No Winners in Local? Not Exactly

Peter Krasilovsky and Zachary Rodgers (citing Peter) at ClickZ post about NY Times’ Digital CEO Martin Niesenholtz comments to the Yellow Pages Association conference yesterday. Peter’s summary of Niesenholtz’s remarks is extensive and worth reading. If the summary is an indication it looks like it was a good address.

Rodgers, in his post, focuses on the quote that local is “a huge untapped opportunity in the directories arena that no one — including the portals — has yet tapped” to declare, per Niesenholtz, that there are “no winners in local.”

That’s both true and not entirely correct.

If the measure of opportunity is advertising dollars, then yes local Internet advertising is still in its infancy and no one has “won.” Many more ad dollars (national and local) will come online. But we all know well the challenges of capturing small business advertising dollars.

If the measure of success or opportunity is consumer usage or brand strength, the statement that there are “no winners” is not correct. To the extent that a dynamic medium like the Internet can have winners there are already some in local. If not “winners” we can say “clear leaders.” They include Google, Yahoo, IAC, Craigslist, Zillow and yellow pages sites like and SuperPages (and I might even add Yelp regarding brand equity, which it has created in a least a couple of markets). Usage levels may not be entirely satisfying to some of these sites but there is critical mass.

There are probably others to mention, including CareerBuilder, AutoTrader, and undoubtedly several others. But the centrality of search and the rise of Google in particular is eroding some of the brand equity at some of these sites in selected verticals.

If the measure of success is the quality, accuracy and overall wonder of the user experience, then nobody has gotten it totally right — if that’s even possible. And then there’s mobile, which is a piece of the local puzzle . . .

But the larger, fundamental challenge of local is the fact that it cuts across so many areas of the Internet from a consumer standpoint: services, retail, events and entertainment, parenting, cars, jobs, real estate, travel. In that regard Niesenholtz’s comments about verticalization are well taken (from the Peter K post):

Niesenholtz also noted that the broad reach of the Internet and data base technology demands a verticalization strategy. “We transitioned from being publishers of newspaper articles on the Web to Web publishers,” he said. “This is a huge difference, as the latter involves developing significant competencies in such areas as application software development, interaction design and user generated content.”

To verticalize, Niesenholtz said The Times “needed to rapidly transform many of the vertical parts of the site into highly robust, data base driven sections. We had made this transition with our movies vertical in 2003 and we’d seen traffic go from 800,000 visitors a month to 4 million. Now we needed to do it in Travel, Business, Style and other areas of robust advertising demand.

The related comments about syndication (also in the Peter K post), which most publishers already understand, are also well taken.

Local is one of the most complex areas online because of some of the user behaviors and expectations that Niesenholtz cites. I go back to the Marty Himmelstein essay, “The Internet Is the Yellow Pages.” The Internet itself is being used as newspapers and yellow pages once were in their respective spheres. But the quality, accuracy and comprehensiveness of the available information online has not yet reached its potential.

It’s also not true that local is a complete “green field.”

There’s still opportunity in the combination of social media and local or the combination of the two with a vertical (and maybe video). Zillow and Yelp also proved that you can enter a market later and still gain traction. But the challenges of monetization and the intensity of competition for traffic and users, today, makes it less the “big opportunity” it might have been even a year ago.

4 Responses to “No Winners in Local? Not Exactly”

  1. earlpearl Says:

    While there may be no “winner” I’d bet Google leads by a landslide. I think your efforts to quantify an estimate for local oriented advertising by Google is laudable. It would be powerful to get specific breakdowns on actual expenditures.

    One interesting perspective on G’s impact on the local scenery occurred in late February when a hospital webmaster from Duke University complained at Google Groups for Business Owners how the impact from the G Maps/Onebox insert on the top of organic serps had seriously negatively impacted calls into the hospital. ref:

    That incident gives an insight into the power and volume of searches through Google, and the subsequent impact of Google Maps/Onebox dominating the page real estate for local searches.

  2. Neal Says:

    think about this . . . there are 36,000 yellow pages sales representatives that drive a $28b global YP industry; there are ?? google sales representatives driving a $12b global search business for google. Talk about staggering.

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