The Interactive Advertising Bureau, celebrating its 15^th anniversary, is holding its annual leadership meeting at La Costa in Carlsbad, California. The sold-out meeting, dubbed “Ecosystem 2.0,” has attracted 650 attendees, up 30 percent from last year: a further omen of recovery in the economy. Over the years, we have actively helped IAB develop its leadership tracks in local, so it is good to see the organization on very sound footing.

24/7 Real Media Chairman David Moore, in an opening keynote, noted that 12 percent of ad dollars are now online, but online share remains disproportionately low, considering that 25 percent of viewing time is spent online. The audience’s increasing fragmentation forces publishers to look for new revenue paths, he added.

The clearest path to recovery is to focus on building more premium content, even though it inevitably means that subscriber charges need to be added. “Totally free content is dead,” said Moore. But that isn’t the end of the world. In 1982, cable TV was beginning to add unique networks, subscriptions were $6 per month. Now they may be $100 a month.

If an “EZY pay” system were instituted for content at 10 cents per access, that would be like charging a CPM of $100,” Moore suggested. That would be far more lucrative than what most publishers are getting.

Moore also predicted that digital would be the No. 1 ad medium within the next five years, with online video advertising leading the way. But first, the industry has got to adopt real standards and simplify the workflow for agencies and concentrate on finding new ways to make commercials more interesting to the consumer.

“You can’t be afraid to be disruptive,” added Moore. “You need to be more aggressive. You have to interrupt the consumer experience with ads. But do it in a way that is interesting and targeted.”

IAB President Randall Rothenberg, in his opening comments, said the key to advertiser success was to focus on the year-after-year development of brand building, which is a synonymous effort with charging premium prices, i.e., BMW and Johnson & Johnson. “It is about being a part of, not apart from,” said Rothenberg.

Having been in the trenches for the past year talking about multiproduct selling and how a consultative or collaborative sales process is a key component for selling multiple media, I keep hearing over and over again “I’ve been training on consultative selling for years so why should we rely on it to take us into the next era of selling?” Having been involved in local media sales for more than 10 years, I’m going to take the unpopular stand and say that the current local media sales process is transactional product selling in consultative selling clothes. In short, many sales organizations have embraced aspects of consultative selling but in large it is being used as a sales tacticto get in the door and keep the advertiser talking in order to sell specific media options.

BNET recently featured Harvard Business School professor Ranjay Gulati, who wrote a new book titled “Reorganize for Resilience: Putting Customers at the Center of Your Business.” In his book, Gulati points out:

“In a marketplace like today, customers have more choices and more information, and services start to look like each other, in what we call a sea of sameness. If you don’t have an ability to transcend beyond the features and functionality of my product versus yours, then you have a problem.”

Gulati points out the fallacy of the notion that media companies are currently consultative and customer focused. Many media sales teams feel if they are asking a few questions about the business and their expected ROI from their marketing efforts that somehow this constitutes consultative selling. Put simply, salespeople are saying “I’ll talk about your needs so long as it leads to you only buying my portfolio of solutions.” Gulati’s point of view is “Most organizations believe they are customer centric when they are asking questions, but they’re communicating with customers through a product lens (with a pre-determined end in mind).” Instead, Gulati says “companies must ask deeper questions such as what problems they are dealing with and what issues are happening in the life of my customers regardless of the solutions the sales person is offering.” The goal in asking probing questions is to help the advertiser better articulate his or her needs so sales can get them met.

Consultative or collaborative selling is about transparency and building solutions that fit the customer’s needs and not necessarily the media company’s balance sheet. If a salesperson is aiming to sell a specific product set, and is willing to un-sell other potential solutions, then this version of consultative selling is merely disguised as the same transactional selling of old — all paths lead to a limited solution. Media consultants recognize there are many media options available to advertisers and that at times their portfolio of media offerings has to co-exist or complement other media and at other times they must fight to win budget from media that may not be as effective or is receiving too large of a share of an advertiser’s budget. Being able to counsel local advertisers on media strengths and weaknesses means salespeople must learn about all types of local media to be effective in selling their own portfolio of media options.

Local advertisers are much smarter about where they spend their marketing dollars because they have access to more information than ever before and have tighter ties to peers through social networks who can offer additional guidance. Salespeople used to be the source of information about what was happening in the local marketplace but now they are one of many sources available. If a salesperson cannot deliver value beyond what an advertiser can access on his or her own, then he or she has very little to offer. True media consultancy is the path where more peer-to-peer relationships are developed. Based on BIA/Kelsey’s Local Commerce Monitor study, 48 percent of SMBs want their media rep to help them understand their media options and make the best choice for their budget among the confusing array of new media choices.

