Who Will Solve the Local Mess?

How are we going to make sense of the local mess? Or better yet, who is going to make sense of it? What local mess you ask?

The Internet is now the best and richest source of local information; it’s just a Tower of Babel (my favorite metaphor here). News sites, entertainment and event sites, verticals, shopping sites, classifieds sites, directories, restaurants, blogs, online communities, local video and so on, all now compete for attention from local consumers. The “Local Internet” is only getting more crowded by the week it seems. (I’m now receiving more releases, emails and requests for briefings daily than I can handle.)

There are now 100 million operating websites. That’s only going to continue to grow, with local shadowing the larger trends.

In an August, 2006 MarketingSherpa survey almost 4,000 online marketers were asked to rate emerging trends in search. Local search was the top trend identified (60%) that excited them. In its summary of those results, MarketingSherpa said the following:

For local search to become part of many marketers’ search portfolios local needs to become the “go to” for information like the yellow pages, and to do so, users will have to feel completely confident that listings are pertinent and complete. Most of the savvy local search marketers we spoke to felt that “comprehensive” local search was a high priority for the top search engines, but was probably a year or two away in terms of functionality and perhaps as many as five years away in user uptake.

I don’t agree with the user-uptake time frame and I would frame the problem in a slightly different way. The issue is critical mass. Marketers want reach or critical mass; publishers want audience critical mass. (That definition may depend on your cost structure.) But that’s what they’ve always received from traditional local media such as YP, radio and newspapers. The challenge online is all the local fragmentation – both for marketers and publishers. There are various efforts underway on the publisher/advertiser side to address that problem, with syndication/distribution, simplified search, do-it-yourself ad networks (e.g., Adify) and emerging exchanges (e.g., RightMedia).

The net effect of these efforts is to try and create a system whereby marketers (large or small) can get their offerings in front of consumers wherever they may be online. That system hasn’t been perfected, but it’s well underway.

On the consumer side, every new site that launches potentially splinters the local audience. I’m not arguing that these sites shouldn’t launch; I’m saying the practical effect of so many local sites is lots of noise and confusion in the market. What too much choice does is reinforce current behavior. That means the centrality of search engines — unless you have a very strong brand (newspapers take note) — and established search behaviors (i.e., G,Y,M; putting aside mobile-local search).

To address the consumer fragmentation problem, I fully expect a crop of aggregators to arise; some like Oodle, Indeed, SideStep, Zvents and OpenList, to name only a few, already exist. Their consumer value proposition is or will be to combine all the relevant local information (or vertically specific local information) in one place and thus simplify the world for users.

We may well see a pyramid of aggregators develop: level one aggregating content sites; level two aggregating content aggregators into local “meta” sites. Then there are the unresolved legal issues (See, Feist v. Rural) about who can aggregate and repurpose data and build a business on top of that.

Until very recently, television was able to command advertising premiums even as its audiences were declining. That’s because it was the last mass medium and even though it was shrinking there was nothing comparable to replace it. In local, that logic probably also applies to print YP and print newspapers. Even though readers/audiences are flat-to-declining, there’s no single source online to replace them quite yet.

3 Responses to “Who Will Solve the Local Mess?”

  1. bruce dobie Says:

    hey greg–you mention the “unresolved legal issues” about aggregation and point to feist v. rural. could you be more specific about what you see as being unresolved? the way i read the case is you can’t copyright fact. on the other hand you CAN copyright original work. so, if you’re an aggregator, you’ve got a pretty good leg to stand on if you’re aggregating facts. if you aggregate something else (original authorship), you are in hot water. please reply…

  2. Greg Sterling Says:

    Speaking not as a former lawyer but rather an observer of the industry, the question is “what is a fact?”
    ShopLocal killed Cairo’s aggregation business because Cairo was crawling ShopLocal content and it was deemed to be copyrighted (although the case settled and there was no legal determination).
    And right now there are all sorts of copyright claims going on against Google, which is just an aggregator of “facts,” all over the world. See, e.g.,: http://ibmwatch.eweek.com/blogs/google_watch/archive/2006/11/09/14512.aspx . So even though the core proposition of Feist may be resolved, how it’s applied to web crawling/aggregation is not yet resolved — in my opinion.
    Just one opinion of course. 🙂

  3. Eric Says:

    Greg – Wanted to get your feedback on our service, that’s doing exactly what you’re talking about (or, you can just add it to your list – http://www.boorah.com):

    “Their consumer value proposition is or will be to combine all the relevant local information (or vertically specific local information) in one place and thus simplify the world for users.”

    We’re currently running an “alpha” service covering the Restaurant/Dining vertical in the SF Bay Area… We’ve taken aggregation to the next level tho, using Natural Language Processing to actually analyze, summarize, and rate all the tons of local information for our users…

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