Local search menace
By Norbert Specker/March 2004 - In an earlier column, we established the fact that while the Internet has not made the newspaper obsolete, it nevertheless, has become an indispensable business tool for any media enterprise. Indeed, it is indispensable for any enterprise of a certain size.
In a sense, the Internet is much more like „paper" than like „news". A „paper" that you can use for a million things, among them to distribute news.
My conference Interactive Publishing dealt since 1994 with „newspapers and the Internet". It has been quietly waiting for better times. Milverton Wallace's very popular conference for online journalists called NetMedia just went into hiatus. Together we concluded, „We are at the end of a cycle. The Internet is not the topic anymore for newspaper executives. No use in waiting; we have to move on."
The Internet will not save any newspapers and it will not destroy any newspapers.
But depending on how other companies manage to employ the Internet - or indeed any other channel - it might be instrumental in eating away advertising revenue traditionally spent with the newspapers. This is old news. In certain markets, job advertisements have left the daily newspaper for good. In other markets like Switzerland, the online real estate advertising is dominated by an insurance company. Often, I hear a certain resignation and a dispirited „those advertisements will never come back".
Well, obviously they will not come back just by themselves. They will not come back for free and they will not return immediately. It is a messy affair.
In future textbooks for media history the loss of classified category after classified category may be identified as the beginning of the end of a particular idea of newspapers. A destructive bacteria causing havoc, weakening them just like the advent of the smallpox virus weakened the native people on the American continent.
In most cases, the companies responsible for whisking away advertising revenue from the newspapers concentrated on the classified market and did so with rather crude instruments. Those instruments lacked the specific flavour, the feel of a particular market, a particular town or region.
Now that is changing. The hot topic in the search engine and yellow pages industry for the last 12 months has been „Local Search". There are many good reasons for this discussion. For example, the search engine people have realised, that explicit and implicit local searches (i.e. somebody looking for „auto repair in Seattle" and somebody looking for „auto repair") constitute up to 35 percent of the searches. At the same time, the yellow pages people have seen usage decline from 2.0 average weekly look-ups per person in the mid 1990s to 1.4 average weekly look-ups in 2003 (Source:Yellow Pages Integrated Media Association).
So, the two are talking.
The Kelsey Group has estimated that the current addressable (not actual) market for local paid search is between US$1.16 and US$1.2 billion. Overture contends that local search revenues will be about US$1 billion by 2008 (Source: Searchenginewatch.com).
After classifieds, it is the retail advertising market that will be targeted by companies finding ways to sensibly use the „new paper", the Internet, to offer advertising clients a good deal.
Consider a change in perception.
Your newspapers have been cushioned against a truly devastating loss in your advertising revenues, because neither the strategies nor the tools have been available to properly approach your local retail advertising market and deliver satisfying results. It is estimated, that only 250,000 of the 10 million small to medium enterprises (SMEs) in the United States currently purchase paid search placement.
The yellow pages industry, together with the search engine industry, are thinking hard about reaching the other 9.75 million. They have been at it for a while and they will not stop.
Now, think back to between 1994 and 1996 when the first people came to you, to your bosses, or to your colleagues all excited and flushed crying, „We have to do something about online classifieds. They will eat away our revenues".
Think about what you did, what your newspaper did, what the newspaper industry did.
And change the approach.
Index of change columns
Norbert Specker is the founder of Interactive Publishing GmbH, a service and intervention company dedicated to support the newspaper publishing industry.