The Vertical Play in Local

At The Kelsey Group’s Drilling Down on Local conference a few weeks ago, over 25 percent of the sessions on the agenda were vertically focused. Kelsey’s attention to verticals underscores consumers’ need for relevant, meaningful local content and advertisers’ opportunity to satisfy that need.

Vertical sites satisfy two primal desires that explain their success in the online marketplace: control and choice. People innately want control over their lives and, in turn, the decisions that impact them directly. Vertical sites give consumers access to the information that influences their decision-making process. What’s key is the aggregation of that information to single-search platforms.

Successful vertical sites focus on content specific to what their users are searching for. If I’m researching online before purchasing a new car, I’m likely to visit a site such as Edmunds or Yahoo Autos. A Google search for “autos” returns results with these vertical sites on the first few pages of organic listings because they offer focused content for that particular search query. And at the end of the day, it’s all about the content.

Why are certain verticals more successful than others? During the day-one keynote, Rich Barton, founder of Zillow.com and Expedia, provided insight based on his experiences establishing several vertical sites over the years.

Barton gave the example of a consumer making an airline reservation in the early 1990s. Back then, the consumer would need to call or visit a local travel agent who would then look up flight information, via a locked proprietary system, providing the consumer with a few choices. Booking a flight before Internet travel verticals almost always involved an endless, tedious back-and-forth dialogue:

Consumer: I’d like to book a 9 a.m. flight on United.

Travel agent: 9 isn’t available, but there’s 10:30 on American.

Consumer: 10:30 is too late, and I only fly United.

Thus the ingredients to a potentially successful online vertical, content and access, were spawned. In what categories could the primal desires of control and choice be satisfied in meaningful and financially lucrative ways? The clear winners so far are autos, travel, real estate, recruitment, and finance — categories in which there is or was traditionally an intermediary between content and consumer.

Offering consumers control and choice can disrupt traditional market segments, such as traditional local businesses, like travel agents, and newspaper classifieds. Yet the birth of a vertical site doesn’t always disrupt traditional categories. In some scenarios, they may complement each other. LendingTree, for example, can provide local mortgage originators with leads they might not otherwise have received. Could a well-developed mortgage vertical significantly upset the traditional offline local mortgage banking and broker model? Yes, if it’s executed correctly.

Which categories will be cracked next? Perhaps healthcare, because an online selection model would benefit both providers and consumers. As I look around the Internet, I see a lot of great information regarding healthcare out there. What’s missing is a vertical site taking advantage of the local advertising opportunity. Overall, healthcare can be a difficult space to make a play due to regulatory, compliance, and privacy issues as well as the role insurance carriers play in the process of selecting a healthcare professional.

Still, there are several segments within healthcare where many of these challenges are not an issue. Imagine a site dedicated to cosmetic surgery options, complete with before-and-after patient pictures, listings of the surgeons associated with each, and user ratings.

Given that over $2 billion is spent annually in yellow pages advertising within the healthcare segment, which is traditionally broken down by verticals, it would seem that shifting a small percentage of those dollars to dedicated online sites could prove fruitful.

There’s opportunity to provide consumers a wealth of information by aggregating disparate and hard-to-come-by content in one place. Consumers are searching for it. How will you leverage the opportunity?