Borrell Associates, Inc: Local Interactive & Online Advertising Research and Consulting

Archive for December, 2009

Google-Yelp … Nope!

Friday, December 18th, 2009

Google’s rumored $500 million offer to buy Yelp, a site offering consumer reviews, drives home my longstanding belief that the major portals — Google, Microsoft and Yahoo — are becoming the national networks in search of local affiliates like an NBC, CBS, ABC and Fox.

But while the deal apparently fell through over the weekend, I don’t think this it would have been a game changer because Yelp misses a key element: Local salespeople, or at least trusted ones. Just Google “Yelp salespeople” and you’ll understand the stickiness of this situation.

Our conference in February features an entire afternoon exploring these evolving portal-local media relationships. “Partnering with the Portals” features key executives from Google, Microsoft and Yahoo! who are in charge of developing relationships with local media.

Fasted Growing Local Online Marketing Companies of 2009

Fastest Growing Local Online Advertising Companies of 2009

Yelp is indeed a marketplace force. Its numbers weren’t previously made public until last week’s speculation of it being a $50 million company in 2009. While its estimated growth rate — if true — would put Yelp in the Top 5 fastest-growing local online advertising companies in 2009 at 66% growth (see chart), it still doesn’t make our list of the largest. Craigslist, for instance, has twice the revenues as Yelp. With a Google deal for Yelp, that might change.

However, I view very few things as “game changers,” and despite its potential magnitude I don’t think this would have made the list. Google has had a tough time making itself look local. Acquiring Yelp would have tied together two very important ends: Google and individual consumers. Real people.

But what they’re missing is an army of real salespeople. Local advertising is sold, not bought, which is to say that SMBs really do need a local sales force to hold their hands. They may go online after midnight and buy AdWords with credit cards, but eventually stop buying because they don’t have enough time to manage the account or understand whether it’s actually working.

It takes a local sales force, and it will take a different type of partnership for Google to really become a local advertising powerhouse. It’ll need to acquire a company with a fairly large local and reputable sales force.

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Tags: google, Gordon Borrell, local advertising, yellow pages, Yelp
Posted in Conference, local advertising, Media, Social Networking | 4 Comments »

5 Things to Watch–and Act On

Monday, December 14th, 2009

We have issued our Top 5 recommendations for local online advertising in 2010. They’re pretty straightforward: Identify and copy the fastest growers, start partnering with other companies, offer “promotions” services to advertisers, monitor but be cautious about mobile, and dive into video advertising. But I thought I’d also offers some predictions for 2010 that might startle you.

First, I’m excited to announce that we have a new list of speakers we’ll be announcing this week for our Feb. 8-9 conference in New York. In the spirit of identifying and copying the fastest-growing local online advertising companies, we’ve gone to the trouble of identifying them for you — and getting their top executives to stand up at our conference and tell you why they’ve become the new darlings of Main Street. We’ve also secured speakers from companies like Fisher Broadcasting, which has launched 43 hyperlocal sites in Seattle that are fast becoming profitable, as well as leading revenue producers in email, video, promotions and paid search. Wait ’til you see the final agenda.

OK, on to the startling things. I believe that 2010 will see a clear divide between the local media companies that are crossing the gorge and those being left behind. Positive growth in Internet revenues will be the delineator. Those who continue to see declines will clearly have tied their Internet operations too closely to their legacy media companies or will have formulated products that don’t resonate with Main Street advertisers. Other predictions:

Largest Local Online Advertising Companies, 2009

1. Newspapers rebound. Look for a 2-4% increase in newspaper ad revenues next year. Smaller papers might fare better. Those who make the digital transition will see up to 20% of their total ad revenues coming from the Internet next year. The Yahoo-newspaper partnerships will generate $200 million to $300 million in geo-targeted banner sales.

2. Local Internet advertising grows 5-9% next year, making it harder than ever for many companies to ride whatever tide is left.

3. Mobile advertising skyrockets (on a small base), but local ad buys remain short-term and experimental.

4. Cable companies dive deeper into local Internet sales. Look for acquisitions and partnerships like we saw with the Yellow Pages in the early to mid-1990s.

5. Yellow Pages continue a precipitous decline, high single digits but perhaps double digits for some. Meanwhile, their Internet revenues will grow to comprise one-fifth of ad revenues.

Predictions are no more than educated guesses, so I really didn’t want to spend too much time on speculation. The recommendations are key to what I think you should be watching. The largest local online advertising companies are interesting to observe, but the fastest-growing ones above $25 million in revenue are the ones worth studying — and copying.

I hope you can make it to our conference. We’re going to spend a lot of time dissecting these companies and learning why local advertisers have become so enamored of what they’re offering.

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Tags: Gordon Borrell, internet advertising, local online advertising, newspapers, promotions
Posted in Conference, local advertising, Media, Social Networking | 17 Comments »

Advertisers’ Foreign Language

Thursday, December 10th, 2009

Digital media has twisted our language into a new hip lexicon. We google something, friend someone or LOL at a joke. If it’s really funny, we might ROFLMAO.

And now advertisers are speaking a different language – different at least than traditional media companies.

At the Radio Forecast Summit this week in New York, ad buyers and agency folks seemed to be speaking different languages speaking a foreign language to people who have been laboring for decades under a simple model where great programming brings massive audiences that fetch big bucks from advertisers. It’s a model that newspapers and TV managers operate under as well.

Don’t get me wrong — the summit was great. Lots of forecasting information and debate about the future and value of media and how some companies are meeting those challenges. But what agency and advertisers were describing was an example of the disconnect between traditional media folks and Madison Avenue.

The message from the radio executives could best be summed up like this: We have a megaphone that reaches 250 million people.

The message from the marketers went like this: We need more creative solutions to help us collect and analyze more data about our advertising and our customers.

I visualized little comic-book bubbles floating above everyone’s heads. Huh?

Let me offer the 40,000-foot view. Businesses will spend about $680 billion this year to market their products and services. One-third of that goes toward traditional media advertising; the rest goes to things like coupons, rebates, Web site development, contests, trade shows, and public relations. Over the next five years, the amount spent on advertising is forecast to decline 7.5%. The amount spent on everything else is expected to increase 24%.

Traditional media advertising has entered the era of perpetual decline. Perpetual decline, my friends. No more riding the annual tide.

The advertisers were actually saying something very simple, and I think local media companies have a great opportunity to meet their needs. All they really want is to drive store traffic or make the phone ring. What they need from local media companies is a little help getting and managing bits and pieces of information that quantifies the success of those campaigns. They need pageviews, clickthroughs, email addresses, abandon rates, demographics, time spent on pages, etc., etc. etc.

It’s not a foreign language at all. It just takes a little more brainpower and creativity (and tools) to reach into the “non-advertising” side of the equation. The days of order-taking are clearly over. As the COO of ad agency Neo@Oglivy said, “There is huge potential to go beyond advertising. There’s a big opportunity here.”

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