Archive for the ‘General online advertising’ Category

City.com Goes Up Against Yelp

April 20, 2010

When Yelp launched I didn’t dismiss it but was skeptical of its chances in what I thought was then a relatively well-established market. Clearly that skepticism was wrong.

I say that because I also have a sense of skepticism about the chances of the new City.com that just launched last week. However I’m willing to acknowledge that I could be wrong.

City.com is a great URL and offers a generally nice/clean design but is undistinguished otherwise (in my quick tour of the site):

The site aims to be a consumer cityguide destination but also a “one-to-many” marketing resource for SMBs. According to the press release:

In addition to facilitating the creation of hyper-local content, City.com is developing practical direct marketing tools for local merchants . . . City.com is focused on becoming the preeminent relationship manager for local businesses who are seeking cost effective local marketing strategies.  The company has established syndication and content partnerships to enable businesses to better control their business profiles centrally at City.com, while having their invaluable listing data syndicated to over 100 local search providers including Google, Yahoo!, Bing, and YellowPages.com.

One of the ways that Yelp established itself was through local SEO. That route is tougher today than it was in early 2006 when Yelp was first gaining momentum.

The CEO is seeking feedback and opinions about the site. What do you think of it now and how would you assess its chances in the market?

Privacy and the Paradox of Targeting

April 19, 2010

I’ve discussed multiple times in the past the paradox that when you ask consumers whether they want to be targeted by online ads they express discomfort and displeasure. But they also say they only want “relevant” ads. This is a direct conflict in most cases; the only online ad channel that can reconcile that conflict is search.

More and more ambitious and aggressive targeting has been developed over the past several years in a effort to make display and rich media advertising online perform better and more like search — matching ads with intent (inferred from browsing history or other variables). A new example of this more aggressive variety of targeting comes in the form of a company called Cardlytics, which is identifying consumers through and using their online banking statements as a marketing channel. AdAge explains:

Imagine signing in to your online-banking account and finding promotions linked to your transactions. Underneath a transaction for a restaurant, there’s an offer from that eatery for $10 cash back when you spend a minimum of $20. And underneath a purchase at an apparel chain, a rival offers 15% cash back for shopping at its store or website . . .

Cardlytics is privy to transaction data: the name of the merchant, date of the purchase, how much was spent and the customer’s ZIP code. But it does not have access to personally identifiable data like customer names, account numbers or home addresses, which are managed by participating banks. Because of that, he downplays privacy concerns, noting that Cardlytics goes through “lots and lots” of regulatory steps in order to work with financial institutions. Customer information remains behind the bank’s firewall.

While the idea of this is both intrusive and potentially offensive, the company says that privacy is taken care of an consumers can opt out. Consumers are also much more open to deals and coupons than traditional ads.

The rise and popularity of Behavioral targeting prompted the US FTC to get involved and hold hearings last year on targeting and privacy. For its part the IAB is trying to keep the government and regulators at bay with self-regulation. That includes new consumer outreach efforts:

The Interactive Advertising Bureau, in conjunction with the ad network trade group Network Advertising Initiative, has announced a new tactic aimed at increasing consumer awareness surrounding behavioral targeting: telling people up front exactly why they are receiving a particular Web ad.

More specifically, the two groups are advocating for publishers and ad networks to run notices alongside banner ads in the form of text links that enable users to find out more information on where that ad came from—and even opt out of receiving similar behavior-based ads in the future. The initiative is being called CLEAR Ad Notice, which stands for “Control Links for Education and Advertising Responsibly.”

This new IAB strategy represents adoption of an approach that Google introduced with its “interest-based ads.” The Google approach is a good one: simple language combined with the ability to change ad preferences or opt-out of receiving targeted ads altogether. Yahoo also now does this.

Giving consumers clear information and control is a potential solution to this targeting-tracking paradox; if consumers understand what kinds of information are being collected and used to serve ads to them they may choose to do nothing, recognizing that the targeting will make those ads more “relevant.” In an optimal case you might even get some additional information about the user.

During a briefing related to privacy Google said for every 15 people who click through to its ad manager’s privacy controls and preferences that “four users edit preferences, one opts out and 10 do nothing.”

Many in online marketing have paternalistic notions about privacy and targeting or operate under the assumption that many people don’t really care about privacy — especially younger people. However a very new study, based on a 2009 telephone survey with 1,000 younger and older US adults, shows that younger users do in fact care about privacy.

