Theoretically, community publishers and local advertisers have much to gain from the rise of mobile advertising. But so far there’s a huge practical obstacle: the way the mobile ad market works isn’t very friendly to the little guys. Yet.

Small sites each scrambling to sell their own digital ads will probably never solve this revenue conundrum. But perhaps a new kind of mobile ad network—one that’s self-serve for small local advertisers and that pays off better for small local publishers who collaborate—could crack this market efficiently…

Selling ads is a perpetual challenge for community publishers. It takes a lot of work to sell a few small ads to local businesses and organization for relatively little money.

My Oakland Local cofounder Susan Mernit recently observed that community news sites can offer advertisers a significant advantage: relevance, which drives audience. But: “The bad news: it’s economically brutal. What newspapers have that the hyperlocals don’t is infrastructure and scale. ...A lot of the great money is in regional and co-op ad buys, which most hyperlocal sites are not set up to handle.”

Recently I’ve been researching mobile advertising and ad networks, ever since I read GigaOm’s excellent April 2012 report, The Promise of Hyperlocal Opportunities for Publishers and Developers (subscription required).

I see a gap in the market that could be bridged in a way to support community publishers and local advertises. Here are the pieces of this problem:

1. Local publishers have little/no ad salesforce. Most community publishers have a sales staff of one or two people, if that. That limits how many local advertisers they can contact and educate, and how many deals they can execute. It would be nice if more ads came to them—perhaps through a truly local-friendly mobile ad network.

2. Local advertisers lack knowledge, creative. Most potential local advertisers still don’t understand the value of online advertising on local sites. They also generally aren’t aware of how mobile media is booming and revolutionizing the way people discover local information.

Furthermore, the ads most local advertisers have created for print media generally don’t work well in a digital context, especially mobile media. It can be a big deal to expect them to generate new creative specifically for mobile—they don’t have the time, expertise, or inclination.

3. Most mobile ads stink, especially on the small screen of a cell phone. Tablets are great at displaying larger ads similar to what you’d see in print media, and even rich media ads with video or interactivity. But mobile is fast becoming the most common way people access the internet—and most of that is happening on smartphones, not tablets.

Most mobile ad networks serve banner or other display ads to appropriately sized slots in mobile websites and apps, where users hopefully will click on them if they’re interested enough. That’s a really big “if,” since a small banner ad on a small screen rarely conveys enough info to warrant a click.

Also, astonishingly, many mobile ads don’t link to mobile-friendly landing pages. This frustrates mobile users, and it’s part of why mobile display ads usually have abysmal clickthrough rates—which leaves most advertisers dissatisfied.

4. Mobile ad networks aren’t self-serve enough, yet. While more mobile ad networks are serving geotargeted ads from small and medium-sized local businesses, they generally don’t offer self-serve tools that help smaller advertisers create their own mobile ads. If you already have mobile ad creative ready to upload, fine—but that’s not the case for the vast majority of local advertisers.

5. Mobile ads and mobile landing pages are created separately. Mobile users want to do stuff, right away—not just passively absorb info. They typically want the kind of actionable information that’s found on mobile-friendly landing pages: clickable phone numbers, a map showing the location, business hours, a basic description of what the advertiser offers, current specials, etc.

There are several services (like Landr.co and MoBistro) that make it easy and inexpensive for a small business to create mobile landing pages which can serve as the destination for mobile ads. But I haven’t yet seen one that also generates standard-size mobile display ads based on the content of a landing page.

6. Community publishers can’t easily join forces to create a local or regional mobile ad market. Right now, community news sites compete against each other—as well as traditional news outlets—for local advertisers. Community publishers can individually sign up to carry ads from mobile ad networks, but I haven’t yet seen a way for sites from a given area to form a local publisher group within a mobile ad network to jointly display ads targeted at a particular city, metro area, or other region.

If they could organize such groups within an existing mobile ad network with robust delivery and analytics capability, smaller publishers might become palatable for regional or other large ad buys—thus meeting the business need Mernit identified. This might help them attract more high-dollar ads from regional or national brands, as well as smaller local advertisers.

POSSIBLE SOLUTION: IMAGINE THIS…

What if a mobile ad network decided to take full advantage of the long tail of both sides of the local advertising business: site/app owners and local advertisers. They could:

• Offer easy web-based self-serve tools that let non-tech-savvy advertisers create mobile landing pages as well as standard-size mobile ads based on the content from those landing pages, with tracking and analytics for both kinds of assets. Pay a low monthly or annual fee to host the landing page (say $10/month), and you get the ad creative for free.
• Offer programs that let local publishers join forces. Make it easy for community sites in a certain region (or serving communities defined by demographic factors such as ethnicity or country of origin) to self-organize into collective markets that offers high regional relevance. Promote these collectives to major brand advertisers seeking regional or co-op ad buys.
• Enlist and reward publishers as educators/sales reps for the mobile ad network. Many national mobile marketing services already offer productive and lucrative reseller programs, through which local marketers educate advertisers about mobile marketing and get them signed up and set up to use the service, for a cut of the revenue. Community publishers already are talking to, and educating, local advertisers—but what they generally lack is an easy-to-use infrastructure to create, place, and target mobile ads that come from their community. This approach could help them realize more benefit from the efforts of their sales staff.

Together, this combination of tools and programs might more effectively serve communities—both by supporting community news and information, but also by supporting the local economy and local business ecosystem. And major brands could increase the relevance they offer to communities in order to get a better return from their advertising investment.

Also, community publishers would directly benefit from collaboration, rather than wasting energy competing against each other, and against major mainstream or legacy news brands. United we stand, divided we fall—or strength in numbers. Choose your preferred cliché of empowerment.

The question is: will a visionary mobile ad network with a mobile focus (maybe xAd, or others) decide to jump on this opportunity before too many of the best community publishers burn out? As Mernit noted, this business is economically brutal, and some vibrant community-based news startups have already folded under the strain.

The News Leadership 3.0 blog is made possible by a grant to USC Annenberg from the John S. and James L. Knight Foundation.      

The Knight Digital Media Center at USC is a partnership with the Annenberg School for Communication & Journalism. The Center is funded by a grant from the John S. and James L. Knight Foundation.