While many media sales organizations are looking at incremental changes to their sales processes, those that are savvy and understand that local advertisers have changed and that the sales role must change are the ones that will thrive. The reality is the market has already changed and it is up to each media company to understand how to recraft its sales strategy and put together a consultative media sales team that understands local media and can be the media guide local advertisers are seeking. It’s time to stop making consultative selling a sales tactic for getting the advertiser to talk and use it as a means for building a relationship, creating value and developing media plans that work for the benefit of the advertiser and leverage their existing marketing activities. If consultative selling fantasy can be turned into reality, media outlets stand to make significant revenue gains and gain a larger, more loyal base of advertisers.

Are the small-business “home and trade service” advertisers that populate PennySaver and American Classifieds a good bet to buy search packages? That’s the question being posed by American Classifieds, the second-largest classified publisher franchise with 6,000 editions.

The company signed this summer with WebVisible to provide search tools and sales training for 600 sales reps. WebVisible CEO Kirsten Mangers acknowledges the effort is not a slam dunk but thinks it’s worth a try. These advertisers are “largely untouched by newspapers and Yellow Pages,” and they’re touched on a weekly basis by the sales reps. They are well positioned for “more consultative” solutions, she says.

Mangers notes that the AmClass salespeople are 100 percent commission-based, and as print usage declines, they’re hungry for new revenue opportunities, especially online. The search sales packages, typically sold in buckets of 50, 100, 150 or 200 clicks, gives them more diversity in their sales kit, she says. “It is another channel.” The packages might be worth $150 to $1,000 per month, depending on the volume of the buy and the size of the market.

At this point, two-day, Friday and Saturday training sessions have been completed with five teams across the U.S. American Classifieds itself is well poised to leverage search and is Google certified.

While earnings by sales reps for classified publications typically trail other local media, Mangers says the figures are somewhat distorted. It isn’t always that the sales reps are the bottom of the food chain so much as they often are working in rural towns with less revenue opportunity.

At J.D. Power and Associates’ Automotive Internet Roundtable in Las Vegas this week, several speakers said they believe mobile search and services are an increasingly important part of auto marketing — assertions backed up by J.D. Power research showing that 18 percent of auto shoppers use mobile during the car buying process, up from 15 percent in 2007. The same research said mobile use was especially strong for luxury brands such as Land Rover, Mercedes and Jaguar.

Mike Sage from Universal City Nissan said he’s incorporated mobile into his marketing mix, and now has 600 text messages flowing back and forth between dealer and customer every month, including text, video and click-to-call. “It doesn’t replace the Web site, but it is another source of information,” he said.

Sharon Knitter, the longtime Tribune Internet executive who now runs the mobile program for Cars.com, said the company launched mobile in 2007 with the twin goals of extending the Cars.com brand and delivering “best of” content.

The mobile site receives four million page views per month, and is growing 10 percent to 15 percent per month. People are using the site when they are out shopping, she said. “They used to see a new model, and then have to go home to look it up on the computer.” Now, 39 percent call right from the lot, and 40 percent use click-to-call. Mobile is also used by dealers to send information to customers. “They say ‘give me your cell number’ and send them information right there.”

Real estate advertising revenues will give way to transaction revenues, at least in SoCal, as the Los Angeles Times Media Group teams with several partners to launch Zetabid, a new site that will display and auction foreclosed homes and other properties. The other partners are London-based GoIndustry-DoveBid, an auction specialist, and CataList Homes of Hermosa Beach, a real estate brokerage.

Each of the partners will share fees on sold homes. For the sake of editorial neutrality, there will be an arm’s-length relationship between the newspaper (which has just folded its Sunday print real estate section) and the new entity.

“These businesses are transforming and [Zetabid is] another way to participate in advertising revenue with a slightly different model,” said Venture Chairman Bob Bellack, who is president of digital media, classified and development of Times Media Group. “The traditional newspaper model doesn’t exist anymore,” he said, in the paper’s own coverage. “The next generation media company is a company that facilitates transactions and helps buyers and sellers come together.”

The first auctions are Sept. 27-28, which MarketWatch, in its coverage, noted will be accompanied by an extensive, multichannel local promotional campaign that includes print advertising in the Los Angeles Times, broadcast advertisements through media affiliates such as KTLA, LATimes.com, other local sites, real estate sites and at Zetabid.com.