The authors of the report wrote, “We conclude then that that young-adult Americans have an aspiration for increased privacy even while they participate in an online reality that is optimized to increase their revelation of personal data.”

The AP summarized the findings at a high level:

  • 88 percent of people of all ages said they have refused to give out information to a business because they thought it was too personal or unnecessary. Among young adults, 82 percent have refused, compared with 85 percent of those over 65.
  • 86 percent believe that anyone who posts a photo or video of them on the Internet should get their permission first, even if that photo was taken in public. Among young adults 18 to 24, 84 percent agreed — not far from the 90 percent among those 45 to 54.
  • 40 percent of adults ages 18 to 24 believe executives should face jail time if their company uses someone’s personal information illegally — the same as the response among those 35 to 44 years old.

The study did find a few generational discrepancies, but there were more similarities.

In an early 2009 conversation the CEO of mobile ad marketplace Smaato, Ragnar Kruse, argued that all mobile advertising should be opt-in. This would remedy any/all privacy issues and potentially make advertising perform better. Placecast has an amazing statistic illustrating this, drawn from the beta phase of the company’s ShopAlerts:

In research we conducted through the holiday season with three brands, 65% of consumers that opted-in to follow a brand made a purchase as a result of receiving messages based on place and time. In essence, location and time are the physical manifestation of purchase intent.

I’ll quote it again: “65% of consumers that opted-in to follow a brand made a purchase as a result of receiving messages based on place and time.”

But this opt-in approach won’t work for most marketers, publishers or ad networks online because too many consumers would simply fail to participate — fail to opt-in. So the Google approach now being championed by the IAB will have to do. But that approach needs to offer simplicity, clarity and control. If it fails to do those things or such a system is abused the feds will come knocking.

Nobody should have a problem with the idea of offering consumers more information and giving them the ability to opt out. Only this sort of approach will address the paradox of privacy and targeting discussed above. Beyond this I could eventually see someone developing a privacy dashboard or ad manager for the entire Internet used by individuals to control and manage the advertising they see or receive.

UBL Expands Scope of Mission

April 14, 2010

The company behind Universal Business Listing, which began with the idea of being the single place for SMBs to submit and manage their data online, is broadening its mission. Here’s some information from a curious press release that went out early this morning:

BounceBack Technologies, a global technology company specializing in business intelligence, today released an open letter to shareholders, customers, and employees announcing that the company is changing its name and expanding with innovative new services and expanded capabilities. Moving forward, the company will focus its efforts on acquiring and developing services that improve the way businesses promote and protect their identity online. This new direction is designed to strengthen BounceBack Technologies, renamed as Name Dynamics, Inc., and help shape the future growth of the company in demand markets such as online search, interactive marketing, and business identity security.

BounceBack acquired the assets of UBL in January, though UBL co-founder Doyal Bryant is CEO of the venture, which is being renamed “Name Dynamics.” At any rate, the mission now appears to be much broader than listings data submission:

Moving forward, the company will focus its efforts on acquiring and developing services that improve the way businesses promote and protect their identity online. This new direction is designed to strengthen BounceBack Technologies, renamed as Name Dynamics, Inc., and help shape the future growth of the company in demand markets such as online search, interactive marketing, and business identity security.

The concept behind UBL was pioneered by the old LocalLaunch (acquired by RHD, now DexOne) with its “master business profile.” And several companies have been trying to executive on a variation of this theme for some time: the idea of a “one-stop shop” that provides access to a broad network of sites for SMBs (or multi-location businesses).

I briefly ran into Bryant at the SMX West conference and he was promising new/big things, which this release hints at.

A Quick Look at the IAB FY2009 Numbers

April 9, 2010

I was out a few days this week and didn’t get to a lot of the news. One of those items was the release of IAB Internet ad spending numbers for FY 2009 ($22.7 billion). Here are some of the charts (click to enlarge):

The graphic above shows the Internet now in third position after TV and newspapers in the US. Next year it will be number two as newspapers continue their decline.

Here are the revenue breakdowns by category and pricing model:

Most of the local advertising (listings, YP) is grouped within the “Classifieds” category by the IAB, worth 10% of the overall $22.7 billion. The other main category where local or geotargeted ad revenues would appear is search, which was far and away the dominant category of online ad spending.

