Setting a positive example for our communities.

After a few months of major projects, mainly the deployment of a new digital platform for our sales force, I finally have time to write part two.  In this post, I look at the options for local businesses trying to survive in an increasingly digital world.  Day after day, they are bombarded with the idea that everything has gone digital, everything and everyone is on the internet.  "The future is digital," they are told.

In fact, one of the more common objections a Yellow Pages advertising consultant hears is, “I don’t need to advertise in the Yellow Pages, I am on the internet.”

I’d agree with the second half that statement. I’ll even concede that many of their customers are also on the internet.  But the more important question is, how much trade does that business do via their online website, compared to the paying customers who pick up the phone and call, or simply walk through the door?

If your customers are not coming to you via the internet, is the internet the best place to chase those customers?  Can you afford to compete with an out-of-state internet giant, who leverage their size to beat any possible price?

Would you even want your relationships with your co-workers to be competitive, each pushing themselves harder to meet impossible targets? A warehouse of conveyors, with human picking machines running to meet a timetable. That's not the heart of the American business community. It's not the business model that built your community.

If your customers are local, if your business serves your local community, if your success relies on the people who live within easy travelling distance from your place business, then surely your advertising should address those people first? Local advertising provides results for local businesses.

Now the Yellow Pages are not the only local media in (your) town.  For brand and name recognition, a local radio station or outdoor billboards can help build your image.  For specific sales events, special promotions, or to take advantage of a particular season, radio and local newspapers are great ways of helping a potential customer consider what you have on offer.  Direct mail is another option, but the results are generally as poor as internet-only advertising, with a 2% - 3% doing the old-fashioned version of a “clicking though” – actually reading the mailing piece.

Yellow Pages should be a key part of a local advertising strategy because it’s there when the consumer wants it. A person reaching for the Yellow Pages is a person in your local community, who is most likely ready to make a purchase. That's supporting the community I can get behind! 

That’s not to say the internet does not have a part to play when it comes to buying locally.  Many of your customers may go online and research before they buy.  Today, many business owners and workers deal with consumers who are much more knowledgeable about the products they want.  But research does not replace holding an item in your hand; the internet does not give a feel to the level of quality of an item.  Most importantly, internet retailers only give people what they ask for.  They lack that face-to-face communication where you find out what they actually need. That human element, that connection local businesses have with their community, is worth preserving.

This election season, much politics is being made over “who built it” but the political wrangling is missing the point.  People in your community built it.  People in your community built the infrastructure.  People in your community built the businesses.  Most importantly, people in your community can build a better future when the money in your community, flows though the businesses, the workers, the shoppers in that community.   

Regardless of whether peak oil results in a much lower-energy world, or technology comes to our rescue and we move forward into a techno-utopia, the relationship between local community and local business will be vital.  Far worse than the vision of a post-carbon world, where local businesses are once again selling, repairing and supporting locally produced goods; is the dystopian vision of  a million small businesses, all trying to beat each other with ever lower online prices, while the remaining good jobs disappear out of their communities, in the frantic race to the bottom.  

Whatever the future holds, the success of our local communities will depend on the local leadership, of the local businesses, in those local communities. Local businesses have local options.  Yellow Pages online is an important part of a strategy, not a replacement.  Local radio, local newspapers, local advertising agencies that can help with your marketing plans.

Most importantly, make sure your customers know you support the buy local campaign. 

Symbiotic versus parasitic businesses

The life style westerners have enjoyed these last few decades is unique in human history.  Never before has every fruit and vegetable been available in our stores throughout the year. In no previous age have the merchants catered to the whims of the populace rather than to the whims of just a select few.  We have shared in the riches of a century of cheap, portable energy. It’s been great.  But I fear the party may be coming to a close.  With supply at a plateau and demand from developing nations climbing, soon we are going to be in an international bidding war for oil.

The energy supply is going to get vastly more expensive as supply fails to keep up with demand.  That will put an upward pressure on transportation costs, making distance from supplier to seller to consumer a far more significant factor.  The big internet retailers are dependent on that cheap energy to get their goods from centralized depots to consumer’s front doors.  Costs also depend on volume, which will decline as spending falls, and result in more and more jobs lost in the inevitable demand destruction.

