Going Vertical: Local Media digs into its categories

Filtering through case studies from around the country, some common threads emerge:

• More large media companies, like the Washington Post with its The Capitol Dish group deal (posted here this week), are tackling verticals in their own markets as a way to compete with directories and group deal providers. Look for categories that are strong in the market and have an appetite for the business model. It may be restaurants in D.C. and outdoor sports in Portland.

HealthDeals, a group deal vertical launching via a partnership of Revolution Health, Mayo Clinic and Drugstore.com is one example of a new national play that will start in New York City and enter the top ten market loop shortly. Its easy to envision how  a local vertical that is female-focused and includes the beauty category may work in a market like Los Angeles - the appetite is there and the group deal model has some of the highest ROI in this category. 

• Smaller markets and media companies may simply not have the critical mass to verticalize a group deal. But they have the advantage of lead time before national providers with crack sales teams (and SuperBowl ads) penetrate their ecosystem.

Partnerships will be key. And a new emerging model for partnerships is not white label, but co-branded and exclusive by DMA. We like this model because in some key arenas, a national brand has extra power, and exclusivity removes the frenemy issues that cast a pall over non-exclusive relationships (see Washington Post's discussion of its Living Social partnership here.) 

•Integration issues are becoming more important - and complex. Directory and coupon platforms now have a group deal built in. Are there more important gains from partnering with a deal provider such as Deal Current that will get involved in training, or Tippr which includes a network that can boost performance?

The best thing to do is collect these questions and ask your short list of providers to answer them. 

Increasingly, local media solve the problem of multiple, competing distribution platforms by either bundling, or simply letting them co-exist; an SEO platform may take up a drop down window, but not much of the prime real estate. Service Alley, for example, was built even though WashingtonPost already had - and still has - and IYP directory virtually parked and generating small amounts of passive revenue.

• The iPad, according to discussions among top media executives, is not really mobile, but portable and reaches a different, younger and more affluent audience. So products specifically designed for iPads are just beginning to emerge in the local space. (Freedom Newspapers may be the first local media to build a new product instead of a replica, read the case study on this site next week).

• Finally, templated software continues to compete with teams of programmers even in relatively small markets. The Stranger in Seattle has a team of three programmers (as well as a very active publisher in Portland), and Oklahoma City Publishing, whose product Wimgo.com is discussed here this week, has - count them - 40 programmers on staff.

Local media who develop products are incented to offer the platforms they created elsewhere and they are worth a look. The good news is that you will get all of the upgrades that the original media is committed to, the bad news is that they may be overly focused on their core business down the line.

• Competition is king. With the multiplicity of development choices it is more important than ever to study your own market. What do your small businesses want? It's not always obvious. One informal survey of the sales team turned up that what clients wanted was answers to how to go  "mobile," plus anything the key competitor was offering. Among regional advertisers, that gets very specific. To really dial in on your market by industry category, a relatively inexpensive survey offered by Greg Harmon, now with Borrell & Associates, (reach him at Gharmon@borrellassociates.com)  makes sure assumptions are accurate. 

Some overdue thanks to people who have shared their expertise: Dave Schappell, founder and CEO of TeachStreet; Tim Condon, Director of New Ventures, Digital, at the Washington Post; Rob Wescott, Chief Product Officer of Oklahoma Publishing, Inc. and Rob Crocker, Publisher of the Portland Mercury.

And finally, welcome to a new sponsor of this site, Laredo Group Interactive Advertising Experts. As sale trainers, this group is most closely alligned with our approach to local advertising sales and we are pleased to be working with them.