FINDING NEW MARKETS OR OVER-SERVING OLD ONES?
By Colby Atwood
Imagine you are an entrepreneur setting up an advertiser-supported Web site in your community. Now imagine that you are in a meeting with some prospective investors and you tell them, “We’re going to sell ads only to those businesses that happen to be advertising in the newspaper these days.” You’d be crushed in the stampede for the door.
In effect, though, that’s exactly what many local media companies are telling themselves when they base their online strategy on “convergence sales,” “upsells,” “joint sales,” or “packages.” By whatever name, this strategy is, at best, transitional, and at worst, doomed.
Selling to your existing advertisers is a seductive strategy because it generates quick, high-margin sales. It makes sense to go after the proverbial low-hanging fruit, harvested from the folks you already know, who already trust you. Online revenue growth looks good, and the temptation is to stick with a proven formula – especially when times are getting tough for the core medium.
But as we explained in our 2002 report, “Disruptive Technology and Local Media,” it is essential for long-term growth that local media companies resist that temptation. They must force themselves to invest in the future of their online operations by going after new business – online-only business – before those easy sales have been exhausted.
The conclusions we reached in 2002 are still valid – and widely unheeded. The commitment shown by local media companies to extending their online businesses has been uneven. Some have actually taken a step backwards in the past couple of years by reigning in their fledgling online-only sales staffs and putting online sales back on the plates of the core medium’s salespeople.
We’re concerned about this tendency for two reasons. First, it sends the message that the online operation exists primarily to support the core medium, rather than to evolve into its own business. Second, it limits the site’s growth potential by neglecting new classes of customers in favor of “over-serving” existing customers. All of this is taking place in an environment of unfettered competition. You can bet that the entrepreneurs running the “pure-play” Internet firms active in your local market are looking for ways to serve anyone who might possibly be a prospect, not just people who happen to be advertising in the newspaper these days.
- Colby Atwood