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Local Social Media Revenue Models to Watch

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Marketing using location and social networking are like peanut butter and chocolate — they’re a perfect combination. Add mobile and you have a trio of hot technologies attracting capital from investors and big companies alike. And as I detail over at GigaOM Pro, those looking to make a buck in the space should pay close attention to the revenue models currently driving the local-social-mobile trio.

Most local ad dollars aren’t spent in the digital realm. Eighty-five to 90 percent of the roughly $130 billion in U.S. local advertising is still spent on traditional media. Sure, thousands of small businesses buy paid search listings from Google (s goog) and Bing (s msft), but they’re usually small online businesses that can convert sales on their web sites. The vast majority of local small businesses are barely online, if at all.

But they are getting there. While announcements of advertising and promotional deals with check-in companies are peppering the news, check-in companies aren’t as local as one might imagine. Location-based service companies such as Foursquare and Gowalla still have pretty small marketing staffs. They’re better equipped to service national or online brands and retailers that target local markets from a centralized national marketing or advertising organization.

In fact, the hottest name in social commerce (and local commerce) isn’t even really about commerce. Daily deal powerhouse Groupon’s pitch is about new customer acquisition. When the economics work, it’s a compelling story: Since the shopper pays for the Groupon coupon, the resulting customer location visit guarantees a sale, and is thus pre-qualified as a prospect.

Other local social revenue sources could include:

  • Media buying. Local social companies could assist unsavvy local merchants with SEM, SEO, distribution, and online ad network buying. Digital Yellow Pages does this.
  • Ad creative services. Companies like BuyWithMe already work with merchants on crafting their emails, testing offers, subject headings, etc.
  • Store loyalty programs. Check-in services are heading this way already.

Read the full post here.

Image source: flickr user Sofianos Rezk

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3 Responses to “Local Social Media Revenue Models to Watch”

  1. David – I enjoyed your article. Great observation about the opportunity to unlock the $130B in US local advertising and bring that to digital. Surprisingly, about $70B of that is national brands vs the SMB market, so there is a big opportunity if location can be delivered at the scale big brands need.