Local, Mobile Hot Areas for SEMketeers

April 2, 2010

I finally got a chance to take a look at this year’s SEMPO survey, based on responses from 1,500 advertiser and agency search marketers from 68 countries (most respondents were from North America and UK). The breakdown of responses was: 64% agency, 36% advertiser:

The report features a good deal of data across a broad range of questions. However I found most interesting the fact that the areas that respondents identified as most significant were local, personalized search and mobile.

The results varied somewhat depending on whether the respondent was an advertiser or an agency (click to enlarge):

Companies:

Agencies:

Notice that the question asks not whether these are areas of future opportunity but inquires about the “impact” of these trends.

IB Debuts New ‘Hover’ Ad Unit

March 30, 2010

There are many who believe that IAB ad unit standardization has killed online ad creative and contributed to the challenges that display ads face. That stagnation led the Online Publishers Assn, together with a group of publishers, to introduce new, larger ad units that were intended to be more creatively engaging. Mobile, the iPad and perhaps Apple’s rumored “iAds” will open open up new creative opportunities and outlets for digital display and rich media advertising.

In the meantime, Internet Broadcasting launched a new retractable “hover” ad unit that exists at the bottom of the browser and remains above the fold as the user scrolls.

The question is: do these non-traditional ad units really boost the fortunes of online display and “work” or are they simply gimmicky?

Report: Video, SEM Spending Growing for SMBs

March 28, 2010

WebVisible put out a terrific report on Q4 2009 trends regarding SMBs and SEM (following up on its Q3 report); it’s got GREAT data. I haven’t had a free moment to digest it until now. 

Here are some verbatim highlights:

  • Average small business search spending surged in Q4 with the average small business advertiser spending $2,149 on search advertising in Q4 2009. This represented an increase of 30% over Q3 2009 and 111% over Q4 2008.
  • Click-through rates (CTR) and cost-per-click (CPC) did not change significantly on the search engines on a quarter over quarter (QoQ) basis. Bing maintained the highest CTR while Google maintained the highest CPC.
  • Conversion rates improved significantly for small business advertisers in Q4 2009 with 35.3% of clicks resulting in website conversion action, versus 32% in Q3 2009 and 26.6% in Q4 2008.
  • Video capability was the fastest growing website feature for small business advertisers over the past year with 19% of advertisers showing video in Q4 2009, versus 5% in Q4 2008.
  • UK small business advertisers spent significantly less than US advertisers in Q4 2009 at an average of $183 per advertiser. UK keyword portfolios were also much smaller at an average of 26 root keywords per advertiser.
  • UK click-through rates (CTR) were significantly lower than in the US in Q4 2009 but varied similarly – Bing had the highest CTR and Yahoo! the lowest.
  • The professional services of law and dentistry made up the largest percentage of advertisers at 9.4% and 6.1% of total advertisers respectively.

Here are a few of the charts that visually illustrate many of the above points (click to enlarge):

The two biggest conclusions here are that SEM spending grew dramatically as did video year-over-year.

Rumor: Google AdWords Reseller Program Ending?

March 28, 2010

The Google AdWords reseller program has been a significant part of the local SEM landscape, enabling publishers, verticals and independent sales channels to gain credibility pitching SEM programs and packages to the local market. Here’s the current list of resellers. It includes AT&T, AdReady, Atlanta Journal Constitution, Citysearch, Clickable, Comcast, Hearst Newspapers, Network Solutions, Orange Soda, ReachLocal, Dex One, SuperMedia, YPG, Yellowbook and Yodle, among others. 

There has always been a certain tension between Google and some of its partners over margins and the percentage of advertiser spend going to buying media. Some of the partners seek “print-like margins,” while Google sees much smaller margins as being appropriate (agency like margins).

In the past couple of weeks there has been a rumor that the program is being shut down by Google:

Asked about this Google issued the following statement:

“The Google AdWords Authorized Reseller Program is still active. We remain committed to building relationships with third party partners that enable small and medium-sized businesses to realize the benefits of cost-efficient, targeted and measurable online advertising solutions like AdWords.

Earlier this year there was a rumor that Google was compelling, as a condition of certification, reseller partners to disclose to advertisers the percentage of the advertiser spend that was actually going to media vs. margin. Assuming this is accurate, it seems to be a response to the churn problem where some partners pocket 40% – 50% of the ad spend, for example, leaving not enough money to really deliver for the local advertiser — resulting in frustration and churn. 

