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The Changing Face of Local

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This ClickZ article discusses a new JupiterResearch report called "Local Advertising: Blending Categories to Compete Effectively." The article doesn't go into great detail about the findings or conclusions from the report. But based solely on my reading of coverage in the article it appears to make two relatively straightforward observations about local:

  • Search engines/portals could steal traffic and potential ad revenues from yellow pages and other stand-alone local sites that seek to cater to traditional directory advertisers

  • The local product definition is changing and categories are merging as the distinctions between classifieds, service listings, local retail and user-generated content and community are starting to blur.

The first conclusion above is something that has been true and fairly obvious for at least three years. Here's Chris Sherman's coverage of an early report from 2003 I wrote on essentially the same subject when I was at The Kelsey Group. The only difference now is that there are many more local competitors, beyond yellow pages and search/portal sites.

However, the Jupiter report doesn't appear (based on the article) to get into discussion of the sales channel issues and some of the "structural" barriers to local advertiser acquisition by portals and search engines. I go into that complex set of relationships in some detail in this post.

The report's apparent other main observation, referenced above, is much more interesting and part of a larger evolution of local online. It goes to the question: What is the right mix of content and features in local? No one yet really knows what that is. Indeed, there's probably no single, definitive answer.

Offline the differences between trade publications, newspapers, yellow pages directories, local TV, direct mail/coupons, etc. are structural/organizational and very clear. Online those distinctions, basically the legacy of these offline publications, start to break down. There's no necessary reason that classifieds, retail content, service listings and video, for example, shouldn't be featured in the same online product. And there's momentum toward a more comprehensive product that offers a broader use case. (See my post on SuperPages as one example.)

On one end of the spectrum are Google, Yahoo or MSN search, offering conceivably everything available online. On the other end is a very specialized niche directory that provides narrow but deep information about a single subject. The ideal local product is somewhere in the vast expanse in-between.

Yellow pages publishers (and to a lesser degree newspapers) are alert to the threats the report identifies and are actively engaged in the product definition question. In addition to SuperPages, Canada's Yellow Pages Group and Australia's Sensis, both publishers of yellow pages, have integrated classifieds among other local content into their online offerings.

The report cites Microsoft's Windows Live Expo as example of a hybrid marketplace that includes local classifieds, display ads and service listings. Here's my February post on the same general themes.

I tend to believe that what one might call an "integrated local marketplace" is what consumers ultimately want -- the convenience and efficiency of getting their local needs met in one place. If I'm right this gives the search engines/portals an advantage "on paper" because of their more comprehensive content. But, to date, they've failed to fully leverage that opportunity in their local offerings, although they are improving under the intensifying pressure of competition.

It's very easy to discount the assets of traditional media publishers in the competition for local online traffic and ad revenues. But it would be wrong to do so. By the same token, the search engines' technology, faster product development cycles and brands make them quite formidable as local competitors.

It's by no means clear that five years from now (when mobile local search is more prevalent) the local market will be any less fragmented or chaotic. One can hope, but reality always turns out to be more complex and "messy" than the predictions suggest.

What's very clear today is that online consumers want local content. What's also clear is that local advertisers want to be found online. But unlike traditional local media, which more or less "owned" the entire value chain (sales, content, distribution/usage), it remains unlikely in the near term that any single player or segment will duplicate that online. The many moving parts make local a lot more complicated than it would appear from "30,000 feet."

That's what's so interesting and vexing about this space.


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