Seeing a bigger picture: Two examples of how to spot opportunities amid disruption

When you spend years working in a disrupted business, you often wind up with a vision problem. You tend to become so focused on trying to evolve your existing business models that you don’t see the much bigger opportunities that surround them.

We’ve seen two examples of that recently in my work at Morris Publishing Group. In both cases, we’ve widened our view, and we’re now seeing and targeting some bigger possibilities.

Classified advertising is the most acutely disrupted part of the newspaper business. It was the first to take a big hit from the Internet as digital alternatives like Craigslist.com, Autotrader.com, and Monster.com sprang up and began to draw away listings and dollars. Now classified revenues have dwindled to a fraction of their pre-Internet levels, and the decline isn’t over.

A couple of months ago, Morris VP of Audience Bob Gilbert and I were brainstorming about the classified dilemma. We were calling it “buy/sell” instead of classified, to avoid an obsolete term that no longer reflects how people are behaving in the marketplace.

(Aside: The very word “classified” points to what makes it vulnerable to digital alternatives. Printed liner ads needed to be sorted into “classifications” because “search” — using keywords to find matches — doesn’t exist in print. You could argue that search is actually what’s killing classifieds, because it’s so much easier than scanning long columns of tiny print ads.)

At one point in this brainstorming discussion, I asked myself if we should be taking a bigger view of the situation. During my years in the Newspaper Next project, I had found that reframing the situation often produced new ideas.

Wham! It suddenly struck me — we were defining the situation by the old business model, when the real opportunity space actually could be much larger.Slide1

I drew a small circle on Bob’s whiteboard — our current classified revenue. Let’s say, in a smallish Morris market, this might be $1 million a year, down from a peak of about $4 million just a few years ago.

Like most people in our industry, we were defining the challenge as finding a way to make that center circle bigger.

What struck me — maybe because we were saying “buy/sell” instead of “classified” — was that there was a far bigger circle around these two.

The two little circles represent advertising spend — the dollars that sellers in the buy-sell marketplace spend in hopes that someone will see and buy what they’re selling.

But a far larger flow of dollars passes through the buy/sell marketplace — the dollars that change hands between buyers and sellers. Let’s call these the transaction dollars, as distinct from the advertising dollars. They constitute an unknown but very large multiple of what people  spend on advertising.

Viewed that way, the circles would look more like this:Slide2

This shows there’s a lot more money out there than we had thought. This view has reframed our discussions about how to participate in the local buy/sell marketplace.

To capture transaction dollars, we need different business models. And that’s not a bad thing, when free digital marketplaces are making ad dollars harder and harder to get.

So we’re thinking about how to capture a slice of the transaction dollars. EBay does this; even some print “pennysaver” publications do it. If we can figure out a different approach to a local classified marketplace in which we assist the seller more directly in making the sale on a platform we provide, we might be able to hook into a percentage of each transaction.

We’re also looking at the related area of e-commerce — possibly an “e-commerce agency” model, helping local businesses to get their products available for purchase online. I’ve been dreaming about this since my Newspaper Next days, when I called it “becoming the local Amazon.com.”

We have no concrete answers to share yet, but we’re working on it. If you are, too, I’d love to trade ideas with you.

Example No. 2

The second recent instance of reframing an opportunity came when I was brainstorming with Morris VP of Sales Mark Lane about an upcoming sales summit meeting. Mark wanted to lead our publishers and local VPs of sales in a powerful exercise to figure out how to achieve steady incremental growth in the number of active advertising accounts.

This is a huge challenge facing every newspaper company these days. More and more accounts are dropping out of print, and most companies are finding it extremely difficult to replace them with enough digital accounts to make up the losses.

As we talked, I thought about how we had reframed the classified discussion. Could a similar way of thinking be applied to the challenge of growing our active advertising accounts? Was there a bigger circle we were not seeing?

Wham! It hit me — the “bigger circle” was the total number of consumer-facing businesses in our markets. Instead of thinking about how to achieve incremental growth on our existing base, we needed to start thinking about the entire possible customer base and how to reach it.

In our mid-sized markets, the circles would look something like this:Slide1

In the middle are current active accounts. Call it 500 or, if you count occasional advertisers, call it 1,000. But as the people in our business know, there are far more business prospects in our markets than we are reaching. Even 10,000 may be a conservative number in many middle-sized markets.

What if we restated the challenge? Instead of asking how we could serve more accounts than we do today, what if we asked how we could make sales pitches to every one of those 10,000 businesses at least once a year? The result surely would be account growth beyond our sweetest dreams.

Mark saw it right away. That’s no big surprise, because we’re already using a similar sales model at Main Street Digital, our new, digital-only sales division.

But for a core advertising sales operation, this is a whole new assignment. We aren’t coming anywhere near the goal of total market penetration, and we aren’t set up for it.

However, some of our competitors have been doing it for years. Yellow pages sales organizations bring teams into our markets and roar through several thousand accounts in a selling cycle that’s only a few months long. Then they move on and mow through the next market.

In our core units today, we don’t have enough sales people to do this. And our traditional sales model — with reps spending far more time servicing existing accounts than making new calls — will never get us there.

It’s a paradox: Today we have far more and better solutions for a wider variety of businesses than ever before, but most of the businesses in our communities don’t know about them. Why not? Because we never call on them.

If we could penetrate the whole market, the change in our business could be dramatic. Instead of adding a few new accounts, we would add hundreds, and thousands over time. Then we’d face the challenge of figuring out how to service all these new accounts effectively without slowing our sales people down.

What a great problem to have.

If we put our minds to this challenge, can we figure it out? We think so, and we’ll be putting some of Morris’ best minds to it at our upcoming sales summit.

Both of these examples, classified and ad sales, show how it can help to step back from a challenge and ask if there’s a bigger picture to be seen. Often there are bigger opportunities than the old business models ever touched. Let’s go get ’em.

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Posted on June 18, 2013, in Uncategorized. Bookmark the permalink. 3 Comments.

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