Colin Pape, Co-Founder/President of ShopCity.com, an early stage Internet company, has a vision, “imagine finding prices for any product or service offered within your community all on a single website.” That’s what he’s doing with his company. ShopCity’s business model is working with local businesses and putting, pricing, availability, hours of operation and methods of payment in the ShopCity.com marketplace to facilitate local purchases. ShopCity.com provides small businesses with a package of advertising services, sponsorship opportunities, a suite of online business-building tools and a local marketplace they can buy and sell through that is heavily promoted in the community.

Small businesses are often eager to consider advertising online but they are attracted to a more complete local market solution that includes on-air, events, and other local points of presence in the marketing mix such as outdoor signage. “Small businesses want to be on the Internet but they’re reluctant to pay for an intangible Internet presence that’s just online – however, when you combine online with in-community advertising – whether it’s signage, radio or TV ads – something they can experience offline, the equation changes,” Pape says. ShopCity wants to drive additional success by partnering with local radio stations to leverage their brand credibility, ability to reach key demos and local sales forces. In return, ShopCity offers a compelling digital solution for radio stations to add in to their mix. ShopCity typically does revenue split deals.

ShopCity got the idea of working with local radio stations from a Midland, Ontario radio station. The Dock FM was looking for a unique angle to bring to its multiplatform advertising efforts and an ability to get a “call to action” for its advertisers. Since the station kept bumping into ShopCity’s sales reps, The Dock FM’s Sales Manager reached out to see about a partnership. ShopCity saw the possibilities and agreed to work with The Dock on ShopCity’s ShopMidland.com site, offering free profile pages to radio advertisers as a value-add, and with the station promoting a co-branded sub-section where businesses could get a special discount while the Dock earned revenue share on paid packages.

ShopCity is looking to develop the model further and is seeking broadcast partners that are already running ‘shop local’ oriented campaigns. Says Pape, “I see huge potential for radio stations and community-branded web platforms to come together to create cross-platform value for each other’s medium. Radio plays an important part in our strategy moving forward.”

On the media side, key issues include finding viable business models; understanding the mobile ecosystem well enough to make informed decisions regarding content, revenue models, technologies, services, partners and market opportunities.

On the advertising side, brand managers, agencies and small and medium business (SMB) operators are trying to be smart with their media plans and spending allocations among multiple media platforms to drive the purchase funnel. Making the mobile platform even more challenging in the consumer environment is the fast pace of evolution not just in technologies but also in how consumers and businesses are adapting to the mobile environment.

BIA/Kelsey has conducted three waves of “Mobile Market View” (“MMW”) which is a consumer study of U.S. adult mobile phone users in the fall of 2007, 2008 and the latest results released in November 2009. One of the key emerging trends we see in the latest research is a solid consumer movement toward using the mobile platform for non-voice communications including search, text messages, email, video, social networking and mobile web browsing. We see fast growth continuing in adoption of smart phones (29% of consumers now have smart phones) and data packages (37% of mobile users now have data plans).

Based on consumer trends, we see revenue growth for content, search, directory, ad networks and of course mobile service providers. BIA/Kelsey sees the fastest revenue growth occurring in local search and mobile video services. The high trajectory revenue growth model will be advertising but we also see subscription and content on demand services as strong components of mobile revenue mix.

For advertisers, agencies and brand managers, this growing use of mobile has significant implications for their media strategies. From 2007 to 2009, consumers have essentially doubled their use of the mobile platform for non-voice communications. This represents a fundamental and rapid shift in media use which needs to be considered in determining the appropriate mix and spending levels among local media platforms. Media companies that do not currently offer a differentiated mobile advertising option increasingly will find it difficult to satisfy advertisers drawn to mobile’s ability to drive brand metrics such as increased awareness of advertising campaigns and messaging. Ad messaging can include not just search and mobile web but also video as we see nearly a fifth of mobile consumers have received or sent videos each month.

The mobile platform is becoming integrated into consumer habits in a more pervasive and sticky manner than any other medium in history. It is fast becoming a mission critical part of the media industry for publishers and advertisers.

