Low digital margins are the problem. Is self-serve the answer?

What keeps you up at night?  For digital executives at local media companies, it is often the profitability of their departments.

The problem is not a new one. Digital services divisions were supposed to be able to reach into lost markets of small and medium size businesses, expanding market share and share of customer.

Serving Small Business

Years later, these divisions have opened up new markets but are barely scraping out a decent profit.  The problem is not a new one; most large metropolitan papers priced small businesses out of the newspaper market long ago during the glory days of the industry.  Small business ads were never actually profitable, at rates of $75 or $150 a week, unless they were classified ads.

According to Borrell Associates’ latest study, SMBs who still advertise say that traditional display advertising is overpriced.

“SMBs feel hoodwinked and lied to by the media company;” Borrell scolded media executives at a recent digital revenue conference.

On the other hand, local media selling digital services tell me that profit margins are disturbingly low, even when the division is long-past the standard ¨start up¨ phase.

“We have to be asking what is the most efficient way we can sell what is perceived as a “commodity,¨ said Chris Edwards, president of the Cedar Rapids Gazette and its agency FusionFarm. “And we have to look at automation.”

One problem is that when re-selling other products like Facebook or Waze, after the “mark- up” there is not much room in margin to pay outside sales representatives to sell and service their customers and still make a profit for the media company.

iPublish Media, the leading developer of self-serve advertising, thinks they have the answer:  DIY advertising that automates both the buying process and the back end fulfillment making each sale hands-free.

Small Businesses are DIY Marketers

The stakes are huge. 64% of SMBs do not use either a sales rep or an agency (Borrell Small Business Report, 2017) when they buy marketing, and that number is growing (Borrell Small Business Report 2105 to 2017).  They buy marketing, DIY, on their own.  Between using Amazon to mobile banking – people are used to getting what they want when they want it without interfacing (or waiting) for humans to fulfill their needs.

Take a minute to think about this number. If there are 20,000 businesses in a media´s prospect database for your small sized city, more than 12,000 of them are already using DIY advertising,  just buying it on other platforms that do not support local journalism.  What would it take to sell DIY local packages that included trusted local media by email? With the climate of distrust and fraud in the digital world a local media partner is just the sort of “anchor” a small business needs.  A recent Adweek* article said, “New research shows ads in trustworthy environments are becoming significantly more effective,” due to the halo effect of the trusted content and brand where the ad is displayed.

Providing a SMB Solution

iPublish Media´s new SMB platform for publishers not only ‘Amazonify’ print, online and mobile advertising experiences for local small businesses, but also smoothly automates ad design and fulfillment across channels with a variety of slick integrations. Products available include not just Facebook and programmatic, but also email, video and Waze ads, smartly bundled into three tiers at low price points.

iPublish co-founder, Brian Gorman claims that by removing the seller’s cost of ad production and manual fulfillment out of the process bundles as low $99 a week can achieve a 60% margin. Typically, the bundles start in the $129 to $199 range and end in the $400 to $600 a month range—affordable to almost all small businesses. They are able to buy what they want, when they want it, and can see measurable results with the automated reports that follow up on the ad campaign.

“No one believes me,” Gorman says.  However, some companies apparently do.  Large newspaper chains like Gatehouse are diving in with self-serve implementations already started.

iPublish Media may be the right company at the right time, with 12 years of experience selling white labeled DIY front end platforms for obituaries, private party ads, public notices and real estate. In fact, they claim their DIY transactions reached more than $200 million last year and have surpassed a billion dollars in the last decade.

Besides the number of available channels, what makes the SMB platform sexy is how the ads are built on the fly from the SMB´s own Google search content, SMB website and SMB Facebook page.

When an SMB enters their business name and zip code, the iPublish software pulls their content to populate responsive ads in a variety of sizes, that can be reverse published to print, and/or served on mobile, digital or social channels.

To the Chief Revenue Officer however, the match is also attractive. With 60% profit margins on bundles in the range of $99 to $600 month, the platform opens up a new marketplace of small businesses in the billions.

 

*https://www.adweek.com/digital/new-research-shows-ads-in-trustworthy-environments-are-becoming-significantly-more-effective/

By | 2018-06-28T13:58:47+00:00 June 12th, 2018|AdPortal|

About the Author:

iPublish Media helps media companies extend their reach, grow revenue and lower costs by providing a self-serve advertising platform for print, digital and social media advertising.