John Kelsey Chairman The Kelsey Group Geodomain and the Transition to Local Marketplaces “Just Put...

John KelseyChairman

The Kelsey Group

Geodomain and the Transition to Local Marketplaces

“Just Put on Your Sneakers”

The Kelsey Group

Visionary

The Alternative Press at the Crossroads“The electronic medium offers several advantages to print

Instant search capabilities based on predetermined criteria Direct placement of ads by readers Instant updating The ability to respond to ads electronically”

Dan Pulcrano – 1993

It wasn’t just the alternative press, it was all traditional media.

© 2008 The Kelsey Group 2


About The Kelsey Group

Kelsey Group coverage areas: Search: local, social, mobile and video Marketplaces: verticals, classifieds and transactions Global Yellow Pages and directories: print and Internet

Data, forecasts and recommendations drawn from quantitative user and SMB research, industry meetings with participants at all levels and a dash of insight

Advisory services, consulting, conferences, reports

Providing predictions since the depression(example)


Some of Our Clients ...

After One Day in the GeoDomain Industry

Favorite word: Intuitive Backgrounds of players: Diverse Most frequently discussed subject: Value of GeoDomain

names Most important issue: Building a successful business Next growth phase: From national to local (or vice versa) Presentation theme: Key trends in local online

advertising Requirement: Work hard, play hard Summary: You get it


It’s All About Real Estate

© 2008 The Kelsey Group

Are you the Baltic Ave. or Park Place of the Geo-Domain Industry?


http://images.google.com/imgres?imgurl=http://www.amnesta.net/other/monopoly/MonopolyMan.jpg&imgrefurl=http://www.amnesta.net/other/monopoly/&h=286&w=281&sz=36&hl=en&start=17&um=1&tbnid=Om2FjeISX4MDcM:&tbnh=115&tbnw=113&prev=/images%3Fq%3Dmonopoly%26um%3D1%26hl%3Den

http://images.google.com/imgres?imgurl=http://www.spamula.net/blog/i33/hotels.jpg&imgrefurl=http://www.spamula.net/blog/2005/07/&h=202&w=400&sz=6&hl=en&start=2&um=1&tbnid=jkjtudlFlrgtDM:&tbnh=63&tbnw=124&prev=/images%3Fq%3Dmonopoly%2Bhotels%26um%3D1%26hl%3Den

History of TKG and City Sites

1988 – Consulted in Operator-Assisted Yellow Pages 1995 – First conference on city guides 1996 – Research conducted on city guides 1997 – Formed Internet Local Advertising & Commerce

Association (ILAC) – later merged with IAB 1998 – Created Local Online Commerce advisory

service 2001 – Tech crunch, 9/11, exit of private equity money 2003 – Launched Interactive Local Media 2007 – Introduced Marketplaces


1997 Local Markets on the Web Conference: Profiting from Local Content & Advertising

Keynote Speakers Peter Winter, President, Cox Interactive Media Marty Yudkovitz, President, NBC Interactive Jeff Mallett, EVP, Yahoo! Frank Schott, General Manager, Microsoft Sidewalk

Mayoral Debate SF Gate, DigitalCity San Francisco, JustGo San Francisco, Your Town San Francisco,

Yahoo! San Francisco

Other Sessions Local Advertising Sales: The Moat Around the City? Partnerships/Alliances and Content: Sleeping with the Enemy Building Traffic in a Competitive Marketplace Vertical Opportunities for Local Markets


The Definitive Event for Businesses and Local Services on the Web 1998


The Online Directories & City Guides Survey

Attributes Importance to success of a city guide

Challenge your company faces in this particular area

Accuracy of Information ___ ___Being First in Market ___ ___Branding/Name ___ ___Consumer Awareness ___ ___Distribution/Traffic ___ ___Funding ___ ___Management ___ ___Partnerships with Key Players

___ ___

Sales Force ___ ___


The Online Directories & City Guides Survey

What % of revenue will come from each source? 1998 2000 2005 2010

Advertising ___ ___ ___ ___

Subscriptions ___ ___ ___ ___

Transactions/Hosting

___ ___ ___ ___

Communications ___ ___ ___ ___

Other ___ ___ ___ ___

TOTAL 100% 100% 100% 100%

Name three city guides that you consider to be the most useful.

1. __________ 2. __________ 3. ___________


Importance to Success of a City Guide/Online Directory

1998 1997 1996

1. Accuracy of Information

1. Accuracy of Information

1. Sales Force

2. Consumer Awareness 2. Distribution 2. Accuracy of Information

3. Partnerships 3. Consumer Awareness 3. Advertiser Relationships


Challenge Your Company Faces in the Particular Area

1998 19971. Consumer Awareness 1. Consumer Awareness

2. Distribution/Traffic 2. Partnerships

3. Sales Force 3. Accuracy of Information


What Percent of Revenue Will Come from Each Source (Asked in 1998)

1998 2000 2005 2010

Advertising 90 74 56 46

Subscriptions 3 4 3 3


3 16 34 46

Communications 1 2 3 2

Other 3 4 4 3

100 100 100 100


What Percent of Revenue Will Come from Each Source2010

1998 1997 1996Advertising 46 54 56

Subscriptions 3 4 10


46 36 25

Communications 2 5 4

Other 3 1 5

100 100 100



Local Has Not Been a High Priority for Many City.com Sites – But Local is the Next Frontier

Higher value of local will keep local sites in business. Gold mine of localized national advertisers will boost

share Sales force is a major issue 80/20 rule becomes more critical in the current economy Local online advertising (and marketing) is a strong

growth area

$605 Billion Global Advertising Market in 2007

Newspapers, 21%

Directories/IYP, 5%

Magazines, 9%

Television, 28%

Radio, 7%

Outdoor, 5%

Internet, 7%

DM, 17%

Source: The Kelsey Group (2007)

Note: Figures are rounded.

