AR&D Reinventing Local Media

If you follow the numbers, you know that local online advertising growth will outpace national online advertising growth over the next five years. Local has been a small part of the overall online ad pie since the beginning, but that's changing. The green in the illustration below from Borrell Associates represents local online advertising, and it is growing, while national advertising is leveling off.

We've seen this coming for a couple of years, but its reality is now upon us, and our dear friends at the pureplay Internet companies are responding. Google is stepping up its play for local dollars by releasing a new "dashboard" for small businesses that will better enable them to understand how their businesses show up in search queries. It's an incentive to encourage participation in Google Local, which is a big part of Google's attempt to suck money from local markets as noted by Erick Schonfeld in TechCrunch.

The other benefit to Google is that the more that small businesses can measure the impact of search, the more likely they will be to buy search ads. The dashboard shows the top search queries that result in a businessí listing showing up. The next obvious step is to start buying those keywords or optimize a businessí site to make sure they are on the page. There is no integration yet with Google AdWords (like there is on Google Analytics), but you can see that one coming from a mile away.

Google is doing this, because it knows what Borrell knows — local is where it's at.

This is why Yahoo was so eager to do a deal with newspapers that gives them sales feet on the street at the local level. By splitting revenue with the members of the Newspaper Consortium, Yahoo gets to tap into that local money growth as well. But Yahoo has reached even deeper into local media pockets by releasing a new self-service option for small and medium sized businesses. It's called "MyDisplayAds," and Mark Walsh of Media Daily News says Yahoo hopes to convert search advertisers into display ad buyers and boost its local display ad revenue. And of course, this will be local revenue.

The pilot program is designed to make it easier for small companies to advertise on the Web portal by allowing them to spend as little as $30 a day and choose from 800 ad templates to create campaigns. Users can bid for unsold Yahoo inventory on a CPM or cost-per-click (CPC) basis. "This new solution provides an affordable and accessible option for businesses to run brand and performance campaigns that reach the local audiences that matter to them most," said Joanne Bradford, senior vice president of North America Revenue and Market Development at Yahoo.

Interviewed for the piece, Gordon Borrell was skeptical.

"Local advertising is sold, not bought." He explained that smaller advertisers are accustomed to ad sales people pitching programs to them rather than having to play a proactive role in advertising. Without plenty of hands-on support, small business owners tend to quickly abandon ad initiatives they may have trouble understanding or using easily. "They're very skittish," said Borrell, who estimates that Yahoo garners less than 10% of local online ad spending, or about $1.3 billion in 2008.

I'm with Gordon on this one. I've built local directories, and self service just doesn't work. It should work, but it doesn't.

Those of us who are trying to grow revenues for local media companies know that the biggest competition we face is from these pureplays. The money is there, or they wouldn't want it. To allow them to proceed unhindered is suicide, for they (the pureplays) already take two-thirds of all the online ad money spent locally. As more and more local advertisers spend money online, that's going to become an enormous sum of money.

In order to adequately compete here, we're going to have to view ourselves as more than just TV stations and newspapers. Advertising is our business, not content, and only through than lens can we begin to grow market share at the local level.