Report Says Portals Threaten Local Sites

Could portals eat local content publishers’ lunch? A new JupiterResearch report predicts it’s possible that portal sites could steal ad revenue from yellow pages directory sites and local content sites if they don’t watch out, now that the traditional ways of organizing and retrieving information are changing drastically.

As noted in the “Local Advertising: Blending Categories to Compete Effectively” report, Yahoo, MSN and Google have “begun to blur the boundaries that have traditionally separated yellow pages advertising from other local directories, classifieds, and retail advertising.” For instance, the report cites Microsoft Live Expo’s serving of local display ads alongside local classifieds, Yahoo Local’s community pages featuring restaurant reviews and local business recommendations, and Google’s blending of local search results and business listings.

According to the report, 52 percent of visitors who clicked to Verizon’s SuperPages listings first visited an unaffiliated portal site, and 34 percent of those who clicked to Qwest’s did the same. In light of this, “Portals have a tremendous opportunity to capture this traffic for themselves and add it to their mix of local online directories and advertising,” the report concludes.

“If you’re a user, you’d probably just as soon stay on the portal if you could,” commented JupiterResearch Media Analyst Barry Parr. He calls that “a huge threat,” not only to directory sites but to newspaper and other local sites selling classifieds and local display ads.

Shawn Riegsecker, the president of local media services firm Centro, disagrees. He believes content sites have no need to worry about portals dipping into their ad dollars, because they typically don’t sell ads to traditional yellow pages advertisers. Content sites like local newspapers tend to attract advertisers from the real estate, jobs and autos categories, while yellow pages players rely on plumbers, restaurants and contractors, he said.

“There’s no fear at all because [local media publishers” don’t play in that game today in the offline world,” said Reigsecker. As far as he is concerned, portal sites are “glorified yellow pages,” providing listings as content rather than the more robust news and information provided by local newspaper sites and other local publishers.

Still, Parr believes that “user habits are always up for grabs,” especially now that, as is featured in the report, traditional information hierarchies are being flattened by search engines, RSS feeds, classifieds listings aggregators, social networking tools, and other Web features like mapping and user reviews. As a result of this shifting ad landscape, Parr suggested, when it comes to the appropriate context for local ads, “The distinctions for these things are less and less clear.”

The report compiled responses from 511 executives in the top 25 yellow pages categories. It found that in the past year, 59 percent of participants bought print yellow pages ads, 45 percent bought online yellow pages ads, 39 percent bought newspaper ads and 26 percent spent on search marketing.

As noted in the report, local Web advertising will rise at a compound annual growth rate of 11 percent between 2005 and 2010, with local classifieds, local display ads and local search all seeing increases.

In addition, the report found that 44 percent of respondents are not measuring search campaign results. Also, most advertisers are managing their campaigns via the interfaces at Google and Yahoo, rather than using a centralized bid management tool to handle their spending across platforms. Thus, “there is an opportunity for the management of the relationship between local advertisers and online advertising media,” notes the report.

“We’re dealing with people who are not sophisticated marketers,” Parr elaborated. Looking at the big picture, he continued, “Advertising is going to look really different ten years from now…. Innovating in local advertising is going to be really important to local content companies.”

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