Yahoo Forms AdLabs To Better Pitch Hyperlocal Ad Sales

Yahoo Local

A recent forecast of small business media buying trends cited by eMarketer showed that local businesses want to advertise online — especially online video. But they find the process too cumbersome, so the money remains untapped. Yahoo (NSDQ: YHOO) has been trying to crack the hyperlocal marketplace along with everyone else and has decided on one thing it can do to release some of those local dollars: set up a research project that will provide “consumer insights” designed to get retailers to spend their local ad budget with the portal.

Dubbed Yahoo AdLabs, the unit will come out with data designed to show the effectiveness of targeting consumers based on their proximity to a marketer (“Hyperlocal targeting of a retail display campaign generated more than five times return-on-ad-spend, measured by sales lift at the retailer,” was one example of the pitch).

Last summer, researcher Borrell Associates forecast that local online ad spending would leap 18 percent in 2011 to $16.1 billion. Previously, the researcher didn’t expect the local online ad market to hit that dollar number until 2012.

Over the past year, AOL (NYSE: AOL) has ramped up its Patch local network — it now covers 775 areas, but still doesn’t appear to be producing much revenue yet — and local news aggregator Outside.in has partnered with several media companies, including CNN, who want to enter the local ad marketplace quickly.

Yahoo has also struck a number of partnerships with companies such as Gannett (NYSE: GCI) and direct marketer Valassis, that are meant to extend its local reach.

Being armed with research is one part of the hand-holding process that local marketers appear to need. But as the recent attempts have shown, prying open local retailers’ wallets will take a lot of face time from actual salespeople — something Yahoo gets from its local newspaper and other media partners — to make it happen.

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