Today, less than 10% of local businesses advertise online. But what if you could get almost 100% of local merchants to advertise online?

That’s the holy grail that everyone is focused on. Local media companies (newspapers, TV stations, web-native startups). Google, Facebook, Twitter, AOL, Yahoo. Everyone.

Why? Because local business advertising is the biggest “white space” opportunity on the Internet — the vast majority of the $100 billion/year in local advertising (US alone) is currently not spent online… but eventually will be. Question is, where will it go?

Today, Publish2 is announcing a new ad product aimed at the local online advertising holy grail.  But before we introduce it, I want to explain our unique approach to solving the BIG problem that thus far no one has been able to solve.

There are three main reasons why the vast majority of local businesses don’t advertise online:

1. Ineffective
2. Too complicated/confusing
3. Too expensive

To fully understand these barriers, we need to look at it from the perspective of local businesses:

Display ads are ineffective (consumers ignore and never click), too expensive (despite plummeting CPMs), and too confusing to buy.

Search advertising is too complicated, and requires PhD-level sophistication to convert site traffic to customers.

Groupon-style daily deals are in decline as too many local businesses have failed to convert 50% discount seekers into repeat customers, and have been left with a bad taste.

Social media – Facebook and Twitter — can help businesses communicate with existing customers. But social media fails local businesses because they can’t use it for their most important goal — getting new customers.

But social media is the key.  Posting on Twitter and Facebook solves the simplicity problem — nothing could be easier, and more widely familiar to a local business owner, than tweeting or updating your status on Facebook.

If you look at local businesses on Twitter and Facebook, you’ll actually see huge consumer value — offers, discounts, photos of new merchandise — all being posted in real time.

The problem for consumers is that they are not going to follow/like 100s of local businesses to keep up with what local businesses have to offer.  They may keep up with a few of their favorites.  But if you’re looking locally for, for example –

• Happy hour deals
• Clothing sales
• Homes for sale
• Deals on new cars

– there is no one place that consumers can go to see local businesses post, in real time, the kind of simple promotions that they post on Twitter and Facebook.

So local businesses have a simple way to promote their business in the form of social media updates.  What they are missing is a way to reach new customers. What they need is audience, ideally one that is already aggregated into one place.

So let’s see, who still has the largest local online audience, that is still growing (for now)?

News organizations have the local online audience, which they have completely failed to monetize the way they did in print with classifieds.  But what if they could return to that lost business model? What if they could actually “reclaim” that business from Craiglist? What if they could monetize their still dominant local audience by becoming THE consumer destination for real-time offers, deals, and product info from local businesses, the way they were in print.

Our new product — BreakingPromos: The Real-Time Marketplace — is for anyone who wants to monetize local audiences as scalably and profitably as newspapers once did with classifieds, whether that be newspapers themselves, or someone else who gets there first.

BreakingPromos solves the intersection of the local merchant, consumer, and local media company problems:

The simplicity of BreakingPromos speaks for itself, so this is what it looks like (currently mocked up, using real product, for the news org Bakersfield Californian, which will go live as our first partner in the next couple of weeks):

Your first reaction may/should be, this looks like Twitter, and that’s exactly the point.  If you know how to post on Twitter or Facebook, you know how to advertise with BreakingPromos.

All local businesses have to do — right here in this widget, embedded on Bakersfield Californian’s site — is type a promotion into the box, add a photo that they took in their store with a phone, and BOOM, they have advertised with the simplest form of advertising anywhere on the web.

BreakingPromos are automatically posted to Twitter (and soon Facebook, Google+, etc).  But the advertising happens right here, right on the news site’s page.  Everything is powered by Publish2’s technology and content platform (since this is a content-driven ad format — more on that in minute).

So all BreakingPromos become Tweets, Facebook updates, etc.  But only posts submitted in this widget/page appear here as BreakingPromos because:

1. Local businesses can see what all their competitors are doing
2. All the consumers are here, to see in real time, all in one place:

• Happy hour deals
• Sales on new spring fashions
• Real estate open houses

etc.

Consumers can login (e.g. with their Twitter and/or Facebook credentials) to the same widget/page to Retweet, Favorite, Like, etc. and to email the offer to themselves to bring into the store.

The ROI for local merchants is that simple.  Consumers see the BreakingPromo and bring it into the store, on their mobile phones. When loaded on a phone, this widget will become a mobile app.  And the implications of BreakingPromos for mobile advertising are huge!

