For those people who have or need a bookie, the opportunity to win the big bet is enticing no matter what the odds are. OwnLocal, a digital company based in Austin, TX, is one of those bets- placed by the every-shrinking newspaper industry. They have designed a program primarily for newspapers that can completely transform them into local digital agencies. The implications of this program’s failure or success are profound.
Here’s basically how it works: An advertiser places an ad with a newspaper and the information goes into a computer database so that it can be managed internally and sent electronically to the printer. OwnLocal connects to the newspaper’s database, pulls the advertisement data out, matches the customer contact info to what’s out on the internet and creates a “digital ad” out of the info. OwnLocal then redistributes this information back to the newspaper for their local website and also creates a landing page for the advertiser for “SEO purposes”. OwnLocal and the newspaper go through this process for almost every newspaper advertiser and every ad that is placed- for $15 to $25 each ad when it runs.
The concept behind OwnLocal’s program is very strong. Any marketing organization would have to be foolish to snub their nose at something that could significantly impact their digital growth objectives. The opportunity for a newspaper to have a new, automatic stream of digital revenue is very enticing. And there is no question that consumers are migrating to the internet and newspapers are at a loss at how to capture that audience.
However, like every gambler knows, the odds are stacked in the house’s favor. Here are a few concerns that every newspaper needs to consider when looking at an OwnLocal partnership:
- Loyal advertisers get the booby prize. Imagine that you are a small business owner who has run a small print ad each week for the past 2 years. Because you know how to play hardball with your sales rep, your bill has not changed during that time, outside of a seasonal or promotional change in ad size. However, much to your surprise you receive a bill that is $70 higher than the previous month’s bill, and the increase is attributed to a “digital” something or other. What would your reaction be- happy, shocked, confused or angry? And so the problem begins…
- Bad customer data. Any individual who has ever worked in a CRM like SalesForce can attest to the fact that bad data is constantly put in and rarely updated or corrected. According to research conducted on 150 companies by Forrester Research, 22 percent found that staff could not or would not use a CRM; 27 percent said the processes between their systems was poorly integrated; and 33 percent said their business had chosen the wrong technology.
Throw in the variable that many newspaper groups have dramatically outdated systems and different technology processes between publishers, and the complication increases significantly. The likelihood of the OwnLocal platform pulling faulty information out of a paper’s CRM and publishing it on the internet is unfortunately very high.
- Not uniform across all products. Optical Character Recognition (OCR) has been around for a long time, but the OwnLocal system instead depends on data that is initially placed into a field rather than imbedded into a file. For example, the information in a classified ad, which is 100% text based, would need to be typed into a computer line by line. This allows Ownlocal to retrieve individual words and sentences out of the ad in order to recreate their own ad. An advertisement that is graphical in nature has the text imbedded into the image itself, which eliminates the opportunity for OwnLocal to retrieve the information.
As a result, their program excludes businesses who might actually benefit from an increased digital presence- magazine advertisers, micro businesses with no website, etc.
- Sales Process Issues.When the advertiser’s unpleasant surprise instigates a phone call to the newspaper, it immediately changes the activity of the sales reps, moving them from a proactive environment to a reactive environment.
- Inordinate amount of time spent handling customer queries and complaints. There is no way to monetize an extended conversation revolving around a complaint.
- Lack of uniformity among products/customers. If all of the sales reps had all of their customers participating in this program, it would be easy to create a streamlined go to market strategy. Notwithstanding all of the hoopla surrounding the technology of OwnLocal, their limitations of retrieving data from imbedded files creates a lack of parity among the paper’s advertisers and products.
- Difficult value proposition. Advertiser says, “I am already spending money on digital advertising and SEO with company X. Besides, I am spending a whole lot less money on a successful SEO campaign. Tell me again why I need this? So I’m going to get this $20 charge every time I run an ad? If a SEO optimized landing page and content is created with every ad that runs, am I going to have 17 different landing pages running on Google down the road? Won’t that actually DECREASE the value of SEO and hurt my rankings?”
- Potential chaos for digital goals and objectives.Every media company that sells digital products assigns a digital objective to their sales teams. Newspapers now have 2 options to modify those digital objectives- allow the reps to benefit from the new-found digital revenue and be compensated accordingly (very fair), or increase their objectives by taking the new revenue stream into account. From a management, payroll and psychological standpoint it can become very complicated.
- Potential legal liability.If one sales rep has a book of business that is not able to participate due to OwnLocal’s limitations (magazine, non-daily publication, etc.), and another sales rep is able to get a noisy advertiser excused from the program due to “extenuating circumstances” and yet another is forced to have every advertiser participate, where is the fairness?
Could a sales rep make a valid argument that they are being singled out? Is it discriminatory for one sales team to spend their time dealing with the fallout of the OwnLocal integration, while other teams are able to focus solely on the selling products to their customers? If a sales rep is unable to meet or exceed their objective due to potential fallout of the OwnLocal program, and it results in a performance management program or termination, could they theoretically make a legal case? Those questions need to be answered by the HR team of every single publication that participates in the OwnLocal program.
- Geo Value. According to data on OwnLocal’s website, the majority of their successful partnerships are with small publications outside of a major metropolitan area. This makes perfect sense, since the opportunity for those advertisers to work with a legitimate digital agency are much smaller than for an advertiser in a big city. The further an advertiser is away from civilization, the less likely they are to understand digital marketing and the more likely they are to be convinced that they are getting a value out of the program.
- Opportunity cost is high.Based on the information that is provided by OwnLocal, it is easy to see how the delivery of the “digital ads” and listings vary across publishers. If a potential newspaper partner would just do a little due diligence on the program, they will quickly see the listing and link errors that are being created and replicated.
Old media companies by and large offer a variation of Listing Monitoring, which basically finds all of the bad listing information on a business, lets the business owner know they have problems, and tells them how to fix it themselves. A few more savvy publishers offer Listing Management, which allows a business owner to correct those listings- at a much higher price point.
If OwnLocal’s value proposition focuses on their ability to harvest listing information for a small business and match it to their advertising information, how much bad data is being compiled and then disseminated? Is it a negative or a positive for that information to be highly optimized for the search engines? How long will that information be out there and where all will it be?
OwnLocal could theoretically take bad listing information from online review sites and directories, replicate it and make the listing information online exponentially worse than it was initially.
- Vendor disassociation due to price point. OwnLocal promotes their program by guaranteeing that an actual human is involved in the process of proofing a print ad before it finishes its transformation into a digital ad. The fact that one newspaper could compile and run over 100 print ads in one day, and one newspaper conglomerate could have a hundred newspapers in their corral, makes their value proposition a little questionable.
Let’s be ridiculous and say that the newspaper group had only 50 newspapers, and each one of those newspapers had only 50 advertisers on a given day that would be part of the OwnLocal program. How could those 2500 ads (per day) be accurately proofed? How many employees would be needed to handle the caseload? How much time would an OwnLocal representative spend on each one of those ads, making sure that the data in each one is checked and rechecked for accuracy?
It would be much more cost effective, scalable and profitable for every large newspaper group to implement their own version of print to digital ad creation, taking the best of what OwnLocal offers and trashing the not so great parts. This would allow them to have flexibility in their go to market strategy and be able to formulate their own messaging to maintain and grow the advertising base that can make or break the organization.