Article prepared by Rick Ducey, Ph.D., Chief Strategy Officer, BIA/Kelsey

First published in ShowSmart, a publication by NABShow, which can be read at:
http://www.nabshow.com/2010/email/ShowSmart/LandingPage/ShowSmart_issue2.html#3

Now that the show will no longer be available, how will these stations fare? First, the show will continue into 2011. Syndicators and local stations will have a substantial amount of time to plan and test alternatives. It may be one of the programs presently airing or some local programming yet to be developed. The time slot that Oprah has been occupying for many stations is one that is quite attractive, so investing in a new program is justified. Besides it’s own time period dominance, The Oprah Winfrey Show has added importance as it often leads into the stations’ local news programming. That’s helped to justify the fees charged to stations by CBS’ Syndication arm.

The considerable amounts that local stations have been spending for airing Oprah could easily be spent on alternative syndicated programming, or instead, on developing local programming. Profitability of this time slot might actually increase with these substitute programs.

Finally, while the size of the audiences that Oprah attracts are still very large, the ratings have been decreasing. The Oprah brand name on local stations is still very important and she’s helped launch other well known personalities such as Dr. Phil and Rachael Ray. For stations that carry Oprah, having this announcement happen in the middle of the all-important November sweeps might be a temporary boost to the ratings. However, given that the show won’t officially end until September 2011, those increases are likely to be temporary. The decrease in audiences may level off or continue downward over the remaining period of the show. Nevertheless, the impact in lost audiences is not as significant as it would have been several years ago. But, there’s no doubt that a badly battered industry certainly can’t relish the loss of one of its most widely popular personalities especially if it turns out that part of this exit is being driven by her desire to play a larger role in the development of her cable project (OWN) in partnership with Discovery.

The full economic impact of the Oprah show ending will not be known for a few years. Syndicators and local television stations will have an opportunity to be creative in the quest to find some programming that will distinguish itself in an ever increasing competitive marketplace. Let’s see what they create!

Though posted under Mark Fratrik, both Steve Passwaiter and Neal Polachek contributed to this post.

Ernie Mosteller, VP, Creative Director/Emerging Media for Brunner Digital asserted that, “most advertising is bad” and that the “formula I see emerging is people looking for a formula. He cautioned that “mobile is an extremely personal space that is opt-in and you have to give people a reason to want to interact.”

Ann Hunter is comScore’s VP in charge of advertising effectiveness product suite and noted that most failed campaigns miss the mark because clients focused on trial metrics versus product benefits. She advised that when digital marketing is targeted, creative and engaging, it works. Trialing metrics don’t deliver results, she noted. “Less than 10% of web users generate about 85% of click-throughs. These are not necessarily the people you want. Click-throughs are not an appropriate goal for most campaigns.”

GenuisRocket’s founder, Mark Walsh challenged that ads should act like the consumer knows something. They should be customized, personalized and place in an appropriate context.” He also emphasized the value of interactivity. “Brand managers fall in love with tools and statistics. But interactive campaigns offer a stunningly rich opportunity to hear directly from customers.” Hunter agreed, “You lose 50% off your opportunity if you don’t listen!”

With increasing bandwidth available to users, video is a natural outcome. In fact, Mark Zaneis, Interactive Advertising Bureau’s VP of Public Policy said that with the standards IAB helped foster for formatting and serving Internet video and increasing inventory, this is a growth area. He argued that it’s a misconception that doing web video is too complicated.

Rochelle Sanchirico, Washington Post Digital’s senior director of acquisition marketing, answered the question, “how would you spend $5 million for a GAP campaign on a new jacket” said she would consider the creative elements, campaign goals and how to leverage these across channels. She emphasized that media allocations need to be optimized through-out the campaign by reassessing relevant performance metrics. She’d split the budget equally into four categories: display ads for exposure; social networks for presence and engagement; search for conversion (i.e., consumers who want to buy just need to find out where); and the final 25% into “experimental” channels like mobile or blogs.

When moderator Paul Sherman asked each panelist to name what will be hot for 2010, the answers came back as video, social, targeting and consumer control. Earlier the panelists had also called 2010 “the year of mobile.” When asked why mobile wasn’t on anybody’s “what’s hot” list the panelists said that interactive marketing has evolved beyond focusing on individual channels and that campaigns must be cross platform to fully leverage marketing and advertising opportunities.