$707 Billion Global Advertising Market in 2012

Newspapers, 13%

Directories/IYP, 5%

Magazines, 7%

Television, 27%

Radio, 6%

Outdoor, 7%

Internet, 21%

DM, 15%

3.2% CAGR2007-2012

Source: The Kelsey Group (2007)



SMBs = 38% of Local Ad Dollars

Data source: Universal McCann (R. Coen). Kelsey Group estimates.

Data source: Kelsey Group estimates for SMB <100 employees (at all locations), based on Local Commerce Monitor survey data (3 years). Modified by industry-specific sources and interviews.

This Project

Total Advertising

$286 B

Local

$98 B SMB >100

National(making local buys)

(34%)

(38%)

Spending on Advertising (2007E)

National

$188 B

(66%)

Combined =$61 B(62%)

SMB <100$37 B

Key Outputs

Interactive Advertising

Search advertising as defined by performance-based advertising models and driven by total search query volume

Local search advertising revenues driven by keyword search queries, which include implicit and explicit “local intent”

Display advertising as defined by sponsorship and rich media ad propositions

Classified advertising

E-mail advertising and marketing

Lead generation


22

U.S. Interactive Forecast: 2007 – 2012

$8,273 $23,749

$7,036

$5,940$20,457

$1,240 $3,903

$14,296

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2007 2012

Search Local SearchDisplay Other

15.2%

25.8%

23.5%

CAGR2007-2012

US$ Millions28.1%

Total revenues to grow from $22.5B to $62.4B



Advertisers Are Confronted With a Complex, Fragmenting Market

Source: Piper Jaffrey (2006)

More choices require more guidance


Bracket Very Low Low Medium High

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

$5,000 - $19,000

$19,000+

Avg. Annual Spend on Advertising

(Monthly Spend)

$410

($34)

$2,516

($210)

$8,436

($703)

$25,564

($2,130)

Avg. Annual Spend on Web Site*

$911 $628 $2,670 $6,117

Percent of LCM Sample (by count) 61% 16% 17% 5%

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

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

4 Brackets of SMB Ad Spending Behavior


5.9

4.34.2

2.2

0

1

2

3

4

5

6

7

Very Low Low Medium High

Local Businesses Relying on More Channels The number of different media used by SMBs increases significantly in the higher spending brackets

Number of Different Media Used (Count)

Source: The Kelsey Group LCM Wave XI (2007)

Supports the need for a balanced portfolio of local media options

The Kelsey Group © 2008

53%

14%

15%

4%

14%

$0-$1,499

$1,500-$4,999

$5,000-$18,999

$19,000+

NA

SMBs by Ad Spending Bracket

Annual Spending on All Types of Advertising & Promotion

Mean = $2,800**Excluding a handful of SMBs spending over $40,000

The Kelsey Group © 2008

32%

38%

7%10%

53%48%

0%

10%

20%

30%

40%

50%

60%

Wave X Wave XI

Increase

Decrease

Stay Same

Uncertain of spending plans: 8% Wave X, 4% Wave XI.

SMBs Intentions for Overall Ad Spending


79%

80%

70%64%

56%

60%59%

58%42%

68%58%

57%

54%40%

35% 45% 55% 65% 75% 85%

Wa

ve

4W

av

e 5

Ratings or reviews

Product inventory info

Compare products orservices

Place orders online

Search for type ofbusiness in location

Items that are on sale

Pricing

Users Want More Features, Too

*Features that received a rating of 8, 9 or 10 on a 10-point scale.Source: TKG User View Wave IV, February 2007, total sample 501; Wave V, March 2008, total sample 988. Methodology: Online. Cosponsor: ConStat.

Top-3 Ratings for Feature Importance(on a 10-point scale*)


Geodomain Approach Is Different; Will It Be Disruptive?

Silos of traditional media are giving way to the Internet that can do it all

But Web sites belonging to traditional media are moving away from their parents

There is no one, right way to succeed because each site is unique. Provide the content that meets the needs of your marketplace. (Branson.com vs. Richmond.com)

Building a successful business is HARD. Don’t ever get complacent (example).


The Big Picture: GeoDomains at the Crossroads

The industry needs to go back and learn a lesson from what the research said in 1998. Success will come from Accuracy of Information/Compelling Content Consumer Awareness Partnerships

Seize the day: Prioritize opportunities and utilize technologies aggressively

Capitalize on your strength by being the go-to local site. The sales force is key.

Leverage the URLs to make strategic alliances with key players (social nets, vertical sites).

An Outsider’s View


Parting Thoughts: 7 Rules of the New Environment (Zillow’s Rich Barton)

1. Consumers crave information and power.2. If it can be known it will be known – by all.3. If it can be rated, it will be rated.4. If it can be free, it will be free.5. Pros who are active players in the new vertical

marketplaces win.6. There can be no vertical marketplace without

community.7. The digital media model rules (local is giant).


Thank You!

John F. Kelsey, III

The Kelsey Group

[email protected]

“Just Put on Your Sneakers”

John Kelsey Chairman The Kelsey Group Geodomain and the Transition to Local Marketplaces “Just Put...

Documents

Transcript of John Kelsey Chairman The Kelsey Group Geodomain and the Transition to Local Marketplaces “Just Put...