Imagine local businesses taking a picture of their product on their phones, and then typing in a quick BreakingPromo, and BOOM they’ve advertised right there via their phones. In short, we think BreakingPromos will be for local advertisers what Instagram was for consumers!

Imagine consumers out on a Friday after work, on their phones, browsing BreakingPromos from local bars and restaurants, who are all competing in real time for their businesses.  Or real estate agents and buyers out on Sunday afternoon looking for open houses.

With BreakingPromos, there’s no need to “follow and/or friend” 100s of local businesses to keep up with their offers. There’s now ONE place you can go to, whenever you want, to find out what’s happening in real time.

We’ve now combined Bakersfield Californian’s dominant online audience with the simplest form of advertising that any local business can do, into a hugely valuable consumer destination — a real-time marketplace.

The purchase is handled by Amazon Payments (like Kickstarter, etc.), which nearly everyone in the market is already signed up for.

Let me be clear about this — we are not selling Tweets, or Facebook posts, etc.  The local business is buying BreakingPromos directly from the site where the widget appears, i.e. they are buying audience to reach new customers.  Merchants are buying access to the BreakingPromos real-time marketplace that the local site has created by leveraging their audience.  The tweet or the Facebook update is just the format for the ad.  It’s the simplicity of that format that makes it accessible to any local business. But we’re not pulling any value from Twitter and Facebook. We are pushing it. As such, we aim to become a valuable participant within Twitter and Facebook’s third-party ecosystem.

Publish2 takes a revenue share cut for facilitating BreakingPromos purchase transactions between the local business and the local news site.  Amazon handles the transaction automatically.  The ad format and the purchasing model are so simple, that everyone can make money while they sleep. Local sites don’t need to allocate any back office FTEs.  They simply set up an Amazon Payment accounts through Publish2’s back end.

With such a low price point, the key to making money is volume.  For that, we tap into the deeply competitive nature of local businesses:

• Bars and restaurants competing for customers at Happy Hours
• Clothing stores competing with sales
• Real estate agents competing for home buyers
• Auto dealers competing for car buyers

Any merchant can come to the BreakingPromos page and see, in real time, what their competition is doing.  All new BreakingPromos are posted to the top of the Category, pushing older ones down.  After a fixed time frame (e.g. 24 hours), they will disappear from the widget entirely.

It’s easy to see the game mechanics that can kick in here.  You see your competitor at the top of your category, so you post a BreakingPromo to push them down.  If your BreakingPromo gets pushed down too far, you have to post another one.  Think Zynga and AdWords/AdSense, i.e. millions/billions of dollars in revenue generated a dollar (or even pennies) at time through addictive gaming behavior and market dynamics.

“We think BreakingPromos will work well on multiple levels,” said Logan Molen, SVP & COO at the Bakersfield Californian. “It’s a simple but effective way to deliver a stream of interesting content to our network of local websites, it can generate revenue from customers that previously couldn’t afford our products and it exposes local businesses to new customers. That’s a lot of win-win.”

You’re probably wondering now how we’re going to solve the chicken/egg problem of driving enough consumer attention to the BreakingPromos destination page to drive the local business posting activity that will draw more consumers, and create the virtuous cycle that drives scale.

Our answer is the Ticker:

Like the Meebo Bar, the BreakingPromos Tickers floats above the site (so you can scroll the page freely behind it), appearing at the bottom of every page.  Formatted like a cable news ticker, our ticker streams the consumer value the local businesses are posting, giving merchants incredibly valuable exposure for such a low price point.

The ticker has one overarching goal — drive consumers to the BreakingPromos real-time marketplace destination page on the news site.  When you click on a BreakingPromo in the ticker it takes you not only to the category, but also opens the specific BreakingPromo, so the consumer can immediately Retweet, Favorite, Email (Like, +1, etc.)

The final element of the business model is Publish2’s role in the transaction between the local merchant and the local news site.  It’s a simple revenue share, where the customers of Publish2’s other products (HTML5 tablet app, web-to-print workflow, content distribution, etc.) have a distinct advantage:

• If you’re a customer of Publish2’s other products, you keep 70% of BreakingPromos revenue
• Everyone else keeps 50% of BreakingPromos revenue

But even if you’re not a customer of Publish2’s other products, there are no upfront set up fees or anything like that, it’s pure revenue share, just like AdSense.  But as Laura Sellers-Early, Director of Digital Audience at East Oregonian Publishing Co (another early adopter of BreakingPromos), so eloquently put it:

“We are really excited about this. This may be the next Google AdSense, but we control the money. Nice!”

