The development of verticals is an obvious growth strategy for newspapers, Yellow Pages, search engines and as standalones. The Kelsey Group projects that verticals and classifieds will make up 25 percent of interactive local revenues by 2012.
But nothing happens overnight. And at this point, still early in the game, there have been some initial disappointments with vertical results.
Teresa Lawlor, a consultant who specializes in vertical development, is a former VP of marketing for MediaNews Group (and before that, with Dex Media.) She has lived through a number of vertical start-up efforts and learned that it is going to require a lot of patience, determination and luck.
“I definitely think there is a slow transition toward the verticals being the next big wave,” says Lawlor. “The opportunity is there. It has the potential to build audience, engagement, loyalty, partnerships and new revenue streams. But it requires a commitment to spending some time working out what verticals will be most easily and profitably leveraged, building community around them and hiring staff … a little more open-minded about change and risk.”
Newspapers, in particular, are “scared to take the plunge because they don’t have the mind-set nor the personnel that know anything about this stuff. But I truly believe that this is the first step toward direct marketing for the newspapers,” she says.
The Yellow Pages is in a similar boat. “When I was at Dex Media [now R.H. Donnelley] about six years ago, we were just bringing on verticals [health, auto, b2b, wedding, legal, dining, travel]. It was a great idea — partnering with Edmunds, OpenTable, etc., to try to get a piece of the transaction and revenue share and introducing new products.”
But Lawlor notes that it was doomed to failure. “It failed because of changed leadership but also largely because we didn’t integrate — the content wasn’t integrated with the listings and the self-serve piece. So users never saw them and we had so many legacy data issues and conflicts with the sales force around self-serve advertising and the low price point of online products vs. print. Sound familiar?” she asks.
Lawlor still believes verticals are going to be a critical part of the future. But getting them started in a time of crisis is going to be all the harder since there is less patience in tweaking things, looking at the analytics and getting them right. “Being a change agent in an industry that is treading water is a very challenging thing and takes time,” she says.