1 Proprietary and Confidential. Copyright © 2008 The Kelsey Group, a division of BIA Advisory...

1Proprietary and Confidential.

Copyright © 2008 The Kelsey Group, a division of BIA Advisory Services, LLC. All Rights Reserved.

Annenberg USC Presentation

Local Online Revenues and HyperlocalDec. 4, 2009

Peter Krasilovsky, VP and Program Director

Marketplaces: Verticals, Classifieds & E-Commerce



About Us

BIA/Kelsey: Local digital advertising research and analysis since 1985. We work with everybody.

Peter Krasilovsky: Editor, www.LocalOnliner.com; VP, BIA/Kelsey. 1985 Annenberg MA (communications mgmt).

Much of career has focused on self sustaining models for community media. Hyperlocal Highlights:

• Cable Television Information Center (public education and government channels)

• Alliance for Public Technology (grassroots community telecom lobbying)

• Benton Foundation Survey of Technology Test beds• NTIA Information Superhighway Grants (sustainability

evaluations)• Family Education Network PTA projects• Consulting with local media and directory companies (everyone

from Citysearch to the USPS)

http://www.localonliner.com/



The Search for Self-Sustainability, 1985-2009 Self Sustaining Categories may be divided into “Community Support”

and “Commercial”

Community Support Commercial

Local Taxes (franchise fees)

Sponsorships/Cause Related Marketing

Grants (CNN, SeniorNet)

Advertising

eCommerce

General e-marketing support



My Thesis: HyperLocal Commerce Brings Sites Closer to the Community

“Markets are Conversations”

Doc Searls and David Weinberger,Clutetrain Manifesto, 1999



Cause Related Marketing is Powerful. But for Most Local Advertisers, Spending Decisions are Based on ROI

Category Search Print Yellow Pages

Chiropractic $45 $38

HVAC $25 $30

Lawyer $43 $35

Locksmith $16 $17

Moving & Storage $20 $24

Optician $28 $22

Cost Per Customer Acquisition



There is a Potpourri of Hyperlocal Ad Categories….What Works in HyperLocal?Hyperlocal sites can sell or support a variety of ad products. But can

they compete with other local media based on traditional reach and ROI factors?

• Banner Ads• Text Ads• Directories• Classified ads• Network Local/Lifestyle Ads• Print products



Bracket Very Low Low Medium High

Range of Annual Spend $0 - $1,500 $1,500 - $5,000 $5,000 - $19,000 $19,000+

Av. Annual Spend on Adv.(Monthly Spend)

$410 ($34)

$2,516($210)

$8,436($703)

$25,564($2,130)

Av. Annual Spend on Website* $911 $628 $2,670 $6,117

Percent of SMBs (by count) 61% 16% 17% 5%

Percent of Total Ad Spend 7% 12% 42% 39%

*Base: LCM respondents that have a “web site or homepage”.

Source: Kelsey Group estimates based on LCM XI data, Nov. 2007. Estimates are sensitive to assumptions.

Most Local Businesses Actually Spend Very Little on Advertising SMBs may be sorted into 4 spending brackets



BIA/Kelsey Forecast: Local Ad Spend 2008-2013

$155.3

Source: The Kelsey Group (2009)

US

$ B

illio

ns



Online is 19% of Local Spend: $29.8 Billion

Search; $12.90

Display; $8.80

Classifieds & Ver-ticals; $4.90

ERPM, $0.46

Lead Gen.; $2.20

Local Video; $0.03

Mobile Display; $0.02

Mobile Search; $0.04 SMS & Other; $0.10

Source: Proprietary research by The Kelsey Group, mid-2007. Sample: 1,200 SMB advertisers in 4 major US MSAs).Methodology: Telephone survey. Cosponsor: ConStat.

Search has gotten local advertisers

online



US: 2013 Interactive Ad Market $58.57B

Search; $26.70

Display; $12.60

Classifieds & Verticals, $4.94

ERPM, $3.1

Lead Gen.; $6.30

Local Video; $1.80

Mobile Display; $0.57

Mobile Search; $2.27 SMS & Other; $0.27

Source: Kelsey Group

Over time, search is the

‘new directory’



‘Free’ Social and Classifieds Services Will Disrupt Our Forecasts (But By How Much?)

0-3 Years 4-6 Years 7-10 Years

11+ Years10%

15%

20%

25%

30%

35%

40%

45%

50%

44.0%

38.0%

18.0%

22.0%

SMBs that Intend to Use a Page On a Social Site in Next 12 Months

Overall average @ 32%

Note: Scale begins at 10%.

Source: Local Commerce Monitor. Wave XIII August 2009 (Sample: 302).Methodology: Online. Co-sponsor: ConStat.



Social Management is Something That Local Businesses May Pay For• NCI (The Real Estate Book, Apartment Finder) has been providing

Community Sherpa services to Real Estate agents for $290 per month. The idea is to move real estate agents higher on Google rankings.

• The fee includes SEO, daily blog posts, Tweeting.• Other companies are also looking at website support, video editing

and uploading and reputation management.



‘Self Serve’ Ads Holds Promise

• Self Serve advertising that doesn’t require sales forces, especially classified ads, holds promise.

• The New Haven Independent is seeing sales in “five figures” ($20,000+?) from using PaperG’s self serve “Flyerboard” for classifieds and display.

• A June 2009 survey by BIA/Kelsey found little active penetration by self -erve solutions today. But a new generation that has gotten used to buying self serve AdSense ads might quickly change this.

• Media penetration of a community is considered a key factor in successful self serve ad platforms.



Key Influences on Media Buying Decisions

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Content Sponsorship Also Holds Promise

• Examiner.com lets advertisers sponsor different bloggers. In Denver, for instance, Loveland Ski Resort is sponsoring seven Ski bloggers.

• Sacramento Press has a Content Management System that automatically lets advertisers buy ads next to chosen keywords and categories.



Directories My Have Promise, But They Also Have Challenges• Local business directories may have the richest potential for

hyperlocal. They can be well-used.• Directory listings may act as a foundation for other types of

advertising.• But they must compete against comprehensive directory books. They

don’t have the advantage of “holding” advertising space for advertisers and there is little penalty for quitting.



Networks: If You Build Them..(And Still, Maybe Not) • There are some opportunities for network sales, especially if you

develop relationships with adjacent blogs (i.e Next Door Media in Seattle).

• GrowthSpur Networks is seeking to build a natoinal network for hyperlocal.

• But don’t expect P&G and GM to come knocking at your door. They are looking for higher local reach.

• The best opportunity for network sales are generally going to be for local/social categories such as entertainment that leverage hyperlocal demographics (young, educated?).



5 Conclusions About HyperLocal (At Beginning of Day) 1. Going head to hear for ad sales may not be successful. But

sponsorships and “Cause Related Marketing “ are low hanging fruit.

2. Self serve solutions can work to a limited degree in “easy” categories, such as classifieds. But they are very limited.

3. Directory sales have potential in terms of volume and penetration. But they have different factors than universally distributed phone books.

4. Developing deeper tech relations with local businesses , focusing on search engine marketing, can lead to a broad roles within the community that go beyond websites.

5. Hyperlocal sites don’t figure very much in our forecast of local media sales. But via partnerships and product extensions, they might prove disruptive.



ILM:09 Conference is next Wed-Friday in Century City. Come!

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1 Proprietary and Confidential. Copyright © 2008 The Kelsey Group, a division of BIA Advisory...

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