Any of the hundreds of local media companies already set up in Publish2 can implement BreakingPromos in a matter of hours.  Anyone new to Publish2 can be up and running in a day or so.  Ultimately, it’s as easy as implementing AdSense (i.e. just requires figuring out strategy for placement, categories, etc.).

Let me explain further the role that the Publish2’s platform plays in creating BreakingPromos, in concert with social media platform APIs.

We are leveraging the Twitter API (and soon Facebook and Google+) to enable easy login and dead simple account creation for local businesses, and to “simul-post” BreakingPromos to Twitter (Facebook, Google+, etc).  Consumers can Retweet, Favorite, and reply to BreakingPromos right in the widget.  They can also follow merchants via the profile:

We believe BreakingPromos has a lot to contribute to the Twitter developer ecosystem — in fact, we choose to integrate with Twitter first in part because we greatly respect what Twitter CEO Dick Costolo has done to foster a healthy developer ecosystem.

In fact, if you think of Promoted Tweets as Twitter’s equivalent of Google AdWords, i.e. monetizing Twitter’s own audience on its properties, BreakingPromos is like AdSense for Twitter, by enabling local news sites to monetize their audiences with the simple but extremely powerful social media format.

That being said, all the heavy lifting for the BreakingPromos product is handled by the Publish2 content platform, which we’ve spent 4 years and nearly $6 million developing.  The widgets, categories, and all the posting, tracking, and commerce around BreakingPromos is all powered by the Publish2 application and database.  We’re storing BreakingPromos in our database, then sending to Twitter (and Facebook, Google+, etc.).

A few examples of how we’ve leveraged the Publish2 platform:

1. Widget Creator

Creating a widget is a snap with our widget creator. It’s entirely self-serve, easily configurable:

2. Custom Categories

News organizations (or anyone with local audience), can define the categories in the widget to match the local market.  Large markets could create a widget for each neighborhood (e.g. Santa Monica in LA). You can create a widget for niche sites, e.g. moms, pets, sports, and categorize for those verticals.   You can start with one category, restaurants for example, and target those businesses to build up activity.  Create a General category to catch other activity, and spin up new categories as activity reaches critical mass.

3. Advertiser Tracking

Publish2 will provide detailed tracking of advertisers in each widget, segmenting businesses by category.  Local sites will be able to plan and optimize their strategy for targeting merchants.

4. Facilitating Amazon Transaction

Setting up an Amazon Payment account for a local news site to receive payments from businesses buying BreakingPromos is also entirely self-serve.

The advertiser account and BreakingPromos purchase pages that you see above appearing seamlessly in the widget are all Publish2 application pages.  The accounting for BreakingPromos, how many purchased, how many remaining, etc., is all handled by Publish2.

Here’s the other key advantage of the Publish2 platform at the center of the BreakingPromos real-time marketplace.

If BreakingPromos is adopted across 100s (or 1000s) of local sites, we see a huge opportunity to leverage data and market feedback to optimize the model, the same way that Google optimized AdWords/AdSense.

For that reason, we need to establish a baseline of consistency across all sites using BreakingPromos.  So we are making three elements requirements:

1. Publish2 controls the pricing
2. Use of the Ticker
3. Use of the BreakingPromos brand

We will work with local sites to optimize the pricing, but we want pricing decisions to be based on data-driven optimization, not arbitrary local decisions.  With our revenue share model, our incentives are perfectly aligned with local sites.

It’s easy to imagine premium pricing models:

- Premium rates for bar/restaurants to post BreakingPromos 3-6pm on Fridays (happy hour), or the real estate category 2-4pm on Sundays (open houses) — essentially, dayparting

- Premium to appear in the ticker, across every page of the local site.

We’re requiring the ticker because we believe it is the best way to harness a local site’s existing audience to quickly scale a huge local audience for BreakingPromos.

We’re requiring the BreakingPromos brand because we want to establish consistent consumer product recognition across markets.  If I live in DC and travel to LA, I know I can find BreakingPromos in LA, same as I have in DC.

Which gets to the question of where consumers will seek BreakingPromos in each market. For that, we believe this is a first-in, winner-take-all opportunity.  Once a local site achieves a critical mass of local business activity and consumer engagement, it will be very difficult for a competing site to break in.  As such, we are eager to work with whichever player in each market wants to move first to capitalize on this opportunity.

If you made it this far, I hope this means you’re as excited about BreakingPromos as we are. Look for announcements of our first live implementations across the next few weeks.

Interested in a live demo of BreakingPromos?  Drop us a line: contact@publish2.com