If Google were to shutter the program it would not be the end of local SEM by any means. Resellers get a suite of services from Google:

However SEM buying could still be done in much the same way it is today. What would be lost is the “credibility” that comes with the certified reseller status. Again, Google has said the program is operating and that it remains committed to it. 

What do you know or have you heard?

___

Update: Someone wrote me privately and said that there were significant benefits to being a reseller . . . having to do with API account creation and related benefits. Here’s what he said:

The two repercussions of losing reseller status for large Adwords resellers would be the following:

1) Having to pay to use Google’s API. Currently resellers enjoy free API transactions.  At high volumes those costs are significant.

2) Not being able to create accounts through the Adwords API.  Here again, only resellers enjoy the benefit of being able to create a new Adwords account through the API, and when you’re talking about large volumes, forcing a reseller to create that many accounts by hand removes economies of scale

MerchantCircle Releases SMB ‘Confidence Index’

March 11, 2010

This morning MerchantCircle released its second quarterly “merchant confidence index.” The survey had nearly 12K responses from among MC’s active member base of US small businesses (SMBs).

The idea here is to gauge the state of small business perceptions of the economy and several key issues, like hiring and marketing intentions. At a high level this is what MC said:

This quarter’s results show that the Merchant Confidence Index stands at a rating of 60.5 out of 100, and nearly 7 out of 10 small businesses believe the economy is the same or better than it was twelve months ago . . .

–Nearly 50 percent of local merchants expect sales revenue to “somewhat” or “significantly” improve over the next three months. This marks a nearly 10 percent increase over November 2009. However, only 17.1% expect to hire and 29.2% expect to spend more on marketing.

–58.8 percent of local merchants said credit availability had “worsened” or “significantly worsened” over the last three months, 36.7 percent said access to credit remained the same, and just 4.6 percent said it had “improved” or “significantly improved.”

Here are a few charts that depict the data graphically (click to enlarge):

There were a couple of interesting, SMB marketing-related questions:

Note that only 40% know Yelp in the chart above. This is partly because a large chunk of MC’s merchant-users come from non-metro areas.

It’s a bit tough to see the chart on the right (click to enlarge). What it shows is the number of these survey respondents who intend to promote their businesses on:

  • YouTube: 17.5%
  • Facebook: 14.2%
  • Twitter: 11.4%
  • Foursquare: 9.9%
  • Yelp: 9.8%
  • GoWalla: 9.8%

The list above is generally about SMBs embracing social media, broadly defined. Also, take it with some caution but Foursquare beats Yelp in the “intend to promote” category (and GoWalla ties). Attitudes, intentions and behavior are often two different things. But this is very interesting and reflects the PR buzz and exposure that Foursquare has right now.

It also reflects how these SMBs are actively considering mobile marketing (Foursquare and GoWalla), though they probably wouldn’t think of it exactly that way. That’s something that would have been unheard of last year at this time.

Has Anyone Heard the Google “YP” Ad?

March 9, 2010

I got this note from someone this morning:

I was wondering if you have heard/know of an advertising campaign that Google is running on radio promoting the fact that they have a $300 yellow pages product.

The product from what I have been told is their listing enhancement product. I received a call from one of my colleagues indicating they heard a radio ad on headline news on Sirus where Google was promoting this product and used the yellow pages name a number of times throughout the ad.

Has anyone heard this? If so is the description above correct?

Citysearch Revamps SEM, Buys into OrangeSoda

March 8, 2010

This morning Citysearch is unveiling a new local online ad program called “CityGrid Complete,” managed and fulfilled partly by OrangeSoda. The IAC-owned company has also invested in OrangeSoda as part of the new relationship. 

I spoke last week with Citysearch CEO Jay Herratti who said that the company chose OrangeSoda because Citysearch believes it has the best SEO solution in the  market. OrangeSoda has been offering SEO, paid-search and what it calls “loccal search maps optimization.” The latter is now the chief focus of “local SEO.” 

According to the press release: 

The first of its kind, CityGrid Complete is the only online advertising solution that gives local businesses the ability to reach millions of consumers monthly by building customizable content ads that are distributed across the web. In addition to content ads, CityGrid Complete includes SEO services designed to drive consumers from all the major search engines directly to their own websites. CityGrid Complete customers also receive access to an integrated web-based dashboard allowing advertisers to actively monitor and manage their campaigns, ensuring they receive the highest quality leads for their advertising budgets.