Rick Ducey is the Chief Strategy Officer of BIA/Kelsey.

Credit crunch, debt crisis, falling Fed rates, real estate valuations plummeting, unemployment rising, auto bail out on the horizon . . . pretty much every sector of our recession economy is feeling pain.

Conventional wisdom holds that the media industries are relatively more robust in down economies as people will tend to save money by staying home and consuming media. Yet we see declining forecasts for advertising expenditures by businesses in both the traditional and digital media for 2009. For example, Magna’s Bob Coen in his December 2008 forecast says he expects to see a decline of 3.2% in 2008 ad spending followed by a 4.5% decline in 2009.

Is reduced ad spending a good strategy for U.S. businesses trying to stay afloat during a recession?

For many businesses, the answer is no and for these two reasons:

• Advertising during a recession has major benefits. It protects the brand, increases sales and is actually more cost-effective with a more attractive ROI during a down economy. UPenn’s Wharton School of Business professor, Leonard Lodish, argues in a recent Knowledge@Wharton article that times like these make for attractively cost efficient ad spending. As ad demand slacks, costs go down but you can achieve the same impact; perhaps better if your competition decides to buy less ad inventory.
• Media allocations may shift but it doesn’t make sense in the long run to cut ad spend below your “brand elasticity.” In other words, if you conclude that advertising drives sales, there comes a point of diminishing returns when one more ad will no longer drive incremental sales. This equilibrium point may shift in a soft economy since your competition may reduce ad spending. This may be your opportunity to increase market share by increasing rather than cutting ad spend.

What evidence is there to support these two assertions?

• Wharton’s Prof. Lodish points out that, “research shows that companies that consistently advertise even during recessions perform better in the long run.” One study Lodish cites from McGraw Hill following 600 companies from 1980 to 1985 found that businesses that maintained or increased their ad spend during the 1981-1982 recession had net sales increases of 256% over those companies that did not advertise aggressively in the same period.
• David Sable, COO at Wunderman, a brand building agency warns that companies that do cut marketing and advertising budgets to “save” expenses may well end up spending four or five times as much down the road to regain lost market share. This is not a good strategy!
• It also makes sense to consider “rebalancing” your media allocations in a down market, just as you rebalance your investment portfolios. You may want to reassess your risk tolerance and rebalance accordingly. Significant growth and proportionate spending has moved from traditional to newer digital and mobile media platforms. However, these platforms are still proving themselves. Indeed, a study released this week by Rene Wilson, director of MS&L’s “influence marketing” unit, shows that 84% of “digital influencers” get their information first from traditional media like radio, TV, newspapers and magazines and only then go online to learn more. So to get word of mouth viral marketing started…it’s back to the traditional media to get things jump started. As Ms. Wilson said in a related Advertising Age article, “Everybody wants to talk about how it’s all digital and we certainly believe that it is the future. But traditional media still has the ability to spark word-of-mouth.”
• Use of Traditional Media Becomes Differentiator. Expect to see TV ads, radio and to a lesser extent, newspapers, act as differentiators for leading online services. Services such as HouseValues.com are already going this route. Among its 2009 predictions, BIA/Kelsey Group advises in its list of “What to watch for in 2009” – look for cross-media bundles bringing together newspapers, TV, radio and online services.

Even in a down economy, it makes great sense to keep advertising. It can offer great cost-efficiencies, bigger ROI, preserve or help your company expand market share. Rather than short term thinking about balancing your expense margin to protect cash flow, you may well be better off “rebalancing” your media allocations. Pete Blackshaw at Advertising Age makes a similar argument when he cautions, “Many of us are going to wake up in 2009 wondering “what did we eat?” and “why did we devour it all so fast?” He goes on to prescribe that we may well, “… feel compelled to join the social media equivalent of Weight Watchers, eager to trim the excess and rediscover a modicum of don’t-follow-everything discipline.”