The Wall Street Journal today wrote about the challenges that newspapers have in trying to sell to small local businesses. Beth Lawton at the Newspaper Association of America kindly asked us to add some context to the article (subscription required). Here is our piece.

… As The Wall Street Journal article highlights, many newspapers are looking “downscale” to the high volume of smaller local advertisers to make up for their permanent losses in retail and classifieds. About 30 percent of an estimated 10 million local small businesses put the bulk of their marketing dollars into the Yellow Pages. They are “directional advertisers,” and more interested in making sure their phone rings than how many impressions their ads deliver. In fact most would have no sense of the CPM they are paying.

Are Yellow Page publishers vulnerable to such entreaties from newspapers and other local sellers? Sure, but it isn’t going to be simple to take them on. While some portion of small-business advertisers have left the Yellow Pages (typically, more retail-oriented businesses), there is no wide-scale abandonment at this point. Depending upon the category, the return on investment can be remarkably high — even with an average annual spend of $4,800. In addition, Yellow Pages publishers have another advantage: Advertisers want to keep their position, year to year. Consequently, most efforts will be to grab budgets allocated to supplemental books or upsell efforts.

More importantly, at the local level, it is no longer an exclusive club of newspapers vs. Yellow Pages. Local advertisers are increasingly supplementing their YP buy with search engine optimization, search engine marketing, targeted e-mail, featured listings, video production and links, and online promotions. Many are also investing more in their Web sites.

Yellow Pages companies can (and do) provide such products. Many are selling seven to eight products, and because their own sites don’t provide enough traffic, they are syndicating traffic to a wide host of players. In this regard, they are way ahead of newspapers, which are still a world onto themselves — even with smaller and smaller local shares.

Yellow Pages publishers, of course, are not the only ones selling such capabilities. There are a lot of ways of buying Google. A number of other third-party resellers are seeking to sell such services to local businesses, in competition or partnership with Yellow Pages companies. In some cases, they are seeing large monthly budgets of $3,000 to $5,000. Some of these companies (i.e., ReachLocal, WebVisible, Orange Soda, Spot Runner and Yodle) are already working with newspapers, leveraging their strong local brands.

Ultimately, we see that newspapers have strong opportunities to enter these new areas of businesses and expect to see a great deal of new activity in this field. It will go beyond building a few vertical directories. The challenge, as the WSJ article correctly points out, is to get their sales and support activity to scale. While self-serve efforts are rapidly improving, many small-business owners are not ready for a self-service option.

The Kelsey Group forecasts that 25 percent of local online dollars will come from “marketplace” dollars (verticals and classifieds) by 2012. But positioning these marketplace dollars as replacement dollars for traditional newspaper revenues doesn’t do anyone a favor. They are, in fact, exciting new lines of business. As newspapers focus more on their niche and vertical strategies, all this has to become a larger part of their game plan.

The economy isn’t doing too well, but that hasn’t hurt the hiring picture for Yellow Pages and local search sales pros, according to YP veteran Ken Clark, who put out an interesting promo for his recruitment firm, Hawthorne Executive Search.

Clark says hiring via Hawthorne is up 25 percent in 2008. Publishers continue to expand in both print and local search, with SEO/SEM experts in especially high demand, as well as community managers.

Churn at pure local search adverting providers remains high, adds Clark. But that doesn’t necessarily mean sales slots are quickly filled. He notes that candidates can’t sell houses to relocate, they can’t pay for gas for jobs that are farther from home, they run away from uncertain entrepreneurial opportunities, and they see all the negative industry press.

One of the hard and fast truths about print Yellow Pages advertising is that the ads at the front of the heading almost always generate more calls and leads compared with those further back. The current trend is for small-business advertisers to move some or all of their directional media budgets from print to online believing that this move will produce the same or greater results. Those advertisers that remain with the directory are realizing some surprising results as they move up in the heading due to less competition. 

A recent blog post on Results Tracking showed a chiropractic group that benefited in AT&T’s Lancaster and Palmdale directory when the page count at the heading went from six to three pages. The charts below depict the uptake in calls between the 2007 and 2008 editions (click image to enlarge):   

From the blog:

As you will note, the 2008 AT&T directory is generating a 20% increase in results. Yellow pages are still heavily used by the older population. This market is the heaviest user of healthcare services. They are also the best insured (thanks to Medicare). This market also has large numbers of Empty Nesters with large disposable income. As more advertisers use emotions to guide their advertising choices they will continue to abandon yellow pages. The tactical marketer will use this window of opportunity to capture a larger share of the local leads generated by the yellow pages. 