CityGrid Complete will source leads through Citysearch’s CityGrid network, which the company says has “500K paying advertisers, enhanced listings and content for 15M businesses, and reaches more than 140M unique users across 100 web and mobile sites.” OrangeSoda will be managing SEO and paid-search campaigns. CityGrid  Complete is, as the name suggests, the most complete of the Citysearch ad programs. There will be less ambitious programs for those with smaller budgets.

Herratti was asserting to me that this new offering is the most effective and comprehensive for SMBs available online — a true “one-stop shop.” To the SMBs themselves Citysearch’s ad programs may not look very different than before, but the platform, sourcing and fulfillment on the back end is going to be quite different. 

It appears that through CityGrid Citysearch has now built a way to deliver leads to its advertiser-customers that is substantially cheaper overall — without a corresponding loss in quality — than pure PPC reliance, which is the way most of these programs began. (ReachLocal and V-Enable also offer “local ad exchanges.”)

This is also great validation for OrangeSoda, which is always mentioned as the fourth local SEM firm: ReachLocal, WebVisible, Yodle . . . and OrangeSoda. 

I’ve been writing quite a bit about the evolution of the ad products that are being offered to the local market and how they’re “diversifying” into SEO, data monitoring and reputation management. The new CityGrid Compete program is another general example of that phenomenon. 

_____

See this previous, related post about CityGrid.

Facebook Expands Local Reach

March 5, 2010

Facebook has added an unspecified number of locations — think: many — to its geotargeting capability. According to a blog post today:

We’ve been listening to your feedback and have recently expanded the number of cities available for you to target when creating an ad! There are now many more cities available in a number of countries.

Facebook offers location and demographic targeting around the globe:

IP address and information provided in the profile (which is going to be more accurate) is what the company uses to determine location: 

Separately a recent study by Rice University’s grad school of business, sought to assess the marketing impact of a Facebook fan page on a Houston area local cafe chain, Dessert Gallery:

Facebook changed customer behavior for the better. People who had replied to both surveys and had become fans ended up being DG’s best customers: Though they spent about the same amount of money per visit, they increased their store visits per month after becoming Facebook fans and generated more positive word of mouth than nonfans. They went to DG 20% more often than nonfans and gave the store the highest share of their overall dining-out dollars. They were the most likely to recommend DG to friends and had the highest average Net Promoter Score—75, compared with 53 for Facebook users who were not fans and 66 for customers not on Facebook. DG fans also reported significantly greater emotional attachment to DG—3.4 on a four-point scale, compared with 3.0 for other customers. Additionally, fans were the most likely to say they chose DG over other establishments whenever possible.

To summarize, Dessert Gallery Facebook fans:

  • Were more frequent customers and, in the aggregate, spent more than non-fans
  • Had a greater emotional attachment to the business and were more likely to recommend it to friends

Caveats:

  • Correlation doesn’t equal causation: did these people become fans because they were already more loyal to begin with?
  • This is a single case study.
  • The Rice biz school researchers coached the Dessert Gallery in some best practices and provided some general assistance around updates: 

We launched the Facebook page and invited everyone on the mailing list to become a fan. DG updated its page several times a week with pictures of goodies, news about contests and promotions, links to favorable reviews, and introductions to DG employees. 

To be sure Facebook is a powerful marketing tool and platform for SMBs. Most, however, don’t know how to “work it,” in the way that Dessert Gallery did. That learning will come over time. 

And to remind everyone there are 1.5 million “active” SMBs with Facebook pages. Despite the impressive targeting options, most of them aren’t going to really understand how to use Facebook Ads in an optimal way. 

But just imagine a suite of SMB services that Facebook might offer at, say, $25 per month. If 500K adopted that would translate into $150 million. Right now Facebook is on target to hit $1 billion in revenue soon. That hypothetical $150M number would thus represent 15% of total revenues.

Will AT&T Wind Up Buying Yahoo!?

March 3, 2010

Some time ago, before the original attempted takeover of Yahoo! by Microsoft I speculated that AT&T might be interested in buying the company (Yahoo! that is) given their complementary assets and historical partnership. While there would be “culture” issues, AT&T might still get the chance at some point.

