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Local online ad revenues have shown impressive growth lately, but a new report by Borrell Associates suggests that those gains would have be…

Local online ad revenues have shown impressive growth lately, but a new report by Borrell Associates suggests that those gains would have been more substantial if it hadn’t been held back by bundling traditional and non-traditional media. The signs that ad sales based on “convergence” were crippling local websites’ growth have been building over the past two years and Borrell believes that by next year, such deals will be all but abandoned. And if the practice isn’t being severely cut back, Borrell’s report, 2008 Local Online Outlook: Convergence Era Ends, Stand-Alone Sales Skyrocket, which is scheduled to be released next week, makes the case that it should be.

The critique of convergence is placed within the context of rising local online ad revs, projecting growth of 47 percent this year to $8.5 billion and 44 percent to $12.5 billion in 2008. The implication being that on its own, local online advertising will rise higher.

The failure of convergence: “The notion that a single operation can deliver content to multiple outlets has never worked for local media in the past, especially when it comes to expecting a single rep to sell multiple media products. God bless them for trying, but I seriously doubt that any web operation can grow to its full potential without being significantly separated from its parent,” the report states. In terms of models of online success, Borrell points to Google (NSDQ: GOOG), Yahoo (NSDQ: YHOO), AOL (NYSE: TWX), eBay (NSDQ: EBAY), Amazon.com (NSDQ: AMZN). That most of these companies have high profile links with old media – e.g., the Yahoo Newspaper Consortium – isn’t the point; it’s that none of these companies achieved stellar growth as a subsidiary of a traditional media company. “When one of them tried to marry up with a traditional media company (AOL and Time Warner), look what happened.”

Convergence failed newspapers: Local newspapers represent a perfect example of the failure to increase online revenues through

  1. I generally think Borrell is wise, but from what he says here about convergence, it appears he is a bit off the mark on his analysis of the data.

    I thought Borrell's previous research found sales people needed to be able to offer both print and web, depending on what the client needed. Having one sale person come in and sell print, then another person from the same firm say, no, invest in our website, doesn't make sense to me. There are only so many $$ a local marketer has to spend.

    Terry Heaton is right on the money, however. Newspapers have not offered marketers genuine innovation on their local websites. But, who is offering newspapers any innovative ideas to sell? ("Local search" is a joke since many buyers can purchase online. Who cares if it is local? Borrell once thought the newspapers should get into the online Yellow Page biz. It looked smart, but it wasn't. The newspapers ended up doing the right thing for the wrong reasons.)

    Here is an idea. The NYT finally, finally, has opened up their archives. Every newspaper should take a hard look at this if they want to get their page views averaging more than 2.2 per visitor. Use the archives to add context to every article.

    I think the local newspapers are going to get another chance to get online right as mobile gets its act together. Mobile is how people are linking to each other and the world. Local media needs to find a way to be a part of mobile every chance they get.

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  2. I have read Borrell's piece and also read the comment sent in on Friday 30 Novemeber 2007 at 01:56pm and I think that because the path of failure is wide many people join the bandwagon. What the Borell's, Al Ries, Jack Trout and Tade Esan have stated in the past concerning convergence and the failures associated with it, hard-hearted who reject the theories of these men live to prove their own ideas by the failures they experience in business. Did Microsoft converge in the beginning to become the second biggest brand in the world? Did Nokia conevrge to kick Motorola out of the leading mobile phone position? Indeed, Borrell's theory is meant for the courageous because only the courageous take the steps of the Borrell's. The path that leads to Entrepreneurs freedomm in business is not to take the wide and popular route but to take the Borrell's route.

    Nnanna Kalu is a Business Freedom Coach from Rapid Results that focuses on helping Entrepreneurs find freedom while creating businesses that can work profitably without them.

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  3. Convergence in business as the worthy marketing tool will never work, it has never worked. Istill maintain just as I'd posted on this topic some weeks ago, convergence is a wrong route to achieving the most important business goal. you can't build or create a great business that must thrive without you if you look in the direction of convergence.

    Has the computer converged? Has newspaper converged? A convergence strategy holds no ground if you must achieve your freedom in business. If freedom is important to you in life, making your business complicated and complex for your team will not be the line you will tow.

    Convergence is a strategy that never works.

    Nnanna Kalu is a licensed Business Freedom Coach of RaRe Coaching Company, a firm that work with entrepreneurs to find freedom while creating successful and profitable businesses. you can reach him on k.nnanna@yahoo.com. To get insightful articles on Business FREEDOM, visit, http://www.freedomstrategists.com

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  4. Convergence is a strategy that never works.

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