Advertising in My Online Neighborhood

Local marketing drives profitability for a wide range of established, geographically focused media organizations. Traditional media outlets succeed by attracting a user base interested in the micro-targeted local information they provide. As a result, an addressable marketplace is created for advertisers.

Small businesses, many of which are local, are an important component of the U.S. economy. According to the Kelsey Group, they drive about $2.2 trillion in economic activity each year and spend over $30 billion on marketing. Only a fraction of that is spent online.

“With local Internet reach equaling or exceeding traditional media,” said Greg Sterling, a Kelsey Group analyst, “we expect local online ad revenues (directories, search, and classifieds) to grow from about $3.3 billion in 2005 to $9.9 billion in 2010.” Note related advertising forms, such as display ads and sponsorships, aren’t included in these numbers. They’ll grow as the markets evolve.

Many offline local media organizations have trouble effectively translating their offerings to the online channel. This is partially due to the challenge of finding ways to target and attract consumers to their online offering without cannibalizing profitable, established offline revenue streams, such as classified advertising.

Meanwhile, search and online yellow pages listings meet some consumer need for local information. But often, they’re not as complete as their offline counterparts and they lack the rich online functionality users have come to expect. Consumers, then, are challenged to find local resources beyond search. As a result, the online local marketing landscape is fragmented and suppliers are testing a variety of approaches with mixed success.

One solution to the fragmented online local marketplace has begun to emerge. Blogging, social networks, and related consumer engagement tools provide a natural platform for localized marketing. Using unique, consumer-generated content to build communities and marketplaces, they meet the needs of consumers, media companies, and retailers while complementing offline media and transactions. This approach was highlighted at the Software and Information Industry Association‘s (SIIA’s) recent conference by Backfence.com and the online edition of “The Austin-American Statesman,” which have become trusted resources by very granularly defining local.

To build traffic, Backfence uses traditional grassroots methods to build relationships with the community, reaching out to local groups, such as PTAs. The site is sustained by viral growth by serving as a resource for local residents and merchants. It avoids conflict with offline media by offering content depth offline can’t cover. It draws involved, repeat users which makes it attractive to local merchants. Due to user engagement and pricing, Backfence’s local yellow pages are the second highest visited area of the site.

Statesman.com uses reader blogs to engage a broader and, often, younger demographic that otherwise might not read the print newspaper. Jim Debth, Statesman.com general manager, advises, “This approach requires marketing and site and content integration to ensure that the blogs get a wider audience incenting authors to keep posting.”

Statesman.com highlights some blogs on its home page to drive traffic to them. For local media companies and retailers alike, these examples illustrate a way to engage local communities to extend online without hurting offline sales.

The Media Perspective

The important issues to consider:

  • Determine your market’s sweet spot. Do you have deep connections to the local community? Provide a forum where people can exchange communications about topics they consider important.

  • Assess your local merchants’ needs. Determine whether you can provide a more integrated marketing approach across channels. According to Chris Muldrow of Community Newspaper Holdings, which owns local dailies and weeklies, both advertising sales and marketers must be educated about the need for local online marketing. Do these local merchants have relationships with the community that you can leverage? If Joe’s Pizza sponsors a local Little League team, for example, create a Little League photo gallery sponsored by Joe’s Pizza.

If your analysis points to online expansion:

  • Complement your traditional media by offering fuller news stories online and by using content that doesn’t fit offline.

  • Extend your offering to advertisers by providing low-cost Web site development that links to your display, classified, or yellow pages advertising for a better user experience.
  • Develop a program to drive offline users to your Web site. Cross-promote it. Include RSS (define) and blogging to help drive traffic and aid organic search.

The Retailer Perspective

Important issues to consider:

  • Evaluate if your local community is well-targeted and developed online. If so, invest in your online presence to extend reach and build your brand.

  • Assess whether your product offering serves a niche market for which an online presence could expand your market coverage beyond your immediate local community.

If your analysis points to online expansion:

  • Add or expand your online presence to enhance your current marketing mix.

  • Evaluate online tools to grow your online presence. Options include eBay and Yahoo storefronts as well as blog use.

The Analytics Perspective

Important issues to consider:

  • What’s your reason for using local marketing? Though the relative numbers may be small, if you target this market your results can be strong.

  • What’s the relative cost of reaching those users through other means? High CPMs (define) may be cost-effective if you avoid wasted impressions.
  • What types of action are you looking to drive? Online communities can help with branding as well as sales. Local merchants back kids’ teams to build brand and association with the community, for example.
  • How deep is the content you offer the community? If I want to know about a restaurant in my immediate neighborhood, Zagats.com or its equivalent may not exist.

Blogging, social networks, and related consumer tools can help both established and nascent media companies reach local communities in an era of fragmented audiences. For local media companies or retailers, these online communities are an effective way to tap into this market. The way to do this is by providing in-depth, relevant, unique local content.

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