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Where is all the local $$$ being spent?

Only 8% fon paid search...

6:21 pm on Feb 6, 2005 (gmt 0)

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Paid search will represent only $329.5 million--around 8 percent--of the 2005 local online ad spend, forecast Borrell.

I saw that and started scratching my head. It is my assumption that SME's make up the largest portion of local online spend. Would you agree or disagree? So the question is, what is drawing all the money from SME's?

9:23 pm on Feb 6, 2005 (gmt 0)

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Part of the full report Jeremy:

Who’s benefiting from this windfall? Daily newspapers remain the largest single shareholder of local Internet advertising and appear to be maintaining that share amid the brisk growth. Local broadcast TV stations gained share in 2004 because of aggressive programs aimed at automotive and health care advertising. Some of the pure-play companies offering targeted local advertising also picked up share. Online Yellow Pages appeared to have slipped.

Also anywhere from 11%-20% of SME media spending this year should go towards SME Web sites.

10:27 pm on Feb 6, 2005 (gmt 0)

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I don't have reliable enough figures from my own research as coverage and spread of markets is very thin in comparison to big reports but I do have a few thoughts on local advertising spend.

Before I go into this, you should know that my company specialise in delivering local traffic to service-based companies. I started researching this in 1998 and have done a great deal of testing, research and implementation in the last 6-7 years.

1. Targetting SME's is expensive. You get less spend and it's often more difficult to tie people down.

2. SME's, particularly small businesses, often have found few or no benefits from their web presence. Either from actually getting no benefit or not having the skills to pick out the benefits that may be there.

3. Many SME's will need more than advertising to increase revenue through local search. The fact that websites are often poor can be a problem, companies needing work on their site and advertising find it very hard to swallow.

4a. There's often large barriers to good SERPs for smaller, local companies. This is usually the result of 'directory' sites hogging phrases that would seem natural to target. This presents an opportunity as paid search can get around that issue.

4b. The amount of phrase variance on lesser searched terms is massive and impossible to predict. Imagine, for example, a landscaping company who operate in the London area. Firstly have the different services that people may search for, much more than if you were looking for a credit card, such as turfing, paving, fencing, irrigation, lighting, etc... Then you have hundreds of locations that people may search for. you then typically will have another qualifier in the phrase which gives literally millions of combinations. This can be worked with when it comes to paid searches, although time consuming. Doing the same for SEO for a SME - too costly for most.

5. Word of mouth in corporate circles can be a goldmine but as the company size gets smaller the likelyhood that lots of business will come from a job well done decreases. I recently did consultancy work for a company that relied entirely on word of mouth at director level. Our first meeting was straight in a level just below the corporate board (one of the world's largest banks). What relevance does this have to local search? Well, networking like this just doesn't happen once you get down to SME's meaning you have to constantly chase business which can be costly.

I could go on but it's already a sizeable post, any questions just post a reply.

5:13 am on Feb 8, 2005 (gmt 0)

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inbound, I think that is getting a little off topic. but, to answer your remarks, two things.

Yes, it definitely costs more to market and sell the SME. That is the real world. only in the last 5-6 years have companies started doing pure online plays with no real sales force.

No website, no problem. This is the whole point of the new local search market. People can now search online for local stores, and not actually shop online. no longer do you actually have to have a full blown site to gain revenue from the search engine. Of course it helps a bunch.

Chicago, I agree with the survey and observations. A few examples arise. The automotive and real estate market. They are dominated by online classifieds. Part news papers and part pure online plays like cars.c*m, autotrader, rent.c*m, and so on. The reason these pure online plays have blossomed is because until now there was no pure local search play. Before the past year you HAD to have a website to benefit from search engines. Now you don't.

Another observation and maybe a new / old direction to take with local advertisers. If SME's are spending 10% of their budget one their website, how much is going towards actually advertising their websites online? I know MANY websites for local businesses that do no online advertising. This is the same as paying an agency to create an ad campaign and never actually paying to have it aired or printed. A website is nothing more then an ad.


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