What does the local media company of the future look like?

At this point, the answer is pretty clear. There will be two kinds of media companies:

• Those that continue to focus on their traditional media channels — newspaper, broadcast television channel, radio station(s) — and therefore shrink along with the advertising spending on those media.
• Those that morph into local media houses that can connect any advertiser with any audience, through platforms, technologies and channels they own or don’t, to win dollars that are moving into digital advertising and marketing.

I’ve been seeing that dual outcome ahead since about 2006, when I was on the road preaching Newspaper Next to thousands of media people. Yet even today, quite a few people are still asking the question.

The answer hasn’t changed much in eight years. What has changed, and continues to change, is what digital solutions the smart local media company needs to sell, and the challenge of figuring out how best to sell them.

A number of media companies are fighting this difficult battle of diversification. They are determined to learn and adopt the ever-broadening range of solutions and channels needed by businesses in their markets. They are determined to sell what works, regardless of what it takes to get it done.

They’re doing things like partnering with a growing list of technology companies, creating digital agencies, starting their own digital services fulfillment teams, plunging into targeting and retargeting on other people’s websites, and a long list of other digital advertising and marketing solutions and approaches.

Nobody said this would be easy. In the words of one newspaper company executive, “it’s the hardest thing we’ve ever done.”

But the hardest part of it, it turns out, is getting the sales structure and process right. There are lots of tech and marketing companies developing advertising and marketing solutions, but the big question is, can legacy media companies figure out how to sell them effectively in their markets?

The critical first step is accepting the fact that your core sales team can’t get it done. Or at least, not well enough to sustain you in the increasingly digital future.

That was already apparent back in 2008, when I was writing the second Newspaper Next report. I remember Gordon Borrell telling me at the time that his people had been training newspaper sales reps to sell digital for years. He said, “It turns only only about 20 percent of a legacy media sales team can really understand digital and sell it effectively.”

That’s why Gordon has always advocated creating separate sales staffs to sell digital solutions. His data prove that this produces markedly better results.

And the 20-percent figure still holds true today. At the BIA/Kelsey “Leading in Local” conference last month in New Orleans, I heard several people from media companies cite the same figure. “The 20-percent rule” seems to be a fact of nature.

At the BIA/Kelsey conference, the challenge of figuring out the digital sales models was on my mind constantly. I thought about it during speaker after speaker, from digital pure-plays selling their own digital solutions to small startup tech companies offering digital solutions for media companies to sell.

I kept hearing Clayton Christensen‘s words echoing in my head: “What the sales force can and can’t do has a huge impact on what the corporation can and can’t do.” Christensen is the man who coined the term “disruption innovation” and described it brilliantly in his best-sellers, “The Innovator’s Dilemma” and “The Innovator’s Solution.

That quote comes from a fascinating interview in January with Innovation Leader magazine. Unfortunately, it’s behind a membership paywall now.

What he’s saying is, no matter what your corporate strategy to dodge disruption may be, you won’t succeed unless you figure out the right way to take the products to market. In the case of legacy media, that clearly means separate sales people and sales staffs.

Let’s look at what’s at stake. Legacy media have been living the Christensen disruption scenario for many years — giving up the low end of their local markets and relying more and more heavily on the bigger and higher-spending accounts at the top of the market. And, for nearly a decade, that strategy has been going sour.

The big companies at the top of the local advertiser food chain are figuring out how to diversify their advertising and marketing spend away from the legacy media. So the up-market revenue has been trending down, and will continue to do so.

Meanwhile, lower in the local market, disruptive competitors are hammering away at SMBs, offering a wide range of digital and non-digital solutions at price points well below our legacy solutions.

The result is that legacy media companies today have a tiny fraction of local businesses as customers. In Morris’ markets, our business units are serving only 4 to 7 percent of the businesses we believe are realistic prospects. That’s typical for newspaper companies.

So the opportunity is huge, and the biggest challenge is figuring out how to reach all those non-customers and win their business.

Most of the legacy media companies pushing to expand the model have realized it takes digital sales agencies to get it done. But too many are tasking their digital agencies with trying to boost the digital sales in their legacy (aka “multi-media”) sales teams. They need to do that within the core, and let their digital sales units go free to sell as if they were startups. At Morris, that’s what we’re trying to do.

But even that isn’t enough. At the “Leading in Local” conference, which was all about selling digital solutions to local SMBs, I kept realizing that even our digital-only sales teams would have a tough time selling many of the solutions being presented.

A few examples:

• Appointment-setting platforms for service businesses. There’s a need, but it’s as much a technology and business platform sale as it is a “digital marketing” sale. Can a digital media rep make that sale, or does it take a specialist?
• Point-of-sale systems. Most SMBs don’t have systems that can connect a real-time purchase with a customer database. If they did, they could use the data to conduct powerful ongoing marketing campaigns based on each customer’s past purchase patterns. Can a digital media rep sell a POS system, or does it take a specialist?
• Customer data matching and analysis. “Big-Data” giants like Acxiom have solutions that SMBs can use to analyze their customer bases and match existing customers with non-customer “lookalikes” for targeted marketing campaigns. They’d like to partner with us for sales. But data analysis is a specialty few digital media reps are prepared to handle. It seems to call for specialists.
• E-commerce solutions. This wasn’t a topic at the conference, but very few local SMBs are set up to make sales on the Web, despite the stiffening competition from Amazon and the big-box stores in their markets. At Morris, we find local businesses want help, but the stopper so far has been figuring out who would sell it and fulfill it. It takes e-commerce knowledge a digital media rep doesn’t have.

It’s clear there’s a huge and growing array of digital solutions that SMBs need to be successful in the digital age. These go well beyond now-familiar digital agency products like SEM, SEO, social media management, reputation management and so on. And yet many of them need to be integrated with digital marketing to be fully successful.

So, what does the local media company of the future look like? Companies formerly known as newspapers, TV stations and radio stations could become the best-known and most-respected suppliers of those solutions in their markets. But they need to realize that “local media company” is too narrow a vision.

We need to strive to be the leading providers of next-generation solutions to connect SMBs (and large businesses, too) with local audiences and customers. We need to take to local businesses many powerful combinations of media, data, e-commerce and business platforms.

As we do that, we can’t lose sight of Christensen’s warning: “What the sales force can and can’t do has a huge impact on what the corporation can and can’t do.” We need to create the sales channels — plural — that we need to succeed. Even our digital media sales teams aren’t enough.