Search is clearly becoming an ever more important device in the drive for the attention of the local consumer, but I’ll let you into a secret. It ain’t everything it’s meant to be. Just as Winston Churchill once described democracy as “the least bad option”, so search is the least bad marketing tool. Every company wants the perfect communications tool in terms of targeting, efficiency and effectiveness, but, like democracy, the reality ain’t like that.
What does this mean for us newspaper folks? Let’s look at some facts, which of course vary greatly from country to country, and culture to culture…..
As I’ve stated before, worldwide, around 60% of marketing expenditure is direct and below the line. Of the rest around 10% lies in Internet, of which half is search. And the balance is advertising in traditional media. In five years time digital will account for between 20% and 30%, with much of that being mobile related.
In another dimension, in most markets in the world, probably around a third of marketing expenditure, including advertising, is local, and of course the vast majority of the remainder while nationally driven, is aimed at local execution, be it local shopping or inter-personal transactions. Even the biggest manufacturing companies may rely heavily on brand advertising, but they also utilise highly localised strategies, for example in their policies for individual product promotions in supermarkets.
The implication of this is that locality and contextual marketing are becoming more and more important, and this is where newspapers have a major advantage, and where Google and Yahoo are falling behind.
Brilliant as Google and Yahoo are, they do not easily offer two key factors that are essential at a local level. These are localised granularity and aggregation. Of course I can type Pizza, Marrais, Paris, into the system and get a cute map, but say I want to aggregate data on teenagers’ education in Mosman Sydney it gets a lot harder. And refining to secondary searches is not easy. The Search Engine “Fast” provided a much more granulated search experience, though admittedly it took far more indexing, and this now powers many excellent newspaper websites, including FT.com and Ireland.com. It was bought by Microsoft in the middle of 2008.
Search isn’t just important because it is becoming a major source of digital revenue. It is also for two other vital reasons. First it is important because it enables sites, in a common contextual framework, to leverage from each other. Secondly, the data behind the search provides a means of tracking media consumers’ needs and interests. Google analytics is one of the powerhouses behind its product development. Put both these factors together – traffic leverage, and knowledge – and you end up with a potent tool.
The analogy that I draw is that of a shopping mall. At one end is a major branded retailer – Carrefour, Macey’s, Harrods, perhaps. Elsewhere are a range of smaller boutiques. Consumers go to the mall for the facilities of both, as well as a range of other experiences such as dining, cinema, or even ice skating, Their variety drives exponential leverage. So imagine the newspaper as the traffic creator, and the other partners in the mall as the beneficiaries, and co-promoters, with a fair revenue exchange.
News will never be a revenue generator, despite what News Corp are wishing, but it is a great opportunity and traffic generator. The partners need not simply be traders. They can be local services, councils, schools, universities, doctors, local community clubs, sports centres, and people seeking jobs and dates, all of whom co-promote their partners in the mall. But they require glue in the form of granulated search, locational marketing, and content aggregation.
By creating this integrated local solution, newspapers can not only create a profitable business model, where the leverage of partner interactivity funds the creation of news, but can also help local traders in their parallel challenges of antidisintermediation.
In most countries, newspaper companies still have the benefit of opportunity generation, because of either their localness or niche focus, which is something the pure-plays can’t offer. However as I wrote recently we cannot do it alone. We need to work together, and establish partnership relationships both with other publishers (nationally and perhaps internationally) and other stakeholders. Outside a few markets - the USA, France, for example, partnership is a thing that publishers find hard.
So far search has proved to be the revenue shifter of the last decade. Now it is getting more complex as location and context become key drivers of the next generation of revenue opportunities. This is our territory. Technological solutions exist, without having to pander to Google, Yahoo or Microsoft. We must invest to retain our advantage and move forward, rather than see another opportunity slip by.