As the cost of transport gets more expensive, the traditional model of local retailers serving the community will come back to the fore.  When it costs the consumer more to ship from out of state, despite the tax advantages internet retailers enjoy, expect to see more people searching for what they want back on the Main street.

Communities are defined by how far you can travel in a reasonable time. Not that long ago, it took as long to travel from village to village as it does today to travel continents –all because of cheap energy.  As long-distance travel becomes less of an everyday activity, our interests will, for the most part, become more localized. Localization is both a symptom and a solution to the predicament of declining energy supplies.

Now before I extol the virtues of adopting the ‘buy local’ lifestyle, I’d first like to talk about those internet retailers. When I buy from a local business, a reasonable portion of that money continues to circulate around my community.  Even the big box retailers contribute some money back to the community though the wages spent locally by their employees.

The business community has always shared a symbiotic relationship with the consumer.  The health of our community is dependent on the ‘velocity of money’ –the transactions from person to person that earns us our daily bread.  Our employees live and work in the community that supports our businesses, and the lives of our employees are intertwined with our customers.  We enjoy a symbiosis that goes back to the earliest days of barter and the marketplace.

The large, internet-only retailers, in an ecological sense, are parasites.  They contribute little or nothing back to the local communities beyond the wages of the occasional delivery driver. They suck money out of local economies into the stock market. In a world of digital money, we may not see that green river flowing out of our communities and into those nebulous ‘markets’.  If I could believe in the paradigm of infinite growth, I would not find this a bad thing.  Our pensions, our 401K funds, and our other investments rely on the markets.

But in a world constrained by energy limits, where the impact of oil shocks threatens economic security, there is competition between the needs of Main Street and the desires of the giant conglomerates who are able to take advantage of energy to grow to a size that can push smaller, local retailers out of the marketplace.

In many ways it is a private sector reflection of the political decisions of the last few years to protect ‘Wall Street’ rather than ‘Main Street’. The concentration of wealth in giant corporations like Amazon, the growth of giant multinational corporations, all reflect the growth of big government. 

Power often concentrates in an individual, politically, that may be in the form of a President or a King. In business, it may take the form of the legal fiction of a corporate person.  It represents the oldest form of social order, monarchy. Today, we see the scale that is possible when there is an almost unlimited amount of energy available.

When we talk about our communities being drained of money, how can we define community?  At a city level? At a county level? How about at a state level?

How about you, the consumer, deciding what constitutes your community?

Actually, you already have.  You, and everyone in your community for the last century or more, have defined what community is by your shopping patterns.  It’s how far you are willing to travel to purchase the goods and services you need.  That model has existed for centuries, people shopping where they live and work.  We almost lost that model of local people spending money in local shops, the drive for lowest possible price before any cost threw a lot of small businesses under the bus.  Again, this is a result of cheap energy that subsidizes the cost of doing business for companies with no investment locally.

Luckily, we still have a legacy of the older shopping patterns before the parasites came along.  It’s called a telephone directory. Businesses buy advertising in directories that serve their customers. The majority of businesses in your local directory only advertise in that one directory – you, not the million on the internet, are their market. The Yellow Pages have been in a symbiotic relationship with you since your parents started shopping for your nursery.

The changing energy costs will affect our industry as much as every other. As transportation costs rise, I expect directories to fragment; a rural directory today that may have three medium-sized communities within its pages, may in the future, be replaced by three smaller directories.  If the consumer travels less frequently to shop, then the value of advertising over a wider area will drop.

The Yellow Pages is all about competition. They show businesses competing for the money moving through their local community.  Yellow Pages shows merchants side by side, letting the consumer choose with whom they wish to speak..  At the same time, we advise businesses on how best to convey their strengths through their advertising. As such, local directories are a reflection of the health of the community; a strong, vibrant business community is a healthy customer base for Yellow Pages companies. We only succeed when our local communities succeed.

In the aftermath of the Great Recession, it is far too easy to open the Better Book and blame our woes on our competitor down the street.  Yet if that were so, what explains the blight in our communities?  If we lost our revenue to our local competitors, the money would still be circulating between paycheck and till receipts.  We’d tighten our belts as our customers did likewise, and adjust to the ever-evolving marketplace. Some uncompetitive businesses would not survive, and a new equilibrium would be achieved.  Businesses have gone through this cycle a myriad of times.