On CNBC yesterday Yahoo! CEO Carol Bartz indicated (via PaidContent) she would consider selling the company:

A notable exchange during Yahoo CEO Carol Bartz’s rather rowdy appearance on CNBC’s Power Lunch today. Moderator: “Is Yahoo better off as a trinket on someone else’s charm bracelet?” Bartz: “A trinket? What are you saying? Yahoo isn’t a trinket. Yahoo is the bracelet.” Moderator: “Would you get taken over? Would you get bought?” Bartz: “Absolutely. Any company at the right price.”

She later clarified that she wasn’t shopping the firm, so it would be “inappropriate” to name that “right price,” although she reiterated that if she had been CEO when Microsoft made its offer she would have taken it.

AT&T is worth $147 billion, while Yahoo!’s market cap is $22 billion.

Local Queries vs. ‘Local Intent’

March 3, 2010

One of the most interesting slides in my four sessions at SMX West yesterday was presented by Microsoft’s Raj Kapoor on the mobile search session. These data are from 2008 and based on an internal Microsoft analysis:

What the chart above appears to reflect is the contrast between explicit query distribution and user intent. It reflects roughly 70% of “measured” mobile queries were for entertainment, news and general Web search. It shows about 25% of queries seeking local information and about 5% looking for “shopping info.”

By contrast the self-reported “session intent” breakdown data is different. General Web queries fall to 23% and local information rises to 62%. If we include “shopping info,” which is ultimately about physical places to buy things, that combined figure rises to 87%.

I didn’t discuss this slide with Kapoor so I  might be misinterpreting it. At a minimum it means that consumers are more interested in local categories of information than it appears on the surface. The larger point is that what the search engine sees is often different than what people want and intend. Indeed, the search engine also doesn’t capture behavior (what people do after their research).

The search engine sees a meaningful but relatively smaller number of mobile queries for local information. The users report a much larger percentage of local intent queries.

The problem and challenge in quantifying local search has always been in the difference between the “explicit” and “implicit” local queries, as well as capturing subsequent behavior (which reveals intent). This recognition led Google to start showing maps and local results for queries without a geomodifier, recognizing that there are lots of queries that are ultimately local where the modifier is included.

Most of what happens online and certainly much of what happens on mobile devices, when commercial queries are involved, is about offline buying. The challenge has been to measure and make this phenomenon more transparent.

Amazingly, most analysts and marketers still don’t clearly see or understand the behavior. But this online-offline pattern is much much bigger than e-commerce and, frankly, anything else going on online.

Google May Have Patented Geotargeting

March 2, 2010

Google has been awarded a patent entitled “Determining and/or using location information in an ad system” that has very broad implications for PC and mobile advertising.

While we all now take geo-targeting today for granted, back when this Google patent application was filed in April, 2004 it wasn’t as common. Dare I say it: Google may have just patented geo-targeting.

The rest of this post is at SEL.

Centro Debuts Media-Buying Platform ‘Transis’

March 1, 2010

This has been in the works for a very long time . . . now Centro is rolling out a comprehensive digital media buying platform that automates and centralizes media buying and planning. The tool/platform is called Transis.

The company says it will overcome digital media fragmentation and enable media buyers to “easily access 100 percent of all digital media opportunities including Web sites, networks, portals, social media, mobile and video.”

That’s quite a claim. A range of other benefits are outlined in the release.

If it works as advertised it makes exchanges (with their “non-premium” inventory) unnecessary . . . Here’s the promotional video:

Again, if the system performs it’s a radical leap forward and makes Centro hugely more valuable as a company.

Survey: Local NP Sites ‘Most Trusted’

February 26, 2010

Newspaper sites are valuable and credible goddamit! A November 2009 survey among 3,050 US adults, sponsored by the Newspaper Assn of America (fielded by comScore), found the following:

Local newspaper Web sites ranked first among all sources for trustworthiness, credibility and being the most informative place to find local content of all types – including news, information, entertainment, sports and classified advertising. When respondents were asked what sources were most trustworthy or reliable, local newspaper Web sites bested local television sites by twelve percentage points for local information (34 percent vs. 22 percent), by six points for local sports (30 percent vs. 24 percent), by 10 points for local entertainment (30 percent vs. 20 percent) and by 29 points for local classifieds (42 percent vs. 13 percent).

Let’s look at some of the data from the associated report, Site Matters: The Value of Local Newspaper Web Sites, which asked consumers a range of questions about their sources for local information and how trustworthy and credible they perceived those sources to be . . .

