With or without publishers, local online continues to grow

The good news for local publishers? There is growing demand for local advertising.

The bad news? An entire industry of companies you’ve never heard of (including some giants you have) are laser-focused on connecting local businesses with local consumers and most of them don’t care if a publisher is in the middle of that transaction.

That’s my halftime analysis from the Interactive Local Media conference in Los Angeles. (I’m posting updates to Twitter and you can find the conference stream by searching the hashtag #ILM09.)

Publishers see opportunities, too, of course. NPR and ESPN are moving quickly on locally staffed “franchise” sites. MSNBC.com and CNN are focusing on getting local, too – down to the neighborhood level. The concept is not new: create content that draws an audience, then sell ads around it.

“Our model is to create high quality, high context, in-market ad inventory,” Outside.In CEO Mark Josephson said during a session today. “Local content is a proxy for local ad inventory and there is a fundamental shift that is creating huge opportunities.”

Josephson’s company is one that is trying to assist publishers. But there are so many more companies at this conference, from business directories to search engine marketing firms, that are direct-to-advertiser plays. They do everything from placing location-based mobile ads to tracking social media conversations and buying Google ads for small businesses. And don’t forget about the big G, of course, or MSN, Yelp, Facebook, etc.

If you’re a traditionalist and want to see legacy news media survive, it’s not pretty. Even the Yahoo Newspaper Consortium, which includes TV and radio, has apparently only booked $83 million in ads this year, which isn’t going to save an industry (newspaper) that used to book some $40 billion. (And my outside impression is that Yahoo is getting the most benefit here, boasting about 100,000 local sales reps thanks to the partnership.)

If you’re a forward-thinker and an optimist, it’s exciting. Independent journalism startups have a bevy of potential partners to help them with the advertising side of the business. Sure, these third-party vendors will get a cut, but it might be less than you’d pay to staff up an ad sales team. And any percentage of zero is …

Additionally, there are publisher models worth following. Scott Tobias of Village Voice Media talked about a thriving local media business that includes three important segments: print, digital and street. The street team is a guerrilla marketing effort that can promote Village Voice events (online and offline) or do street-level marketing for big brands.

“Print is not dead for us,” Tobias said. “Village Voice wasn’t bloated like a lot of the metro dailies. And the Web is just an extension for what we’ve been doing for 25-plus years.”

The power of local brands still works, of course. Cory Bergman (MSNBC.com, Next Door Media, Lost Remote), Mike Orren (Pegasus News) and I were talking last night about how few of the companies here have any presence on main street. Local businesses have heard of Google, of course, but Yodle? Methinks not. Yet they claim to have 7,000 customers.

Yesterday, Howard Owens responded to one of Twitter updates with a prediction that “localpreneurs” will win this space in the end. If a local publisher can create, or in the case of newspapers – resuscitate, a recognized local brand, then local businesses are still an open opportunity.

After all, the one big recurring theme throughout all the sessions is that we’re still in the early days of all this. As Jim Pastor of ESPN said: “Anyone who tells you they know what local online looks like 1, 2, or 5 years from now is fooling themselves.”

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