The Future of Local — Revisited

I’ve written about this several times over the course of the past couple of years: the future of online geotargeting is demographic targeting. I raised the issue again briefly today in a panel about local search at the SMX East show. That’s what prompted me to do this post.

The historical discussion of local search and local online advertising has largely been about small businesses: e.g., plumbers and pizza. Over the last two or three years I’ve tried to expand the local conversation to encompass brands, product sales and to generally reflect the relationship between the Internet and offline transactions. But in many ways the most interesting future for local is something else.

Stepping back for a moment, direct mail is arguably the single biggest advertising/marketing category in the US:

Source: comScore, Advertising Age, Magna Global, Newspaper Association of America; Radio Advertising Bureau; Simba; Outdoor Advertising Association of America; Interactive Advertising Bureau (IAB)

Direct mail’s online cousin is search. However, offline direct mail is quite a bit more provocative a tool than search in many respects. Online a search engine generally knows my query (and maybe has some behavioral data) but doesn’t know much else about me.

Demographic data from public and private sources are tied to zip-level targeting in offline direct marketing. Elaborate databases exist containing layers of information about people who live in particular zip-codes throughout the US. But that type of demographic targeting isn’t possible right now online at any level of scale or accuracy. One might be able to get a diluted version of demographic targeting — a bastardized version of cable-TV or magazine targeting — but it’s pretty weak.

Once online location detection becomes more precise, however, census and other related household composition, education and income data become available to enable direct-mail type targeting, at the zip or neighborhood level, on a national scale. Hopefully I’m making myself clear. (I wrote about this previously.)

As I’ve said, location is coming to the browser (cell-tower/Wifi triangulation) probably next year.

So once Google or Yahoo know where I reside with greater precision than IP-based lookups, then I can be profiled as part of a market segment or group (using existing data) based entirely on where I live. But the radical thing is that this could be done on a national scale with relative ease. Marketers could thus buy audiences or market segments on a national level through geotargeing. Display could also following the same model.

In the search context, imagine an advertiser-facing interface with a bunch of check boxes or buttons that correspond to income, household composition, race/ethnicity, education and so on. Say I’m an automaker or cellphone carrier and I have a clear profile of who my customers are. I could target them according to their group characteristics (income, etc.), based on location.

After I as a marketer selected the desired segments, the system would show me all the zips or geographies across the US where my customers tend to reside, based on the available data already resident within the platform. I then buy only those zips or areas where my potential customers reside. It’s much like today’s IP-based geotargeting — only much richer.

Indeed, the underlying demographic data already exist. The only missing piece in my equation is being able to zero in on people in their homes and neighborhoods when they’re online, as direct mail marketers do offline. That’s where the browser with Wifi comes in. More precise location detection in the browser unlocks the targeting possibilities I’ve described. Location or geotargeting thus transforms into a potentially effective method of doing demographic targeting online — in an extremely scalable way.

Sure there are challenges and complications: what about Internet usage at work for example? People don’t typically live and work in the same locations and profiling people in the workplace is more difficult. What about getting location from the browser to the ad platform? I believe these challenges are quickly surmountable.

Demo-geotargeting could also be done with graphical ads or, potentially, video as well as search. Under any of these scenarios, resident of “community A” might see a different ad than resident of “community B” on the same page or in response to the same search. And search keywords and/or behavioral information potentially provide additional layers of data that can improve targeting further still.

Whether for branding, direct response or some hybrid of the two, this coming capability will dramatically change the way that marketers think about geotargeting. And that may begin to attract more of the many billions in offline, direct marketing dollars.

This new still-hypothetical form of “local-demographic” targeting won’t eliminate the more conventional forms of geotargeting. It will, however, provide a very powerful complement to them.

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