Noticeably absent from the list above are yellow pages directories, search engines and city guides and other types of local sites such as Yelp — although they might fall into “other type of Web site” perhaps.

These are not all the findings but what they assert is the following:

  • People care about local information
  • Newspaper websites are the go-to sources for local news and other content
  • Newspaper websites are more trusted and credible for local information
  • Newspaper sites make the ads that appear on them more effective (for 40% of consumer-respondents)

These data echo a 2008 OPA study about newspaper and other local content sites, whose findings are somewhat more varied but generally consistent.

There’s no question that people value local content and newspaper sites are well regarded. Yet here’s TMP-comScore data (mirrored by other studies) that show something different in response to a slightly different question:

WebVisible Closes $20M ‘C’ Round

February 16, 2010

WebVisible has just closed another financing round of $20 million, “led by Focus Ventures and Adams Street Partners. Existing investors Redpoint Ventures and Sutter Hill Ventures also participated.”

The company will use the money for additional R&D and to grow its direct sales force. I spoke with CEO Kirsten Mangers this weekend and she said that the direct sales channel efforts are being conducted in the white spaces where its partner sales channels (e.g., AT&T) are not operating. WebVisible has a presence in Europe as well. 

The “big three” companies in the “local SEM” space, which is rapidly evolving beyond SEM alone, are ReachLocal, Yodle and WebVisible. WebVisible is really the incumbent in many ways, having been in the market the longest (roughly since 2002). There are many (emphasis on many) other companies of course that are either selling directly to SMBs or operating as platforms or service providers to support existing local sales channels (e.g., Marchex, Kenshoo, ClickFuel, Clickable). 

Indeed this intensifying competition makes for confusion and “noise.” See my earlier post:

Mangers said she considered the various major players to be engaged in a “land grab” right now. That led directly to a conversation about churn, the vexing and persistent problem for the local interactive industry. Nobody reveals their numbers directly and everyone says “we’re better than the average.” But the industry sees 90%+ churn on an annualized basis, not all of which can be attributed to product dissatisfaction. But it’s ugly. 

Mangers and I discussed, as a hypothetical matter, that after ReachLocal goes public the company will need to maintain retention levels that are acceptable. (Reach itself says it has churn levels significantly below others.) Top-line growth will be the focus for investors for a little while but then they will shift toward retention. Out of necessity the churn issue will have to be addressed. 

As the WebVisible press release says, “Local interactive is the emerging market right now . . .”  Indeed, everyone’s buzzing about local because of mobile LBS and the shift of local ad spending to digital. Yet there’s resistance to investing in local startups even as the market is hitting its stride. VCs have been “burned” time and again by local investments because they failed to appreciate the difficultly on the advertiser side or had time horizons that were too aggressive. 

But the market is certainly hot and will continue to be for some time. Why? Because consumers will continue to consult digital media (PC and mobile) for buying advice before spending money in local markets, offline. Small businesses and large brands that sell locally will continue to need to do a better job of getting in front of those consumers to influence those decisions. 

Folks, this is what the Internet is about: influencing offline buying decisions.

SMB Market Getting ‘Noisier’ by the Day

February 14, 2010

At the Borrell show last week there were a ton of terrific speakers and sessions. I had lots of interesting conversations “in the hallways.” But one thought keep coming back to me: no one is really seeing the world through the eyes of the SMB.  

In the opening session Jeff Jarvis discussed the movement from “selling scarcity to selling service.” I thought this was a clever slogan to capture changes in the market: the difference between selling a limited number of ad placements in your own publication to providing an array of marketing options and services to your customers that reach beyond your O&O properties.

In general Jarvis said some insightful and compelling things and there was also some, I would argue, naive thinking he put forward. But the concept he discussed — scarcity to service — is right.

Perhaps because it was an industry conference few people discussed the SMB’s perspective or predicament. There were a few mentions in some of the sessions I attended — I wasn’t at all of them of course — and I tried to do this in my two sessions. But most people discussed their margins and how the new product offerings would grow them or preserve them, etc. People also discussed why they were better positioned than the other one to sell into the SMB or local market. 

While the YP publishers have been selling SEM and related services for several years now (since late 2004), newspapers, radio stations, TV affiliates, credit card issuers and a range of others are now in the hunt. There are lots of platforms and white label SMB marketing “solutions” providers out there. It’s pretty “turnkey” to start selling SEM, SEO, websites, etc. to the SMB market these days. 

