Think Directory Income

The news of declining online revenues isn't surprising.  (See this recent article in Ad Age) I think too much emphasis is on banner ads and classifieds.  That's just like the print model—display and classifieds.

I've been focused on directory advertising for many years now as a scalable solution for local publishers.  God knows I'm not alone as directory projects have exploded in the past five years.  Publishers have to think of directory forms of advertising and content as an interstitial to display and classifieds (if that helps in positioning it).

Banner ads are just not that helpful in terms of income for most local sites—the ceiling on inventory is too low to accommodate local advertisers.  Do it, but realize the limitations.  You can only sell a limited number of ads at any one time and the prices aren't that great.

Classifieds broadens scalability, but has so much competition by established pure-play sites that it limits income and the feature-rich tools needed by advertisers and consumers.

Directories are high-utility for consumers.  Sites like Yelp add the social network component in a big way.  I don't think that a publisher has to duplicate all the social features of Yelp, because ultimately it is the utility that must work for the consumer first, which in turns brings results for advertisers.  Some consumers will really be attracted to social network features and many others won't care so much about that as they will in finding what they want quickly and reliably.  If they trust the site publisher, then that credibility can offset a high mixture of user input—some for sure, but not as much as Yelp provides.

Directories come in many shapes and sizes.  The main advantages are:

• You can offer listings to customers and non-customers.  Great way to expand your customer base.  You can support thousands of advertisers instead of just a few.
• They can provide and present more information in a better display than banner or classified ads.
• They're relatively easy to maintain.
• Directory applications are relatively inexpensive.
• They provide valuable, legitimate links to your advertisers' websites, which supports their search engine value.
• While you can package them with print sales, they should be considered a web pure-play first.  That being said there are other digital products that they can be packaged with for sales.

There are on average 40,000 businesses per 1 million population in the US.  Most newspapers, whether dailies or alt-weeklies, transact business with a mere fraction of that number.  You have to scale big at lower prices to survive, which means you have to open your horizon to businesses you never imagined fit your portfolio.  And you have to imagine sales transpiring in ways that don't fit the current display or classified-selling paradigm.

Comments

[George]

Great article totally agree, I think in the next few years we will see a lot of interest in this space as well as a lot more interesting and different applications. Social platforms with video capability will start to emerge.

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