Right. We most often talk about SEs because this is webmasterworld. But the universe of organizations vying for the local advertiser dollar, valued at $22 billion annualy, is deep and diverse.
In addition to the major media providers mentioned above, we know for example that ebay, a 25% shareholder in the craiglist, recently made a play towards interntional classifieds through its new property kijiji.com. We know that Amazon wants a share. We know the portals have a play. We know that many pure plays are emerging, and we know that traditional local advertising beneficiaries are not standing idle.
As with any new marketplace, the consituents are lining up, all with their eye on the migrating local advertiser dollar. The marketplace is fragmented and best defined by innovation and change - hardly an environment with clear definitions and stable platforms.
Yet, as with any marketplace, the big fish will eventually swollow the little fish, and if there are vertical or geographic based niche players with differentiating factors or comparitive advantages, they too will be eaten by any one of a number of mature businesses that seek to mitigate the loses associated with their increasingly marginalized business model, while gaining in the apparent trend towards traditional advertising dollars transitioning to the Internet.
The SEs by nature are horizontal plays. They seek to cover a vast amount of information to provide answers to searchers. They are by nature thin in their proprietary and rich content. This is not to say, however, that they will not make a strong attempt to take a share of the migrating ad dollars. SEs by nature are well positioned to direct ad dollars. With 20+% of all searches having local intent, it would be niave for them not to make a play in this marketplace.
The traditional YP arena is over 100 years old. It is annualy a $15 billion dollar industy. The newspaper industry has a similar history, and their business model *is* content production, distribution and local advertising- so the Internet advertising arena is a natual fit, and they too will make their play. Combine this with radio and tv outlets that own a significant amount of local ad dollars and you have at one hand a fragmented marketplace and on the other hand a muture marketplace looking to transition their ad revenue base from off-line to on-line.
Who will win? Well, in the end, the majors will win- the "goliaths" ~ those with deep and mature value chains and enough fiscal resources to scoop up any small niche player with any comparitive advantages that neatly augments their own.
What does this mean for us? Well for me personally it means opportunity to help simplify and consolidate the complexities associated with new and varying types of on-line inventory ~ to help advertisers make sense of a confusing and changing marketplace. Fragmentation by nature presents opportuntity and will give birth to a new breed of facilitators. What does it mean for small niche players? Well, it too is an opportunity to concentrate on your niche and do it very well. If you are the best at covering a vertical or a geography or a geo-vertical you will eventually be a target of one of these "goliaths".
Back in the day (late 90's), we used to be idealistic, thinking that we could break traditional supply and value chains. We thought that we could intermediate and simplify the connection between buyers and sellers more effectively. In part, the local arena today has charecteristics of that idealism. But at the same time, this arena, will soon revert to the same level of realism that was forced upon us when we finally understood that the Internet, like every other advertising medium or industry for that matter, is not immune to the classic rules of capitalism and free market forces.
It is idealistic to simply think that the tradional YPs, Newspapers, and SEs, can not stake an effective claim to the local internet advertising marketplace. It is idealistic to think that the Internet is somehow too organic and not susceptable to traditional marketplace forces. Such thinking will ultimately prove to be niave. The "goliaths" will ultimately own the local search arena online, and along the way, a few of us will be lucky enough to benefit monetarily as we help them to transition their mature business models, and aid in their capture of the migrating local advertising dollar.