The market is getting more and more noisy. And many of the platform companies now are also moving into direct sales (e.g., WebVisible). 

The rising “noise level” contributes to the churn problem that concerns everyone in the segment. More competition, more aggressive pricing and more inflated claims of quick results all contribute to more confusion and more churn when SMBs are dissatisfied, disappointed or don’t understand what they bought or how it works. 

Everyone is coming at these small businesses and most of the offerings sound very similar. So even as the products to match SMB needs are in the market it’s very tough for SMBs to figure out whom to trust and how to think about all these things. 

If you were getting 5 to 10 calls a week from competing providers of similar online marketing services how would you figure it out?

One answer, for later discussion, involves the idea of “trusted brands.”

Sensis Loses Copyright Control of Listings

February 14, 2010

Ever since Feist Publications, Inc. v. Rural Telephone Service Company, decided by the US Supreme Court in 1991, the law in the US has been that directory listings (construed as “facts”: name, address, phone) are not entitled to copyright protection. This decision opened the door for data aggregators and for competitive print and, later, online directories.

Copyright protection for incumbent directories outside the US has been broader and more enduring as a general matter.

However Telstra in Australia, the parent of directory publisher and online search provider Sensis, has now lost that protection apparently according to a recent court decision. The logic of the Australian court’s decision appears to be the same as the US Supreme Court’s in Feist.

It’s not clear to me if there’s any further legal review or recourse available to Telstra. If not the Australian directory and local search market will shortly mirror the US. However top brands will likely still prevail; it’s just that the market will become increasingly competitive.

While I agree with the core notion that facts are not subject to copyright, there’s unfairness in permitting third parties to “piggyback” on the publisher’s compilation of those “facts” by simply sending phone books to low-cost labor markets to have listings keyed in verbatim to an electronic database.

As a related matter, the doctrine of “fair use” is probably being abused by “aggregators” online in the US. I know this is an “old” and apparently “settled” issue. But the case above made me think about it this morning again.

There have been various cases around the question of fair use and its application to the Internet; however most of those (with a few specific exceptions) have ruled in favor of defendants for policy reasons. Courts have been reluctant to find against search engines and others for fear of “impeding the development of the Internet.” Indeed, as a practical matter, Google and other search engines’ continued existence is to a large degree predicated on liberal interpretation of the “fair use exception” to US copyright law.

Here’s what the federal statute says about “fair use”:

Section 107 contains a list of the various purposes for which the reproduction of a particular work may be considered fair, such as criticism, comment, news reporting, teaching, scholarship, and research. Section 107 also sets out four factors to be considered in determining whether or not a particular use is fair:

  1. The purpose and character of the use, including whether such use is of commercial nature or is for nonprofit educational purposes
  2. The nature of the copyrighted work
  3. The amount and substantiality of the portion used in relation to the copyrighted work as a whole
  4. The effect of the use upon the potential market for, or value of, the copyrighted work

This four-pronged test means that each case must be decided on its own facts; there can be no hard and fast rules or “bright lines” in terms of what does or doesn’t qualify as fair use.

On its face search engine and other types of data and Internet content indexing would, in my mind, fall outside fair use because the overall objective and existence of most of these companies is explicitly commercial. Lawyers for defendants might cite items 3 and 4 in arguing against that. The industry and search engine response has also been to argue any party may request removal from the database/index. As a practical matter, however, that has come to represent a kind of commercial suicide given the way that consumers now rely on search and content aggregators to find information online.

It’s been more than a decade since I stopped practicing law and I have not followed the development of the case law in this area so take those qualifiers as caveats for all of this. However here’s my view on an early Sunday morning:

Much of the indexing and presentation of content in search engines and elsewhere online (e.g., news aggregators that index headlines and portions of articles) almost certainly fails the original idea behind the “fair use exception” (technically an affirmative defense to a copyright infringement claim). These practices, however, have been allowed to continue by courts because to narrowly construe fair use would potentially “limit the development and growth of the Internet.” That’s probably true  — a more restrictive interpretation would limit the dissemination of information online — and it is beneficial for consumers to have access to vast amounts of information via search engines.

But that liberal, policy driven interpretation of fair use has created categories of winners and losers on the Internet and in the media more generally.


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