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Summary:

Not a day goes by when we get pitched by one start-up or another that has a new twist on local search and listings. They all want to target the small and medium sized businesses, and tap into the billions locked up in local advertising that […]

Not a day goes by when we get pitched by one start-up or another that has a new twist on local search and listings. They all want to target the small and medium sized businesses, and tap into the billions locked up in local advertising that currently goes to non-Internet channels. Never mind that the very presence of large number of players creates more confusion.

There are many other challenges as well, and many were discussed at the Kelsey Group Interactive Local Media Conference in Los Angeles. Jonathan Weber, founder of New West said, “It is hard to get local businesses to participate, even if it is free.” Full report at Inside Chatter.

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By Om Malik

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  1. Om, I read the report and while this is some great information, I’d take it with a grain of salt. Also, while I love the design of the site, Merchant Circle is a poor example. Think of it this way, I never EVER go to CNN tech/money, or Yahoo/MSN, etc when I want to hear the latest about tech startup news, sites, etc. I type, http://www.gigaom or http://www.techcrunch in my browser because, well, you and Arrignton are much more informative. Merchant Circle is the Yahoo Portal of local businesses and there’s no value for me. While I’m not sure how well they are doing, I think Trulia and Zillow are much better examples to follow for hyper localization. Local SME sites have to be informational, authoritative, and solve my problems, certainly not couponic (not a word) in nature. What’s the purpose of having a SME if I have to dig for his content and similar SMEs aren’t on one blog instead of individual ones. Getting page views for local businesses have to be horrible using this approach. While, we may crash and burn, Noocleus Media will never take this approach because it just isn’t sound.

  2. Eugene Rudkevich Saturday, December 1, 2007

    I run a laptop repair business in Tucson, and my listing in Merchant Circle is consistently higher in Google search results than my actual website. This is my primary reason in investing time in Merchant Circle.

  3. The problem – “Not a day goes by when we get pitched by one start-up or another that has a new twist on local search and listings.” SMEs don’t have the time or desire to weed through ALL the “twists” on local search and listings to find one that works, even if it’s free. And for those that try the free listing service and invest their time entering their data, that’s about the extent of it because local consumers don’t know about it. The SME thinks why continue to invest valuable time, even if it’s free, when they got nothing from it. The listing quickly becomes out of date and basically inactive leaving the latest twist on local search full of outdated listings that has no appeal to local consumers.

    If I didn’t read gogaom, techcrunch, etc. I would never have heard of Merchant Circle and even though I am aware of it, I don’t go there looking for a local merchant. How do they expect local “non-techie” consumers to know about them or use them. Lendingtree spends millions of dollars a year promoting their service and they only have about 2% of the lending business. It would take hundreds of millions of dollars annually to get the local consumers to becomes aware of the service and then just like me, that doesn’t guarantee they’ll use it.

  4. @ Toledo Dave

    That exactly is my point. I don’t think this is a market – except in the power-points of start-ups who have made themselves believe that that is a big business.

  5. @Toledo Dave and @Om,

    While you make good points, they don’t mean this market is dead in the water. Obviously it’s not or ValPak and their competitors would be dead in the water. Also, LendingTree isn’t the best example. Honestly, how many people go online to shop a mortgage, it’s a bit of a stretch. Also, I agree people don’t go online looking for merchants, just like I don’t listen to Jim Rome to hear Clear Channels advertisers. That’s where Merchant Circle is in a losing fight. There has to be GREAT content, another channel perhaps, for merchants to advertise. Going to a merchant portal for the hell of it isn’t going to cut it which I’m not sure they realize. The real challenge in my opinion with hyperlocal ads is the cost benefit analysis of putting someone in front of local merchants so they buy advertising.

    A good example of this model is, http://www.cincymoms.com. While they aren’t raking in the millions, they have done a cool million in their first year without much effort or staffing. That’s one city and while I’m not saying that we can imply that this model would work accross all major/mid-major cities, I think if you imagine the possibilities, it’s not that hard envision some positives and opportunities that exist.

  6. @ Tim Abbott

    I think the execution of the local search and local advertising online leaves a lot to be desired. I have to tell you, the Yellow Pages are much easier to deal with even now, despite all the money that has been poured into the market. I can off course use them online and find quick information on what I am looking for.

    If the start-ups want to get our attention, they need to figure out a simpler way not only for people looking up information, but more importantly for small business owners.

    You might be onto something with cincymoms – local search (online) by smaller local Internet operations. The ones who understand the local market best.

  7. I agree…when I first started this internet game, I also thought…WOW, you can take over the world. But I learned otherwise, quickly. You can, but it has to be, one city at a time. The internet is still a very scary, faceless place for millions of people. So when you can have an internet business, that is focused in your local community, and your customer/client, can come in and see you, face to face, I think your success rate increases a thousand times.

  8. Kelsey Group Blogs » Sunday, December 2, 2007

    [...] GigaOm [...]

  9. The Premity Blog » Blog Archive » Discussion on Local Merchant Advertising Online Sunday, December 2, 2007

    [...] Malik posted an item today titled “Local Ads, A Billion Dollar Biz, Some Day.” Om points his readers to another blog post from Donna Bogatin, where she discusses a [...]

  10. @ Tim Abbott: You say “how many people go online to shop a mortgage, it’s a bit of a stretch”, but that’s exactly what these local search services are trying to do. They’re taking a local activity, usually done offline, and moving it online to try and gain economy of scale. And unless they are going to pump millions in local promotion to create consumer awareness, it isn’t going anywhere.

    The http://www.cincymoms.com site is a good example of a narrowly focused local play, and that’s why it is working. I’m sure a lot of its success is due to word of mouth, not online but offline among mothers sharing information.

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