Rebalancing media allocations to rely on traditional media’s strengths is very good strategy since we see that traditional media is the first refuge of the digital influencers who can drive viral marketing for your brand. P&G is a real world example of a firm that tends to increase ad spend during tougher times. P&G believes that it can steal share from adversaries that cut spending and that they can then keep those customers when the economy strengthens. They are counting on the competition to slash spending. This time around, P&G is looking to renegotiate their existing schedules in order to get more spots but this will have the same impact of increasing their share of voice as the nets/stations will not want to lose those critical ad dollars.

It is a new world out there. The challenge of predicting your radio station’s revenues, as well as the total market revenues, has never been more difficult. No longer can you just plug in a 5-7% increase for the market and a few percentage points higher for your station, and think you are acting conservatively.

Competitive forces in recent years – for both listeners and your local advertisers – have weakened local radio stations. Added to that is the recent economic downturn, and what results is a gamble to predict revenues for 2009.

What do you need to consider when making those predictions? Overall, you need a better sense of what is going on in your local market. First and foremost, is to determine what local economic conditions are expected. Local data on employment, retail sales, and increasingly, housing sales, are essential in determining your market and station revenues. In addition to just the cold, hard (and sometimes very dreary) facts about the local economy, it is also important to talk with local retailers and service companies. Local radio broadcasters are well positioned to have those conversations with existing and future advertisers. In some sense, that is the essential “color commentary” one needs to complement the “play-by-play” of the local economic data.

Another essential area of discovery to help in estimating revenues is monitoring competitors’ activities. This area does not just include what the other radio stations are doing and are thinking of doing, but increasingly important is to determine what other media are doing. For example, how active are your local cable systems in the advertising marketplace? What programs are your local newspapers employing to stem the downward tide they are facing? As for the other radio stations in your market, are there any new owners of these radio stations, and are they going to have more pricing discipline or just add inventory to the already oversaturated local market?

In addition to their activities using their traditional media outlets, you need to also monitor the on-line activities of these competitive media. Considerable amounts of advertising revenues are being diverted to local on-line outlets, many of which are affiliated with traditional media outlets. It is essential for local radio stations to keep up with what other media are doing online and to have an aggressive program for themselves for their on-line activities.

In a recent study BIA conducted with Borrell Associates, we derived valuations for the online activities of local traditional media, and from that analysis we found that many radio broadcasters are generating substantial sums on their websites and adding considerable value to their overall businesses as a result. (For more information on this report, click now.)

Another consideration when predicting your station’s and your market’s revenue growth is how involved your sales staff and the rest of the local radio market is with their local advertisers. What we have seen in recent years has been a relatively superior performance in medium and small markets in terms of revenue growth. While that growth has not been too spectacular, those medium and smaller markets have seen 2-3 percentage points higher than the larger markets. We believe it is the involvement by the sales staff with their local advertisers directly that has led to that advantage. Keeping that direct contact up with your advertisers will lead to stronger growth.

Finally, the perilous state of local newspapers may provide more opportunities for revenue growth, and thus, should be taken into consideration when you are forecasting. If your local daily is experiencing serious circulation drops, and possibly even considering not publishing one or two days a week (some are thinking of stopping Tuesday publication), this might open the door to steal away some newspaper clients. Analyzing those possibilities when forecasting is a must.

To sum it all up, radio broadcasters are being challenged from all directions. As a result of that competition and generally tough economic conditions, the industry has suffered several years of negative revenue growth. Forecasting revenues with that recent history is incredibly challenging. By being present in their local markets and monitoring local economic activity, radio broadcasters should be able to navigate these waters and arrive at sound revenue predictions.

Add me to the list of folks who have an opinion about Microsoft’s new ad campaign featuring two of the 1990’s biggest business and entertainment icons in Bill Gates and Jerry Seinfeld. The first ad makes Gates out to be Seinfeld and Seinfeld to be Bill Gates. That’s not easy to do. Gates is the one with the subtle and cool cues in this effort and Seinfeld’s efforts are somewhat focused around a discount shoe store, churro and his desire to make his computer taste like cake. So, who exactly is the nerd here and who talked Seinfeld into this? Okay, I know the answer to that question. Unfortunately, the follow on efforts have been as painful to watch as the first. I guess the only satisfaction this writer had was watching Seinfeld and Gates get thrown out of the house in which they were guests. The teenage daughter doing in real life what the rest of us had been doing with our TV remotes. Microsoft has finally seen the obvious and has pulled Seinfeld from the ads but that’s like blaming the gun for shooting Lincoln.

