Internet Titan BattleWhen Google upgraded their Local Business Center to Google Places, it launched the opening salvo in what we expect to be a long war for local advertising dollars.
With local advertising revenues expected to reach $144.9 billion in 2014 according to BIA/Kelsey — and more and more dollars are shifting away from traditional media toward digital media buys — the new war for local ad spend will be a battle between the Internet (Internet) titans and social networks.
Facebook (Facebook), Twitter (Twitter), Google (Google), Microsoft, Foursquare (Foursquare), Yelp (Yelp) and even Apple are all attempting to carve out their own niche offering for local advertising dollars. Who will succeed remains to be seen, but this is a fight you won't want to miss.
The War of the Worlds
The challengers fighting for local advertising budgets can be separated into three categories: Search, consumer review sites and social networks. The mobile component to each sector is also quite significant, especially given that the mobile web is taking over the world, and that mobile search is still a nascent space — one that appears to be more app-driven than search-engine driven.
Each category also has its own distinct advantage and key players, but what Google has managed to do with Google Places is straddle all three sectors with an extremely valuable proposition for local businesses that includes free stuff, cheap advertising rates and the promise of exposure.
Google also has a very strong mobile presence, but their adherence to the standard search model for discovery could make them susceptible to competitors vying for local ad dollars.
Search
In the local search space we can include the obvious players: Google and Microsoft, the latter of which will grab more share once the Yahoo search deal is implemented. Both behemoths are fast-adding features to their search services to better facilitate local search queries. Bing (Bing) even has Foursquare data in maps.
For businesses, the advantages of being highlighted in local search results over competitors is significant. Sure it's 100% paid media, but it's also exposure at one of the primary touch points for service and restaurant queries on the web.
Google clearly recognizes the value of a targeted ad. With Google Places they also re-introduced a simpler, faster, cheaper way for their local business customers to advertise (formerly called enhanced listings). Business can pay a $25 per month flat fee to use Tags to make their listings more prominent on Google.com and Google Maps (Google Maps). Included in Tags are Posts, which are like status updates for Place Pages and will appear as part of the search listing.
Tags show up as yellow markers that users can scroll over to view promoted features or coupons. While Tags are ads, they're essentially Google's take on Promoted Tweets, and make listings stand out from the crowd. If done right, they could be useful for both businesses and consumers.
When thinking about local search, don't forget about Twitter. The social network also happens to double as a search engine, and they're aggressively moving in the local direction with tweet geotagging that can identify points of interest. This extra layer of data will enable Twitter users to search locally, and see a real-time stream of nearby tweets.
Couple these new Twitter features with Promoted Tweets — Twitter's definition of search advertising — and you have a situation ripe for local businesses. The key here is whether or not Twitter can prove why users should share their location and why local businesses should care.
In thinking about search, remember that mobile will factor into the future in a big way. Steve Jobs believes that most mobile search happens via applications, which means that Apple — which now owns alternative mobile search application Siri (Siri) — could play an important role in the mobile local advertising battle.
Consumer Review Sites
For the purpose of this post, consumer review sites like Yelp and City Search are being distinguished from other social networks because their primary focus is on user-generated place reviews.
The advertising opportunities on these sites are certainly geared towards the businesses that consumers are reviewing. That could create a conflict of interest for some networks, and in the case of Yelp, many small businesses felt that they were being bullied to pay to advertise in order to remove negative reviews. Yelp has maintained that this was absolutely not the case, and was a misunderstanding of their review filtering process.
As such, they've made changes in recent weeks to lessen the confusion, but now that Google Places offers a handful of business-friendly features, we could easily see local businesses jump ship with their advertising budgets.
On this feature front, the addition of service areas is quite significant. So too are the QR code window decals and free business photo shoots. Plus, if Google opts to take Google Maps inside businesses, there will be even more incentive for companies to own their Google Place Page.
In a previous post, I made a case for how the new consumer review is all about you, and that location, premium content and relationships are critical to the relevancy of the consumer review.
In this sense, Foursquare certainly factors into the consumer review equation. Their tips and content partnerships mean that their location-aware mobile social network is perfectly poised to deliver up tightly packaged consumer reviews that are place- and time-relevant. This means that smart local businesses will allocate more of their budgets to checkin rewards and mayor specials.
Lest we forget, there's a Foursquare-esque component of Google's Place Pages. All Place Pages include consumer reviews with both text and star ratings. These reviews are also easily accessible via Google Buzz for Mobile and Google Maps.
Social Networks
The primary social networks embroiled in the local advertising war include Twitter, Foursquare, Google and soon Facebook.
Google's social networking endeavors have left plenty to be desired. Google Buzz (Google Buzz) launched to an excited tech audience but enthusiasm has since faded away. There's also Google Latitude — an always-on location-sharing service that started as a Loopt clone — which now has 3 million active users. It's the intersection of Buzz and Latitude on mobile devices that will help Google nail down local advertising dollars.
Between Buzz for Mobile's checkin model and Latitude, Google has a lot of information that they can both display for consumer/business use as well as use behind the scenes. Since Buzz checkins are associated with Place Pages and Place Pages have dashboards, Google has the opportunity to compete with Foursquare's business dashboards. They also have the data to create accurate behavioral analysis around location, based on the implicit location-sharing of Latitude users. Take that and the Google name, and you have something quite compelling.
Unfortunately for Google, Facebook is most certainly moving into the same space. Given their size and trendiness, we can assume that Facebook will be a strong competitor and a viable contender for local advertising dollars. The leaked McDonalds-Facebook location partnership tells us that diners will be able to check-in at restaurants with activity and food items being posted back to Facebook. How exactly this will work or function we don't know, but what is certain is that once Facebook knows where their 400 million members are, they can target advertising by location.
Twitter is really trying to ramp up relevancy of geo-located tweets, but they've never quite been able to do what Foursquare has done — demonstrate the significance of location-sharing. As discussed above, there could be a perfect storm brewing for the day when geo-aware tweets are tied to places and Promoted Tweets are available to all potential advertisers.
Once that happens, we predict that advertisers will be able to target their Promoted Tweets by location and not just keywords (as it stands now). Should they go down this path, this could be their real secret sauce, especially given what we've already seen from Virgin America in the Promoted Tweets department.
In the social networking space, don't count out David — a.k.a. Foursquare — amongst these internet Goliaths. Foursquare has pioneered the location-sharing movement by making checkins valuable, if not cool. The company is hotter than ever, and its partnerships — especially with the likes of Starbucks — continually ensure that it has something the competition doesn't. Its user base is growing astronomically, and now that the users are there, businesses are clamoring to catch up.
Foursquare has also been nimble in finding ways to cater to local businesses. Early on, it allowed business owners to offer specials to mayors and those that check in. More recently, it introduced a simple way for businesses to sign-up and gain access to the business dashboard with checkin analysis. Its offering not only parallels what Google is doing with Place Pages, but bests it.
http://mashable.com/2010/05/14/local-advertising-war
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