Newsletter Archive - Local Search & IYP
Kelsey Conference Recap
04/09/2007 - The Kelsey Group Drilling Down on Local conference was recently held in Santa Clara on March 19 -21. This year’s edition of Drilling Down on Local followed the companies release of recent research which predicted that revenue in the online local segment will grow to $11.1 billion globally in 2001 from $4.1 billion in 2006, a 22.3% compound annual growth rate. Those kind of numbers will certainly make the industry take notice.
The conversation on stage and in the hallways at the conference was equally intriguing. There are a number of sources where you can obtain other, more detailed reviews of the conference proceedings, such as:
- Mike Boland’s overview of the conference for Search Day
- The Kelsey Group Local Media blog
- Greg Sterling’s blog,
- Donna Bogatin’s blog: The future of Local Search: Report from the field, Growing local ad spend: Top seven predictions, and Online advertising meets ‘The User Revolution’.
1 - This time it’s real
Anyone who was around this business in the 1999 to 2001 timeframe vividly remembers the starts and stumbles that the industry went through in the .com boom/bust. No doubt, those bad memories have slowed the development of local search and IYP products in many publishers who didn’t want a repeat of those prior experiences. But this time, it looks like the business of local search and IYP is real.
Ok, print yellow pages advertising is still growing, but at a very low rate. According to the Kelsey Group, the print segment will grow to $27.8 billion globally in 2011 from $26.5 billion in 2006 (0.9% growth rate). Most small to midsized businesses still rely heavily on traditional printed phone directories advertising.
Yet we all know peopleare increasingly turning to the Internet to find local merchants, repair services, restaurants, and other buying sources as opposed to checking the print Yellow Pages. Together, print and online local directory/search ads combined will grow more robustly from $38.9 billion in revenue globally in 2011 from $30.6 billion in 2006 (4.9%).
That has lead to publishers picking up the pace in acquiring or building businesses to support this new advertising medium. For example, RH Donnelley bought local search marketing consulting firm LocalLaunch in September of last year. Idearc Media signed an agreement to distribute its Superpages.com advertiser listings on local search site Local.com, giving them enhanced placement in the “Featured Sponsors” section.
How do I know its real now? Some of the best thinkers that follow the industry are sounding more and more bullish about the future of the media. Safa Rashtchy, the Senior Research Analyst/Managing Director guru of Internet media and marketing for Piper Jaffray has predicting global online ad spending by 2011 to reach $81 billion. In his keynote address at the Kelsey conference, he noted that "Local search is the second most popular activity other than e-mail. You will have more and more focus on local search, whether it's information or product searches that are happening. The adoption of local search by both local and search advertisers will see an increase."
Rashtchy is being heralded for his recent report called "The User Revolution," about the rise in what he's labeled as "communitainment" as a mix of communication and entertainment, especially among the younger generations of Internet users.
But more importantly I know it’s real now because all of the supporting companies, suppliers, and third party entities have found a viable, ongoing business model that fits and works with search engines, major portals, and yes, even Yellow Page publishers. The big mistakes of the dot com bust that “if we build it they will come”, and “we can do everything ourselves” seems to have passed.
2 - See Spot Run:
Perhaps the second most compelling presentation I heard was the one from Spot Runner Founder Nick Grouf. If you are not familiar with this group, they provide video production services and media buying oriented at local small businesses. They have also been winning some big deals with national advertisers that want to provide solutions for partners/franchises/affiliates who need to target their message locally. As Grouf noted during his keynote, the company is “solving problems for small business, we’re seeing substantial demand from Fortune 1000 brands.”
One example he talked about were realtors via Caldwell Banker and other brokerages. “We’re the agency of record for 260,000 real estate agents, working out of 10,000 offices,” he noted. Spot Runner’s stock TV footage is templated, with multiple options, and then appears to be unique to local audiences because the local realtors picture and contact information are loaded into the ad. The power of combining production and media buying is compelling with price points in the $500 range. “Five-hundred dollars is not the negating item. We’re pretty confident if we wanted to raise the price, we could. But what we’re doing is working with very small businesses.”
The company’s media buying side reaches into markets for as little as $10 to $12 per spot, even for companies that do not use the video/TV production side. “We provide greater reach and efficiency from the targeting we want to do. For instance, the company recently launched a campaign for Warner Bros.’ "The Painted Veil" for 200 movie screen locations. “They bought a five-to-ten mile radius around each screen,” he says. “They targeted $5,000 per screen, but working with Spot Runner, they did $12,000 per screen.”
3 - Video, Video, and more Video
Video was on everyone’s mind at this show. In this YouTube era, online video appears to be emerging as the latest “must have” feature for any locally focused sites. Since its production is still very challenging, I’m still not sure we are at a real mainstream point just yet. You should also read Greg Sterling’s blog interview with Michael Taylor of the Kelsey Group on the possibility that Yellow Pages could take a leadership position in offering local video (click here). I’m not convinced yet, but maybe this is a generational thing. I just don’t see the business model yet.
If you want further evidence on how crazy everyone is for video, look at the Washington Post's (more analysis) recently revamped home page. Jim Brady, the Executive Editor of washingtonpost.com, hopes it will finally give some visibility to video reporting. "Our video team produces some of the best, most critically acclaimed work on the Web with awards ranging from Emmys to Murrows -- readers need to know how to find it," Brady said.
In remarks recently, Brady said 85 of the newspaper's print reporters have been trained how to use cameras. "They don't have to do it on all stories, but we're now running maybe five or six reporter-shot videos weekly that we add to the Web site," he told a Columbia Journalism School audience. The Web site redesign has a permanent place for news videos on the page.
Does this mean Yellow Pages sales reps will be next???