Local Online Media Platforms Seen Taking Share From All Traditional Outlets but TV
SANTA CLARA, Calif. -- TV will remain a large part of the local ad market, but other traditional local outlets will lose share of local ad budgets to new digital marketing competitors, said Neal Polacheck, president of BIA/Kelsey, at the consulting group’s Interactive Local Media conference Tuesday. “Increasingly, we think the two dominant drivers of this will be television on the one hand, and everything else digital on the other,” he said. Local advertisers will use TV for brand advertising while digital marketing tools like Groupon, Yelp and Google Places will increasingly be focused on transactional activity, he said.
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Meanwhile, local online media companies are finding they need significant sales staff to stay in the game and they are attracting ever larger advertisers, executives at the conference said. Yelp has increased its local sales staff considerably as it has grown, CEO Jeremy Stoppelman said. Because small businesses hear from so many different local media outlets, all offering marketing opportunities, Yelp found it needed large local sales forces, he said. “As a result we've scaled up our sales effort, he said.
There’s no limit to the size of advertiser that a local online business can claim as a client, said Dev Khare, vice president at venture capital firm Venrock. “It’s across the board,” he said. “And I don’t think all the technologies are specific to one size of business.” Local advertisers of all sizes will be attracted to performance metrics, said Kara Nortman, senior vice president of publishing at Citysearch and former vice president of IAC’s mergers and acquisitions team. “We see advertisers big and small, national chains” and local shops, she said. “Ultimately it boils down to a performance metric,” she said. Businesses want to put their message in front of a specific kind of consumer, and many local sites can offer that, she said.
Local online media sites are also tapping a host of small local businesses that haven’t paid for advertising or marketing themselves before, Khare said. Handymen, nannies, and other small businesses who “can’t afford to pay lead generation costs” are increasingly entering the interactive world, he said. He said he’s investing in companies that are trying to sell local services like home improvement, rather than products, online. “We're all familiar with buying products online now and we think that buying services is the next step.”
The growth of daily deal sites such as Groupon is a threat to traditional local media outlets, Khare said. “A lot of that money is now going to Groupon deals, and from a merchant’s perspective” there’s value in getting sharing the revenue with Groupon rather than paying to run a local ad, he said. Still, there will be an opportunity for ads to be built around daily deals, he said. “There’s a whole ad ecosystem that’s going to jump in” primarily through mobile devices, he said.