Shoppers are not tightening their belts.  Instead they are changing their shopping habits. The online retailers have the advantage of not having to support the local community. They employ no one locally.  They often avoid taxes by incorporating elsewhere. They appear to provide great value to the consumer who feels the pressure in his or her pocket because there is less money flowing though the community. Yes, it’s the same argument used against big-box stores; except even if those stores were to become the only game in town, it would reach some equilibrium within the community it served.  Not so with the internet corporations.

The relationship between consumer and merchant, on a local scale, is always symbiotic. Not so for the internet parasites. They survive by feeding off local communities and profit by giving nothing back.

Next post, I will suggest ideas on how local companies can survive until the inevitable increase of energy costs levels the playing field and brings the focus back where it belongs, in our communities.

Spam, spam, spam spam....

I don’t get to blog often these days, my writing exploits have taken a different turn. My first short story, "Caravan of Hopes", will be out in an anthology of stories regarding peak oil this fall.

But my career is still firmly centered in advertising, and the Yellow Pages industry in particular.  Today, I’m going to rant about spam, and the lack of anyone out there actually dealing with the problem.  All the current anti-spam packages do is treat the symptoms, and make a lot of money in the process.

Don’t get me wrong, I find our spam filtering device invaluable.  The number of spam emails I get at work is minimal.  It’s not the same at home, though, where I often wade, digitally speaking, though far more spam than real email.  I’ve seen statistics saying 90% of email today is spam.

That’s one hell of a signal to noise ratio.  90% of the clicks in my inbox are a waste of my resources.  In my opinion, however, the answer to the problem is not stopping spam, it’s increasing the noise to signal ratio for advertisers using spam.

Currently, there are enough people who click-through spam, then buy something, to give an advertiser a reason to continue junk mailing our inboxes.  For every few million email messages sent, a few suckers fall prey, and an advertiser pays for a ‘business lead.”

But what if the click-throughs were not from real people, just like the spam you get is not really your uncle Joe emailing you with an offer you can’t refuse?  What if we could increase the signal-to-noise ratio for the advertiser?  They would be paying the spammer for traffic that generates no revenue.  In a perverse twist on ‘click-fraud’, the spammers would see an immediate increase in revenue, followed by a collapse of the market and possible lawsuits.

Obviously, I don’t want to click on every spam I receive just to help the advertiser waste their money.  I’m sure neither do any of my readers. What I want is an anti-spam package that identifies (automatically or via ‘mark as spam’) unwanted email, forwards it to a server, where an automated program (a spider) can follow the links in a manner that is indistinguishable from a human clicking on the link.   

To maintain click value, spammers would have to start avoiding email addresses that triggered wasteful traffic. Alternatively, they would have to drop the value of the traffic as the conversion rate plummets, reducing the effectiveness of the advertising model.  

Signal to noise.  I want to turn the tables from the ‘noise’ being my problem to the ‘noise’ being the advertiser’s problem. I want to see their costs for sending unsolicited email to go up while their conversions go down.  Companies who hire spammers don’t care about potential customers or they would not alienate the majority of them, in the hope that there are enough suckers to make it worth their while. Make them pay for the spam in your inbox with no hope of a conversion.

Of course, I’d also like to be able to mark commercial emails as ‘not spam for me’ if I do, indeed, have a reason to hear from an advertiser.  I want to encourage responsible use of email as a marketing and communication medium between businesses and customers. 

Now that’s an anti-spam product that I would be more than happy to pay an annual fee for.   

I like to have as much control as possible over what advertising that enters my life. That’s why I no longer watch TV; I use the internet to stay current with events. It’s also why I like working in the Yellow Pages industry.  The yellow pages are there when I need to buy something and sit quietly on top of my refrigerator for the rest of the year.  I also know that every business I find in there is invested in my local community, not some scam from the other side of the world. Yellow pages builds trust like no other medium.

For those of you who came here expecting a Monty Python reference, here you go:

2012 is here

My apologies for not posting for a while. Family matters have taken up a lot of my attention, with my wife taking a work contract in Europe and the kids staying here in Calfironia with me.

I will be resuming my posting on Peak Oil and the impacts it is having on Local Search, particularly Yellow Pages, soon.