What chance do local media providers have in surviving in an online age? A good one, if they follow the evolution of consumer habits and marketing. But for some making the transition from print to digital might be a step too far without some new ideas and different business models.
It looks like only a matter of time before Hibu, the company formerly known as Yell Group, the makers of the globally familiar Yellow Pages local directories - falls into the hands of its lending banks, who are seeking redress on debts of £2.2 billion (via Telegraph).
It's looking bad, with analysts predicting a further erosion of market share and profits. A new, bold strategy from CEO Mike Pocock of becoming an online brand marketplace for SMEs, focusing on helping companies market themselves, with 337,000 sites created for clients last year.
But that's yet to have much effect on Hibu's fortunes. Print revenue fell 21 percent in the year to April 2012 to £1.15 billion - combined digital revenue (online directories and client marketing services) brought in £461 million in the same period, leaving a revenue gap of £690 million. With 5,000 staff in the UK alone, organisational change isn't something that happens overnight.
The company's share price chart from the last ten years could be titled: What Happened to Local Advertising When Google Arrived:
Google's domination of the search market in the UK is all but complete, with a 90.96 percent share in the UK (Hitwise, via Themarketingblog)
Small and medium-sized companies are voting with their feet and - worringly for Hibu - figuring out cheaper ways to build an online footprint. Jay Gavin, MD of the comms agency inPressOnline has been working with SMEs to build marketing campaigns without buying up Yellow Pages ads, but instead by creating an online presence through online content and SEO.
The concrete company Mixamate had previously spent a six-figure sum annually on Yellow Pages ads, but Gavin tells me it now spends a quarter of what it used to on marketing and has better exposure and better results. Appearing on Google, and controlling how those results look, has tremendous value and companies don't need Hibu to help them.
This is the challenge facing all local media. While brand advertising spend continues to shift over to online and mobile -- rising 10.3 percent this year in the UK, compared to a 1.7 percent drop for newspapers, according to Zenith -- the winners there are Google and Facebook, who have the scale and reach to make low value eCPMs inventory worthwhile.
While as for local SMEs, as businesses build an online strategy, they are figuring out how to market themselves cheaply - without the need of the local media middleman.
I asked on Twitter this morning what the best hopes for local media business models were - curiously, more than a few people said "events".
@psmith A commitment to unique, non commodified content would be a start.— Brian McDonnell (@backpagebrian) September 3, 2012
It's not quite the same thing, but The Economist makes a good deal of money from events, as Garret Goodman makes clear in this HuffPo article. But online publishing evangelist Jeff Jarvis replied on Twitter that there is indeed a local events biz model to be found.
Is there hope for a local events business mode, and can anyone point to a company that has successfully done this? Please leave us a comment or get in touch if you know.