Next digital step leads to content near you
EmptyCHICAGO -- This year, localization will emerge a powerful catalyst for transforming old media into new, forging unique online revenue streams, and generating indispensable content, all as close as consumers' own backyards.
The creative mining of the local businesses, services, resources and interests so ingrained in our everyday lives can take the personalization of digital broadband interactivity, as well as the profits of participating companies, to the next level and remind struggling newspapers, radio and TV stations of how they can more ingeniously tap what was once their exclusive domain.
The trend toward embracing and monetizing online localization also can inspire very big deals such as a heightened alliance or even acquisition among the likes of Barry Diller's InterActiveCorp. and Comcast Corp., or Time Warner's AOL and Yahoo!, whose national businesses are rooted in community-based services and functionality. Merrill Lynch analyst Jessica Reif Cohen estimates that AOL's advertising business could be acquired for about $18 billion by Yahoo!, in which case the deal would be immediately accretive with only $100 million in combined cost savings and the acceptance of Time Warner as its new largest single shareholder.
That said, there is relatively scarce digital prospecting of consumers' local connections among the more flashy digital technology devices and new media platforms that all are largely driven by the lucrative but vulnerable exchange of movies, television programs, infomration and data, and personal communications. There will be no sexy celebration of the value of local content and services in the bustling exhibition halls of this week's annual International Consumer Electronics Show or next week's National Assn. of Television Program Executives, both in Las Vegas.
Still, localization is a wild card of the user relevance that drives the Internet. It is a quiet untapped venue that smart players are beginning to embrace as a way to cater to the unique needs, interests and tastes of consumers where they live and drill down into local places where money can be spent.
After all, what's more important than the grocery list, community services, local movie times, car maintenance, school schedules, home repairs, pet care and children's activities that is the "local" glue holding together everyone's lives. It's the kind of electronic "to do" list and personal community-based content that everyone needs, and is not as likely to be replicated or ripped off--making it ripe for digital interactive advertising, commerce and other forms of monetization.
Nascent efforts by local newspapers, radio and television stations to work with local merchants by using interactive links have not generated as much consumer support and new revenue as could be possible in the future by taking more enterprising interactive tacts. For instance, how useful would it be if that same interactive "to do" list was interfaced with consumers' individual electronic payments, phone service, scheduling, budgeting and personalized comparison shopping. Such natural interactive connections between consumer online activities, retailers and commerce could prove a potent alternative to Google's algorithm-directed and ad-supported search.
Pulling together such fundamentals of personal living in a more efficient and cohesive way than existing software and services allow would prove a tremendous advantage for busy consumers and local merchants seeking to enhance repeat business with new digital technology. The user recommendations and reviews that accompany local content and service postings or web sites will create a new web of niche customers and sales. Little wonder then why Yahoo! recently partnered with local search and link wizard Dash Navigation, and why its new Go mobile search service may be a precursor to providing more relevance to Internet search and phone calls made by consumers from their smart phones. Theoretically, the more contact with the consumer, the more opportunity online advertisers and hosts have to mine behavioral information and electronic transactions.
It also is a way to reach what Magna Global recently identified as the endemic and new advertisers who handily dominate online spending, many of whom have never patronized local newspapers, radio or television.
The unmatched draw of local content and commerce is why Citigroup recently identified community-based direct mail, yellow pages and outdoor advertising as the only "safe havens" among the forms of traditional advertising comprising nearly $300 billion in total domestic media revenues.
A spate of new products and services at CES could help thrust localization onto the digital broadband stage, from Wi-Fi routers for cars to a new slew of smart phones to a living room hub to provide a seamless interface on the transfer of personal and community as well as entertainment content between phones, computers and televisions.
The economic value of interconnected local services and information is at the heart of Chris Anderson's Long Tail theory of even the most obscure individual interests and needs having a place in the digital broadband universe, and is ending big media's popular entertainment tyranny by meaningless measurements and lowest common denominator product.
Anderson, editor of Wired magazine, will be NATPE's opening keynote speaker.
The value of local information and services is being woefully underestimated even by the newspapers, radio and TV stations that have dominated that venue for more than 50 years and have allowed the value of community classifieds, advertising and content to pass to Internet strongholds from Craigslist to eBay
Networks affiliated TV stations continue waging retransmission battles with cell phone, Internet and cable companies which are cutting their own deals with Fox, NBC, CBS and ABC rather than mining their community ties in more innovative and lucrative way to reinvigorate their business models.
Media companies that come to intimately understand consumers, as they search and discover commercially produced content or generate their own content, will thrive in a converged environment. So will local businesses and services willing to adapt to the convergence example of Yahoo! Music, where value is created by orchestrating the relations between users and media rather than from consumers of scheduled and packaged content.
That will assure that the continued 30%-plus growth of online and wireless advertising and e-commerce will come to include greater local and personalized components, all of which will inevitably link through the Internet to regional, national and global entities. It's an inverse of media globalization that hits home.
So, despite the dazzling array of gadgets highlighting the $150 billion electronic device industry at CES, the year ahead may demonstrate that digital nirvana is less about devices and more about relevant content. That is why the likes of Microsoft, Apple, Sony, and other players are intensifying their battle for control of the living room gatekeeper hub that will provide a seamless interface of computer, television, cell phone, movie screens and portable management device screens and their connections to commercial, personal and local content.
Microsoft chairman Bill Gates in a CES keynote Sunday night, made the important but woefully overlooked observation that consistent and uniform connected experiences are lacking in this "digital decade" and in a digital consumer ecosystem that equally values shared personal experiences and communications, and commercial events and entertainment.
So far that one half of the value proposition is being under served in what Gates calls the developing digitized home of the future and consumers' own physical communities. (To better understand the concept, think about all cell phones--the most universal device--providing users with a running electronic grocery list that cross matches items on sales at local stores, or a favorite playlist of tunes automatically cross listed to local concert information and related local retail new movie downloads, or electronic sweepstakes that award locally distributed products.)
That is the same personal and local-rooted concept of community that will anchor the revamped Disney.com social networking site being unveiled at CES (complete with a MySpace-styled interactive profiles, video games, film clips and music downloads) that could easily become a software driver for Disney's young person's smart phones, armed with parental controls and locators. After all, Disney had to best itself and its year-old breakthrough TV series download arrangement with Apple's iTunes that has been overshadowed countless content arrangements with cell phones and other devices.
The rapid morphing of services, the inundation of all kinds of content, the frenzied shifting of advertising dollars, and the very self-consuming nature of the Internet's big black hole should be making the prospect of exploring new forms of personalization through localization rather appealing just now to the entire spectrum of media-related players, who had best get their heads out of the digital blue long enough to understand and embrace the grassroots consumers now seated at the controls.
Diane Mermigas can be reached at [email protected]