For Local Search, Digital Means Full Overhaul
LOS ANGELES -- Local media companies aren't alone in their struggle for a profitable digital transition; local search feels the same pain.
Presenters at BIA/Kelsey's ILM West conference here on Tuesday painted a digital sales scene familiar to those in legacy media: the same voluminous field of competitors, the same skittish and gun shy SMBs. Only here, swap out the yellow pages for TV, radio or newspaper and dial back that legacy medium's expiration date to yesterday.
Charles Laughlin, senior VP and program director for BIA/Kelsey, put the most pressing question to a local search industry going digital like this: Do you buy a new engine or a new car?
To which a panel of experts firmly answered: Buy the car.
That means a top to bottom overhaul of existing sales forces and, in many cases, building a new company to focus on digital.
For Jeff Folckemer, CEO of LocalEdge, that means not just replacing the car, but getting a whole new garage and driveway, too. "I look forward to the day I have no more yellow pages," he said. "Then I'll know I'm successful."
Folckemer said his company is in the eighth year of a 10-year plan to transition out of that legacy business, and that focusing instead on the service side of the business is where his future lies.
Kathy Geiger-Schwab, principal at Geiger-Schwab Consulting, said that local search companies must clearly define their core business first, then develop a new company aside from that core. "You have to reinvent everything, and you have to do it in a concerted way," she said, noting that yellow pages products and sales reps are often the weakest elements of local search companies.
Geiger-Schwab said a strong CEO is necessary to drive change, and that ideally, a company can take 10-12 people off the line to build the new company while the core company is shepherded through.
She added that companies can't expect to build all of the products they sell themselves, but should be effective aggregators of many outside products.
Mark Canon, CEO of SmugCloud, said that local search companies can't forget what a difficult time it is for their SMB customers. "The transitions that small businesses are making are incredibly wrenching for them," he said, with the days of simply handing over a monthly check for advertising services now long gone.
That said, "SMBs want and need a trusted advisor," Geiger-Schwab said. "And they really want to buy from one provider if they can."
One way that Kris Barton, chief product officer at ReachLocal, tries to do that is by sending personnel on the product and technology side out on sales calls. "I believe very closely in the marriage of the product and technology organizations and the sales organizations," he said, noting that his company's products are often tailored around the customer feedback gathered on those calls.
And yet, Canon emphasized, "the traditional heartland customers are being systematically underserved." That's because the legacy sales models are fundamentally too expensive to adequately serve those customers, he said. Thus companies must ask themselves, "Can you build alternative channels and segment your business."
And can they do it fast enough? Because the competition numbers in the hundreds of thousands, he stressed, consisting of smaller independents "who have time as a currency" and can build their small businesses fast using tools from the cloud.
"The dominant sales force in the market today is the independents," Canon said. "They dwarf everybody else."
The only way to beat them is to be bold enough to outrun them, he said. "Change happens today. It doesn't happen tomorrow."