NAA 2009: McKinsey Details Newspaper Opportunities With SMBs

McKinsey & Co. consultant Ali Keshavarz, speaking at the NAA Annual Convention in San Diego, said he believes newspapers can add 20 percent to their online revenues by pushing harder on small-business accounts. McKinsey has been working on an SMB project with seven newspaper companies since last fall.

The primary challenge is for newspapers to reconfigure their sales efforts to effectively touch SMBs. Newspapers only sell about one-third of their SMB customers; more than two-thirds initiate their own sales by calling the paper. Keshavarz points to ReachLocal as an example of a company that is effectively beating newspapers to local SMBs. He asserts that ReachLocal is grossing $100 million per year.

One advantage that newspapers can deploy is the ability to reach advertisers more frequently. Thirty-four percent would like to be contacted monthly, 16 percent would like to be contacted weekly, and 30 percent quarterly.

But advertiser touches don’t need to be in person. Sixty percent of SMBs surveyed by McKinsey say they actually prefer a combination of phone and email while 20 percent would like “in person” as part of the mix. Keshavarz also says that many are willing to try self-serve sales solutions.

McKinsey’s research additionally shows that SMBs are more sophisticated about the Web than commonly thought, and are ready to be sold. Fifty-one percent have Web sites, and 43 percent of these are marketing beyond their Web site. Forty-one percent of an SMB’s online marketing dollars go to its Web site, while 13 percent go to paid search, 9 percent to display ads, 13 percent to e-mail marketing, 13 percent to online video, and 11 percent to “other.”

This Post Has One Comment

  1. Brian Prows

    The study confirms why newspaper publishers, despite attempts to promote online advertising to SMB’s, remain stuck with steep revenue losses and shut-downs.

    For years, newspapers dominated local SMB ad spend and ignored the move to online. Then larger newspaper chains, such as Knight-Ridder, developed digital divisions which cannibalized classified print advertising revenues through ill-conceived pricing strategies.

    That so many newspaper publishers remain reactive rather than proactive–building print, online and especially mobile advertising reenues–is curious.

    In my recent podcast interview with Michael Boland at Kelsey (http://tinyurl.com/catopz), Mike discusses projected mobile advertising spend (SMS, display and search) that complements traditional media revenues (radio, television and newspapers). SMS still dominates, but local mobile search advertising, according to Kelsey’s study, is growing quickly.

    By communicating more proactively with local SMB advertisers and offering multi-channel advertising programs, newspaper ad spend will grow.

    Brian Prows, MobileBeyond

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