What becomes interesting is the perception one can get from this campaign that Microsoft has had to admit to itself that it’s not cool any longer. The software giant is certainly a vital player in the international business arena and it has a tremendous platform from which it will continue to enjoy large profits. That’s not going away.

But, the company that launched the PC revolution now looks a little tired, unexcited and seemingly lacking in success with efforts that go beyond licensing revenues from its largely preinstalled operating systems (Windows) and network effects productivity software (Microsoft Office). It has surrendered search and the corresponding advertising revenues to Google. Microsoft gave up the last real chance to try to make a run at Google by ending its quest to purchase Yahoo. Speaking of old timers, I think Trout and Ries would find a case study in Apple’s continual repositioning of Microsoft both on the PC vs. Mac argument and with the iPod products vs. Zune. Apple’s message is pretty clear.

With sales figures as a backdrop, the gamers are clearly more interested in the Wii and not the Xbox despite Microsoft’s massive expenditures and consumer subsidies in that area. While some high end gamers do seem to like the Xbox, are there enough of them to make the product commercially successful? Give Microsoft credit for the recent price drop on the Xbox with the holidays on the horizon and games to be purchased.

With all of this news as a backdrop, these can’t be quite the happy times of the earlier decade when many of the same pundits who now deride Google for their alleged pursuit of global domination had a similar narrative for Microsoft. It appears that the new captains of the digital revolution have clearly put Microsoft on the defensive.

I’m somewhat puzzled at the reemergence of Bill Gates in this campaign. Hasn’t the company spent the last five years trying to disassociate itself from its former CEO and to make Bill less important to the operation? I guess you have to give Steve Ballmer credit for putting his own ego aside and putting Gates out front once more as the face of Microsoft. Maybe the Gates that runs charities is a more charming figure to the American public? I just don’t know that it’s helped them very much to bring up the past to promote the future.

It has to be tough to watch as others, somewhat ungrateful for the progress you made in the early days, pass you by as seems to be the case in Redmond these days. A questionably effective ad campaign has not transformed the image of Microsoft in the minds of the American consumer. Only great products will do that. As to that image of cool these ads try to portray, as someone once said on a famous 90’s sitcom, “it’s not a lie if you believe it.” Was this an ad campaign about nothing?

I know how hard it is to find good salespeople in almost any business these days. It’s a common complaint I’ve heard from radio owners and friends of mine who own businesses outside of media.

Having said that, it’s still inexcusable for radio companies to send out unprepared and unknowledgeable sales people into the market. Hasn’t our industry suffered enough from not training our sales people and sales managers on how to effectively make radio advertising work for Clients?

Add in a lousy economy and an industry struggling to maintain its place in the advertising food chain and you’re flirting with disaster. By saddling customers with reps who don’t know their business and have no interest in learning about others, you do a great disservice to an enormously effective advertising medium.

I read industry trades with comments from radio CEOs who assure us that this doesn’t happen any longer and that radio sales reps are as professional, if not more professional, than those of other media sellers. Call me a skeptic if the following incident about which I’m going to tell you is happening out there with any frequency. I don’t want to impugn the entire industry based on one experience but I have to believe that if it’s happening here, it’s going on in other places.

A friend of mine, who knows a little about my former life as a TV/Radio media seller and manager, works for a financial firm in a Top Ten media market. This firm does not have an agency or a freelance buyer working on their behalf and they buy all their media in house. Having some Top Ten market experience on my resume, I’m too aware that there are relatively few direct accounts in markets this large. Those that fit this description should be treated as a pearl of great price for any media sales rep. These accounts are fertile ground for a true sales professional who knows how to use their station’s assets to the benefit of the customer and who can listen to a customer, ask the right questions and turn radio into a lead generation machine. Sadly, my friend got the opposite.

This particular industry representative happens to work for one of the top stations in the market that’s owned by a well known and well respected company that anyone in the business would know without fail. I’ve found myself wanting to pick up the phone and call the gent who runs this station to tell him what happened here but have come to the conclusion that if he’s hired the manager who hired this rep who “serviced” my friend, he probably doesn’t care.