The print product continues to deliver high-quality leads and may be more valuable at specific headings given the target audience, as noted by Results Tracking. The argument for online advertising is that it is less competitive on a local level, making it more attractive to SMBs. Some of the movement to online advertising may actually be creating the opposite effect, with print becoming less competitive and offering better lead generation.  Much like smart investors who look for opportunities counter to popular trends, smart marketers will seek out advertising opportunities that maximize their local exposure and deliver the volume and quality of leads that will grow their businesses.   

Over the past two months, we have been talking with sales reps in a variety of local media outlets who are selling search engine marketing. While we feel like some sales organizations are making headway in selling a significant volume of SEM products to their customers, we find that the technical aspects of SEM often work against salespeople who want to propose online marketing as an extension of an advertiser’s media plan. 

With the inherently technical nature of SEM, sales organizations often get too caught up in how SEM works rather than focusing on drawing parallels to the value delivered by known media offerings (Yellow Pages, newspapers, direct mail, etc.) so small and medium-sized businesses can clearly understand what they are getting. More often than not, SMBs could care less about how SEM works and more about what it can do for them and how much of a commitment of time it will require. 

Mike Moran, on his Search Engine Guide blog, makes a good point on this topic when he theorizes why more SMBs don’t use SEM:   

• The Internet is still too hard. Most small business owners are not comfortable with technology, because it still requires too much expertise to operate, sucking up time and money they don’t have. Time will solve this, because younger owners have more technology experience and because technology does get easier each year (I swear). We should expect that business owners that don’t use computers will be suspicious of Internet marketing. But most small business owners have at least made their peace with computers, so what else is holding them back?   

• Internet marketing is scary. No matter what you try, there’s too much to know to avoid looking like a fool or even breaking the law. Yellow Pages ads, trade show brochures, weekly circulars, and other tried and true small business marketing programs are at least understood. Sure, you could screw something up, but it’s hard. But with search marketing, you can blow money on paid search and get no sales. You can send out e-mails the wrong way and run afoul of the CAN-SPAM act. You can breach some Internet etiquette and be a laughing stock. No, for some, it’s just too dangerous.   

• Inertia. I honestly think this is the big one. Small business owners are the busiest people I know. They spend so much time just executing what they already know how to do that they are ill-equipped to spend any time thinking about something new.   

The local media industry cannot take the approach that only a limited number of SMBs will “get it” and buy SEM. With the large SMB audience still not using online marketing, the greater question is how can the message be simplified, what are the value drives that help SMBs make the decision to buy SEM, and what do they need after the sale to be sure they are anxious to renew their advertising?

We continue to delve into this topic and would be interested in hearing from our blog community what core messages are resonating with SMBs and how SEM can be simplified to draw in a much larger advertiser base.

In this economic downturn, I’ve heard so much talk about one medium or another making claims that it is delivering all the leads and traffic a company needs. Online selling against Yellow Pages, Yellow Pages selling against newspapers, newspapers selling against online classified sites, and the list goes on and on. The reality is no one marketing medium can deliver the entire prospect audience, nor can it deliver all the leads a small or medium-sized businesse needs in its local market. 

The fundamentals of marketing have always been to layer your media choices so they work together and complement one another to deliver the desired amount of awareness, traffic and leads for your business. But instead of taking my word for it or the words from a university marketing professor, I found the advice from a painters blog site, Out of The Bucket, made this point clear and easy for SMBs (and hopefully local media reps) to understand: 

The truth is no method of advertising is going to work every time. No method of advertising will create an endless stream of leads without fail (or at least not in the numbers most [painting] contractors need). More than focusing on an individual form of advertising, contractors should focus on a plan—a mix of advertising that creates exposure through a variety of means. I’ve long lost count of the people who tell us that they saw our signs, saw us in the phone book, and then found our web site when they did a search. It is the constant exposure that works, not any one particular piece of advertising. 

Local media reps need to keep in mind that while their particular medium does deliver value to an SMB, they must also be aware and be able to explain how it complements or leverages the other media the SMB is utilizing in its media plan.

This is why local media companies whose salespeople offer multiple products are in a better position to serve local SMBs. If the rep acts as a media consultant and demonstrates the value and ROI of a balanced media approach, particularly in delivering leads to a business, SMBs are more willing to listen and find value in the sales discussion.

Media sales organizations that represent single local media products must clearly position how their particular medium works best with other media and be able to comfortably and knowledgably discuss this if they are to have credibility with SMBs. 

While local media competition is healthy, understanding how media work together goes a long way in serving the needs of the advertiser.