should your sales reps.  Sure, the cash cow is & remains to be selling print ads to car dealers and other folks with big pockets.  But that business is getting weaker and weaker every year.  The successful sales rep of 2020 has a different suite of products and is involved in a different, much more consultative sale than the rep of 2010.

I say all of this at risk of upsetting a few friends here and there.  But it's my outsider perspective looking into an industry that still has a lot of resources and brand affinity even in 2010.  I don't think newspapers are by any means dead, but the best ones are already iterating, learning, and modernizing.  Are you?

Forbes article on local business marketing going social

Howdy everyone - today Forbes published a summary of my thoughts on local business marketing. Paraphrasing, I really do believe that local businesses are being forced to develop a core competency in internet marketing across major channels -- e-mail, social media, search, etc.

The full article can be found here:  http://www.forbes.com/2010/09/17/facebook-small-business-technology-marketing.html

Companies that get it are killing it, and those that don't will suffer.

Have a great day everyone.

5 Ways Facebook Places Changes the LBS Game

I think just about everyone in the local advertising halo is digesting Facebook's announcement that they are jumping into LBS with two feet.  The LBS folks knew this was coming, yet the proposed "co-opetition" still scares the hell out of them.  In fact, I brought up this very point at a panel in May with Josh Williams of Gowalla.  The entrance of a major player with a HUGE audience is a massive gamechanger for the startups that popularized things like check-ins, mayorships, location-driven game mechanics, etc.

If rival tech giants such as Google, Yahoo, AOL, Microsoft, and Apple haven't considered Facebook a competitor yet, they're probably now realizing that, yes indeed, Facebook is perfectly willing and able to compete in the local advertising arena and they're a major, major threat.

Overall this is obviously a really big deal and a seismic shift in the LBS business, in local advertising, and perhaps in social networking in general -- although it will take several years to play out.

In May, I shared some thoughts about LBS on Mashable and followed up here on my blog.  I thought I'd spend a few minutes today talking about what I think the latest news means for the sector:

1) LBS startups forced into building an ecosystem like never before -- I have written before about how LBS startups have been riding the wave of popularity & innovation but have also to some degree tried to control how third-parties interact with their systems.  For instance, even today only foursquare allows write access to their API.  LBS startups are not by any means dead -- in some circumstances they will remain the "consumer front end" for LBS.  But to stay relevant, they will need to be a lot more aggressive fast about building an ecosystem that helps justify themselves long-term.

2) Legitimacy to LBS -- LBS startups have done a great job of exciting the early adopter market and showing the world the possibilities of local, mobile services.  But none have yet made it to the mainstream.  Why?  Because it is a HUGE undertaking.  Reaching moms in Kansas is just tough.  Facebook changes all of this significantly because they have such a huge audience.  150 million+ people are on Facebook Mobile and over 500 million experience Facebook on the Web.  Now those are mainstream audiences.

However, I do think that this is a situation where the "rising tide raises all boats."  This will legitimize the existing LBS startup players as well.  In fact, I think in the short term foursquare, Gowalla, MyTown, and others will experience growth.  The bigger question, of course, is the long-term impact for the LBS startups.

3) Facebook, the aggregator -- With this move, Facebook aims to be the center of all location-based activity.  The existing players are presently invited to "read" data from the Facebook Places API but will also be allowed to write data to Facebook.  What a great way for Facebook to build a robust database off the backs of the startups that popularized the sector.  I think the golden rule needs to be changed from "he who has the gold rules" to "he who has the users rules."

4) Twitter, the afterthought -- Twitter just gets a little more marginalized each day.

5) The Cold War begins in earnest -- There is absolutely NO WAY that this move will go unchecked by Google, Apple, Yahoo, AOL, and other major players who are eyeing the location sector.  To some degree, this move really forces relatively quick action by these companies who will need to do something to be relevant.  Otherwise, Facebook will own it.  I suppose you can argue that Facebook is already well on its way -- they have the audience, they are about to have a ton of data, and they've delivered an immersive experience to users so far.

We live in interesting times, that's for sure.