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Local media online: what's the holdup?

Dawn Anfuso
Local media online: what's the holdup? Dawn Anfuso

Despite my desire to throw out the numerous yellow pages directories that take up too much space in my kitchen drawer, I haven't been able to do so. Why? Because I still can't find all the local business listings I look for online.


That's because, according to eMarketer's latest report, "Local Online Advertising: Measuring the Market," this segment of the online advertising spectrum hasn't yet met its potential.


The research firm estimates that advertisers will spend just $2.9 billion locally this year online, compared to $18.8 billion nationally, with local ads comprising only about 15 percent of the whole internet pie.


As a yellow pages industry consultant told The Wall Street Journal last year, "The vast majority of small businesses have neither the time nor awareness to effectively market their products on the internet."


But eMarketer predicts a change, with several factors accelerating local markets' growth.


Newspapers team with portals
Among these factors is the increasing willingness (or one might say need) of newspapers to partner with the big guys. To date, 17 newspaper companies, encompassing more than 400 daily papers, have joined up with Yahoo! in a mutually beneficial consortium: Yahoo gets local content and the newspapers' audiences, and the newspapers get Yahoo's ad-serving technology for display advertising to create an online national ad platform for local markets.


Google, too, is working with the traditional media companies. Google Maps now displays expandable local business ads on map results, and the company has extended its AdWords program to let businesses go on the web to buy newspaper print advertising. As of July, the network included 225 newspapers, representing 32 of the 35 largest DMAs and such chains as Gannett, Hearst, E.W. Scripps, The Washington Post Co. and the New York Times Co.


eMarketer states that the mere fact that Yahoo and Google want to work with the newspapers shows that reaching the local ad market is more difficult online than it would seem. "The value of local news in attracting a significant local audience is obvious," states the report, "and neither Yahoo nor Google can get at the billions of dollars in local online advertising by themselves, and nor can the newspapers.


Search: online's "yellow pages"
Another factor that will boost local spending is the movement of dollars by local businesses into search marketing.


Research from the December 2006 Nielsen//NetRatings and WebVisible report "I Searched, I Clicked, I Contacted … I Transacted" shows that 70 percent of U.S. internet users have used a search engine to find a local service vendor.


Interestingly, due to the familiarity of search for consumers, paid search has become the online counterpart of the print yellow pages in consumers' minds, rather than actual internet yellow pages.


"This change of habit among individuals will do much to alter the course of local ad spending," states eMarketer. "Local companies see how more of their customers research online before or instead of using yellow pages or local print newspapers."


As a result, eMarketer estimates that by 2011, 51.3 percent of U.S. local online spending will go to paid search, compared with 43.1 percent today.


Video makes online appealing
A final factor affecting the growth of online local ad spending, according to the eMarketer report, is more and more offerings from such companies as SpotRunner, Spotzer, Turnhere and VideoAdFactory that make it easier and less expensive for small businesses to make and deliver video commercials.


"Reaching down and making it accessible are part of the tools in general that will be needed to grow local advertising," says David Hallerman, an eMarketer analyst.


All in all, Hallerman says he is optimistic about the growth of local online media.


Maybe soon, I can send those print yellow pages to the recycling bin.


Dawn Anfuso is senior editor, iMedia Communications. .

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