Local Search: The Second Act

One of the occasional subjects of discussion in my world is the question: how early is it in the development of local search? Some believe it’s still in its infancy and others, like me, believe its still early but well beyond infancy. Here’s a fun and slightly different way to answer the question.

There are tons of competitors in local and more coming (e.g., newspapers). As evidenced by the “Local Search Case Studies” panel I moderated at SES Local, some businesses are now using local targeting very effectively with the help of sophisticated SEMs. True, millions of small businesses still don’t have any sort of web presence. But there are many companies out there that offer simplified websites or will build a web presence as part of a larger marketing campaign.

It’s also the case that explicit local search volumes (geographically modified keywords) don’t match mainstream search usage. But, as the comScore data from Thursday indicated, local search is definitely gaining awareness and growing fast. (Again, I believe this is too narrow a definition that doesn’t take into account similar behavior on a broader range of properties than just search engines and IYP sites.)

There’s obviously no “winner” or even very clear market leaders (except perhaps on the product side, where some are better than others). However, as I said to LocalLaunch’s Justin Sanger at SES Local, I think that “Act 1” is over.

What do I mean by that?

In any three-act film (plays these days are typically two acts) the first act establishes the characters, the basic story line and what’s at stake in the realization of the hero’s or antagonist’s ambitions. Using that framework, we’re clearly done with Act 1.

The characters in this story are all the local media who have substantially owned the roughly $100 billion in locally targeted “offline” ad spending (yellow pages and newspapers are the leads here). I would also include the millions of small businesses who’ve relied on those media for growth, sales and new customer acquisition and the large corporations that spend billions annually targeting consumers in specific markets (e.g., Federated Dept. Stores, Target, Auto OEMs). These are the important supporting actors.

Depending on your viewpoint, the protagonists are the traditional media players in their Herculean struggle to adapt to new market pressures, protect their revenues, grow and defend against the moves of “predatory” online competitors (search engines and others). By the same token you could see traditional media as the antagonists, trying to maintain their “oppressive” reigns over their advertisers and local markets while the new media “liberators” storm the city gates to bring democracy and greater efficiency to local advertisers.

As you can see, the story line broadly is “who will win?” More precisely, the question is, how much of traditional media spending and how many of those local advertisers will migrate to the Internet? What’s at stake in this drama are the revenues, margins, reach and continuing influence of traditional publishers vs. the Internet.

All these questions and all the challenges are now well established, so are most of the players (although there will continue to be more competitors). Consumers have adopted and are increasingly using the Internet in addition to traditional media for local information. And the tools that allow local/small businesses to more easily adopt Internet marketing are now in place.

All the components of the drama are present, all the characters, stories, risks and rewards laid out. In a traditional three-act story, Act 2 is the longest of the three. In the “Local Search Story” that’s right where we are now – the beginning of Act 2.

2 Responses to “Local Search: The Second Act”

  1. cohn Says:

    Excellent analysis.

    Local advertisers have been yellow pages and newspaper buyers because they had few other options.

    Advertisers and their budgets will continue migrating to media where they can reach their target audience more efficiently for less.

    Whether advertisers embrace the yellow pages and newspaper internet offerings more so or not will depend on their level of satisfaction or dissatisfaction.

  2. Chris Parente Says:

    Nice use of analogy to explain an often confused, chaotic transitionary period. You’d think IYP would have an inside track, but as you’ve written about they are giving their listings to the search giants as content. Taking the money now, but what happens in the future?

    It will be fascinating to watch.

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