Hey BW: Don’t ‘Dis’ What You Don’t Understand

Here’s a general article on the local market from Business Week. Many people have seen it and emailed me about it.

It bothers me because it’s pretty superficial. And here’s a gem of a paragraph that no doubt captures the author’s personal experience and feelings (complete with dismissive tone):

What happened to the “everything is local” adage? The concept of local is morphing quickly in a world where instant global communications and social media widen our circle of friends and acquaintances to include the world. In essence, we’ve become national—if not international—citizens.

That is a bland and purely anecdotal observation that one might toss out a party without too much reflection. Beyond this, writer Lacy skips merrily through various local media, citing Borrell’s revised downward local forecast and newspaper troubles as evidence that local is not happening or in decline.  She also indirectly refers to the chronic challenges of SMB ad sales as evidence that there’s no there there.

Here’s the reality, which BW either doesn’t fully “get” or seem to want to explore in sufficient depth:

  • Local is about offline — money spent in physical places.
  • E-commerce is <4% of retail; 95%+ percent of product purchases happen offline. Increasingly those purchases start online.
  • 99%+ of service business transactions happen offline/locally (yet online is the place where more and more people go to find service businesses).
  • People may communicate via Twitter, LinkedIn or Facebook to others around the globe but they live in physical places and when they travel they’re also in physical places, where they stay, eat, shop.
  • SMB advertiser acquisition is hard, yes — no dispute there (see the last two years of blog posts)
  • The central barrier to more geotargeted and local advertising by nationals has been the challenges of offline tracking in any given campaign

What about mobile? Except for gaming, mobile brings the relationship between the Internet and offline transactions into sharper relief. In fact, mobile is starting to reveal and teach people about the value of local online.

The angle should have been: there’s a big disconnect between online consumer behavior and advertiser understanding and/or ability to capitalize on that phenomenon.

There’s this bit too:

So if you’re an advertiser and want to reach a particular geographic region, good luck. You can target a group, whether it’s young singles, men between the ages of 35 and 50, or women climbing the corporate ladder—but increasingly, they’re scattered across the country, not lumped into one city vs. another.

Every single ad network offers layers of targeting based on location and audience segment. And geotargeting is only getting more precise (see Geode, Windows 7, Chome, etc.). In fact, as I’ve argued repeatedly in the past, the better local gets the more it becomes demographic targeting. Everything, including geo and demo targeting, is even more precise in mobile.

We’re in a recession; everything is down including local. And local is harder than other segments because of some of the factors mentioned above. SMBs are hard to sell to and they don’t spend lots online. But there are millions of SMBs online in various forms today.

As I’ve argued before, from consumer behavior perspective, local/offline is a much, much bigger deal than anything else going on online.  It’s just often hard for people to see it.

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14 Responses to “Hey BW: Don’t ‘Dis’ What You Don’t Understand”

  1. Devin Davis Says:

    Couldn’t agree more.

    And to ignore geo-targeting across virtually every online category was a bit of a travesty.

    Not seeing the bigger picture in regards to local and the offline disconnect (and ignoring the fact that, even with the revisions from Borrell, the segment is still growing) is obviously a huge oversight. Or at least, obvious to anyone who works directly in this space…

  2. Greg Sterling Says:

    Yep

  3. Perry Says:

    Agree – it was disappointingly lame reporting. The downside of an increasingly underfunded newsroom, perhaps?

  4. Greg Sterling Says:

    I’m sure that she thought she was being thorough with a kind of survey of different industries and discussion of both national and SMB advertisers. But I think it was a case of not knowing the questions to ask or having much insight into the segment to know what was not being discussed.

  5. Devin Davis Says:

    I agree with Greg. She’s been around quite awhile and is a pretty accomplished reporter. Definitely a lot more to do with not asking the right questions or fully understanding the segment…

  6. Vickie McGee - Where2GetIt Says:

    I’m surprised they ran the article!? Even the national brands that we work with are focusing on local.

  7. Greg Sterling Says:

    What can I say?

  8. Julian Seery Gude Says:

    Great points Greg.

    To me the most interesting aspect of the story that is playing out in the real world are the local SMB’s that increasingly DO understand that there’s a ton of business coming from their web site that they experience in a traditional offline mode.

    For example, a typical large Print and IYP advertiser called me last year about redoing his web site and SEO because he wanted to cancel all his Print and IYP ads. He’d had those print ads for over 20 years.

    He’s not the slightest bit technical or web savvy. He doesn’t like dealing with web sites and local SEO anymore than he ever liked dealing with his Yellow Pages. He didn’t call us because I sold him anything. He called us because over the last few years he found his referrals were saying they found him on Google and not the YP as they’d been telling him for 15 years prior.

    Eight months later he’s still taking some lumps (as we has prior to his marketing changes) but he’s surviving the recession on his web site and SEO alone. He’s pretty damn happy about that, to the tune of several thousand dollars less in marketing costs per month.

  9. Greg Sterling Says:

    Thanks Julian for the info. I think SMBs conceptually “get it.” It’s just the execution part — as you say — that’s very hard.

  10. Local online is about local offline at Ghost of Midnight Says:

    [...] Greg Sterling today… Here’s a general article on the local market from Business Week. Many people have [...]

  11. James Delli Santi Says:

    The BW author does not understand that local SMBs are mostly interested in driving sales. They are much more sales-driven than marketing-driven. Thus traditional online advertising, geo-targeted or not, on which most big companies are spending from their marketing budgets is much less interesting to a local SMB interested in driving sales. If you speak with a few Open Table restaurant owners, up to 50% of their reservations are now coming from OpenTable, which generates actual sales for them in the form of online reservations. And these restaurant owners will tell you if OpenTable went away, they’d have nothing to replace the reservation volume it currently provides today. The distinction between marketing dollars and sales dollars is another point largely lost on this BW journalist. Execution for driving local SMB sales is hard, but not impossible. It just takes the correct mindset, (like that of an SMB owner) and knowing what they care about, and how they drive their own sales.

  12. Mike B Says:

    I lost all interest in anything Sara Lacy says after the Hindenburg of an interview with Mark Zuckerberg at SXSW last year

    http://www.mediabistro.com/prnewser/interviews/sarah_lacy_and_the_zuckerberg_interview_meltdown_79393.asp

  13. earlpearl Says:

    I read the entire BW article. Yes, I think they missed the point. Online efforts are being increased across the board by local businesses/services/ and even the nationals are creating more local visibility. The spending is diversified in every way possible. I doubt if any one source is sucking up most of the money…..unless Google reveals how much it makes through locally generated ppc…..:D

    Meanwhile I disagree with Craig Newmark’s comments. I love Craigslist. It has absolutely ripped into Print’s revenues from Classified….and on top of that it produces.

    Frankly within this amazingly weak print market…Print media should discount the heck out of print advertising to draw back advertisers. Some advertising is better than none. I’ve got some businesses that are primarily relying on web visibility….but we have successfully added some selected print advertising that is working. There are select opportunities.

  14. Rob Paterson Says:

    Absolutely agree – an awful, superficial article which displayed a complete lack of understanding of local, small businesses and the web as audience.

    Small businesses are advertising online and locally online – but in a huge variety of places and formats.

    That doesn’t mean there isn’t room for improvement in creating audiences for small businesses to advertise locally.

    Additionally it’s not just a case of “if you build it they will come” the benefits of the audience still have to be sold to potential advertisers.

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