Enough of a primer on this case of malfeasance?

It became abundantly clear that this rep was handed a package by management and was dead set on selling that package whether it found the type of people my friend’s firm needed to reach or not. 65% of the spots in the package were in off times, mostly evenings and weekends. One would think that if this radio station were really interested in this schedule working for this new-to-radio advertiser, they would have managed to find a way to include more of their better inventory in order to help guarantee success, particularly in the early part of this quarter. My friend even used an old trick that I was taught by one of my mentors to ask for a Monday through Wednesday schedule so she could make it easier for this rep to include more 5am-8pm spots during the week by staying out of the heavier retail demand later in the week. This wasn’t something the rep or the manager thought to emphasize. That really demonstrates a sales department that knows its inventory flow.

Further, this rep didn’t even leave the office to see the advertiser in order to have an opportunity to meet the decision makers and/or the influencers and ask the right questions to see how she could accurately deploy the resources available to her based on the feedback she got. Even when it came time for the presentation of her recommended schedule, this rep decided the best course of action was to do that by conference call. My friend’s company is in one of the close in counties in the market and making a trip out there wouldn’t have taken more than forty minutes. Without making a connection or asking the right questions to the right people, the suggested schedule made about as much sense as nothing. When queried by my friend’s boss as to how long the schedule should run, this enterprising rep said two weeks. Two weeks! She also mentioned that the night and weekend spots were really just bonus spots and she also offered a free internet ad on the station’s website. Nice way of selling the value of your audience and interactive elements, eh? Did I also mention that the grass in my yard grew faster than this rep when asked to run Scarborough data to make sure the schedule matched up with the people the company wanted to reach?

Can anyone really promise results to a Client who’s going to run a total of forty spots over a two week period? That’s not enough reach or frequency to do the job. This rep missed a golden opportunity to outline a yearly commitment for this company that would have delivered results and a better than average chance of a renewal contract. Had she done her homework, she could have outlined a schedule based on the business flow of the company with an understanding of how their services are procured by their customers. But, you have to ask the questions first and this rep didn’t bother. All she saw was the promise of a quick commission check and the achievement of a quota. What’s going to get left behind in the wake of this effort will be another advertiser who will state that famous line we all get tired of hearing, “radio doesn’t work.” I guess her managers never thought it was worthwhile to train her how to ask those questions or provide her with some guidance on making the medium work.

Unfortunately, despite the efforts of my friend to convince her superiors otherwise, the company decided to buy the two week schedule and it’ll begin shortly. A sales manager who should have known better, decided to sign the order and I’m sure the rep in question probably got a pat on the back for a good sale. What this station did was steal money from a Client by not adequately training a sales rep and a sales manager missed an opportunity to take a rep aside to give her a much needed lesson on how to sell radio as a solution to this Clients’ needs. Furthermore, the station left a ton of money on the table in pursuit of a quick hit. I just wonder how many other customers are in for this treatment.

We’ve got to do better than this. The margin of error for this type of sales effort is long gone. Our business doesn’t grow organically any longer and the competition has never been fiercer. When I sold radio back in the ‘80’s, this type of “training” by using Client’s money was commonplace. Radio’s come a long way since then and we need to realize that it might be better to have six really good and well trained salespeople on the street than twenty mediocre to bad salespeople. Our business can’t afford the damage to its reputation by continuing to make these kinds of mistakes at the expense of the advertiser. Advertisers have too many choices at their disposal. If you don’t break your neck to deliver results, you’re out of the mix. In a mature business, it’s training and Client relationships that give companies an edge over the competition. It’s certainly not the desire for a fast buck at the expense of a new and valuable Client.

I hope this isn’t happening with your reps and sales managers in your markets but I hope this serves as a reminder to Senior Management at the corporate and cluster level to make sure that you’re doing right by the Client by not hiring managers who are incapable of hiring and training people who are passionate and eager to learn how to make radio work. We’ll never grow our way out of this with these tactics and the damage left in the wake of this nonsense will continue to haunt the business.