Some Thoughts on the Kelsey Group Conference

I was generously invited to attend the upcoming Kelsey Group conference but declined because I had too much travel around the event. But it’s a great line-up of speakers. The conference is valued by many as a business development opportunity but there’s also interesting stuff that comes out on the podium.

Local has been a part of the Internet from the beginning and the opportunity on paper is big (though viewed and defined differently):

  • Borrell: By 2010 local search + geotargeted display advertising = $8.61 billion (from $4.8 billion in 2005)
  • Kelsey Group: By 2010 local search (Search, IYP, Mobile) + online classifieds = $9.9 billion (from $3.3 billion in 2005)
  • Jupiter: By 2010 local online advertising = $5.3 billion (70% attributable to classifieds; from $3.2 billion in 2005)
  • eMarketer: By 2008 local = $2.8 billion

In MarketingSherpa’s August 2006 Search Marketing Benchmark Survey, the company found that marketers viewed local as the most exciting and promising emerging opportunity in search, but that it had a way to go. Local is already very real for consumers but less so for marketers for several reasons.

People like to argue that local is in its infancy. I don’t agree. What I called “Act I of Local Search” is over. We’re now in the tough, long climb up the mountain. This is a game of “survivor” and many of the companies on the Kelsey Group attendee list won’t be around in five years. The key to whether this is going to be a good conference or another “blue sky” discussion of the local opportunity will be the degree to which everyone gets into the realistic, nitty-gritty and tactical particulars of “how”:

  • How are verticals and others going to get repeat traffic and keep TACs down when search engines continue to grow in their centrality to the online consumer experience?
  • Same question for everyone that isn’t Google, Yahoo! or MSFT. What about building brands in local? Who has one and are any of the newer players willing to invest in brand building for the long term?
  • How are local sites without a sales force going to effectively monetize their traffic? (Judy’s Book and InsiderPages have, to some degree, stalled on this issue.)
  • How are yellow pages (and newspapers) going to defend their traditional products over the long term even as they promote online? Are they segmenting advertisers and willing to cannibalize their print products at the low end of the advertiser spend?
  • How are newspapers going to execute on their emerging “hyper-local” and community strategies, given the challenges their cultures face and their historical failures to act?
  • And how are newspapers going to solve “the missing network” problem? (Real Cities is a failed answer; Yahoo! is a potential, partial answer.)
  • How are locally oriented sites going to cope with video, as video becomes increasingly important to the local experience? (There’s only one session that directly addresses video featuring TurnHere; I’d attend it.)
  • On a related note, how are “traditional” local publishers and sites going to deal with the increasingly visual nature of the online experience? What about Virtual Earth 3-D and its API – are any traditional local companies going to take up that challenge? Putting aside mobile, the future of local search may look radically different – literally – than it does today. Who’s thinking about that progressively?
  • How are yellow pages and others going to deal with community? (If the acquisition prices of MySpace and YouTube didn’t convince people that community was real and here to stay, I don’t know what will. And many are still in denial about the “going forward” importance of community.)
  • Who really has the stomach to stick it out over the long haul – 10 years or more? (That’s what local requires and most local sites are ultimately seeking to be acquired in the near term.)
  • The Sprint-MSFT mobile, local-search deal suggested new competitive dynamics in mobile. How are Google and Yahoo! going to respond? And how are non-search, non-carrier local players going to respond to the impending rise of mobile-local search?
  • And how are all these players going to solve the fragmentation problem of local? (Users distributed across hundreds, even thousands, of sites without any efficient way to market on those sites.) The so-called “long tail” has failed to materialize thus far for marketers because of a lack of infrastructure and general inefficiency in buying beyond “the head.” Of the projected $16+ billion in online advertising in 2006, Google, Yahoo!, eBay, MSN and AOL control 2/3 of that ad spending.
  • Then there’s the well-documented problem of acquiring small-business advertisers . . .
  • How are the various traditional local media companies going to cope with the reality that they can’t have the same revenues and margins online that they enjoy offline? They don’t have the traffic and their “local monopolies” over local consumers and advertisers have been substantially disrupted. Have they awakened to this and what practical positions are they taking accordingly?

There’s a lot more to say and ask, but this post is long enough.


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