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Local vs Search, the Online Ad Battle Begins

Posted by Mort Greenberg on May 6, 2008

Article Source: http://axcessnews.com

 
By Dave Porter

(AXcess News) Reno – The Internet appears to be pulling more ad dollars from traditional media like print, television and radio during a time of lean advertising budgets, but even though there is a slowdown in ad spending, the real battle online appears to be ‘big box’ vs local.

According to eMarketer, ad spending in 2008 will “bounce back”, increasing 3% and television will see the highest growth thanks in part to the election and the Summer Olympics.

Still, the Internet is expected to show a healthy gain as well.  According to a December, 2007 Borrell & Associates report, “2008 Outlook, Local Online Advertising”, total online ad spending is forecast to grow by 1.8%, while offline ad spending was estimated to shrink by 1.8%.  That’s a far cry from eMarketer’s forecast, yet Borrell’s prior market estimates have been far more accurate in consideration of the researcher focusing more on local advertising.

“Even with the Olympics and presidential election campaigns on the horizon, overall ad spending in the US is in the doldrums,” says eMarketer’s David Hallerman. “Except online.”

Hallerman says that “US Internet advertising will not only be more resilient than traditional media, it will grow. In fact, in 2009, 10% of all US ad dollars will go online.”

Stepping forward in the minds at Borrell & Associates to the most recent Report, “2008 Online Promotions – The Big Shift”, Borrell & Associates made a bold prediction.  That a shift in ad dollars was underway with promotional advertising rising to the top while Standard-sized ads (banners, skyscrapers et al) would shrink dramatically.  In fact, the researchers over at Borrell & Associates were already downplaying ‘standard advertising’ online back in December, predicting then a severe drop in web advertising dollars this year.

“We are seeing a distinct shift of business spending away from classic online advertising per se toward non-advertising marketing expenses – the more nebulous category of ‘promotions’,” said Borrell & Associates founder, Gordon Borrell.

“The Internet provides tens of thousands of marketing channels that allow businesses to reach consumers directly with information on pricing, sales, features and new products,” says Borrell.

While Borrell’s report gives some startling predictions, such as, Online display ads (Web page banners, pop-ups, etc.) have lost their luster; and, Paid search advertising is likewise facing a luster-loss, the ‘big box’ theory of major search providers consolidating is threatening the pricing model for competitors.  While lower ad rates may be attractive to online advertising buyers, some of the allure comes in the form of logistics in doing business with one resource capable of handling a large ad budget, where spreading those ad dollars across a host of local sites is more difficult to manage and monitor.

So the question arises, who’s right, Borrell or Google?  The answer is, both.

Borrell notes that the web is creating opportunities for viral marketing, such as an online video of a new beer which when post online gets handed around by viewers.  That branding tactic works well, but production may not fall into the hands of the brew mister as much as at it rests in the hands of skilled public relations providers.  Borrell was sharp enough to note that in its report in which they predict that “Online promotions, including the revitalized and expanded practice of public relations, will nearly triple over the next five years to $22.8 billion, surpassing all other online advertising categories (paid search, banners, email, and online audio/video advertising.)”

Oh wow, you say.  That is a startling revelation indeed!    So far the paid researchers who derive the bulk of their revenue from reports gleaned off of information from the top search engines and major websites haven’t responded to Borrell’s ‘revelations’ and for good reason – they’re not about to get into a credibility war with the maverick of online research and king of local – Borrell & Associates – as it could cost them plenty.

The ‘big box’ dominance of Google’s combination with DoubleClick is certainly going to affect the online advertising market and the most likely area will be in ad costs falling as the mass-market appeal of one-stop advertising online takes hold.  Recently, Google and Yahoo tried teaming up with Yahoo looking to display Google ads, which appears to be getting a green light from regulators while the rumors of whether or not MSN will be combined with Yahoo still echo through the tech blogger world.

I have often argued that people should pay more attention to the fact that while the bulk of traffic lies with the top search providers, there is more action in the long tail of the web and Borrell is saying the tail is now getting more diverse and with it greater opportunities to brand products and promote online on a local scale.  Underneath it all is one recurring theme – geographic.

Local is becoming king and through it new, more creative ways of reaching customers are developing.  Video and even content is being used to achieve a geographic appeal.  Perhaps where that’s winning out is in the fact that major newspaper websites, along with Yahoo and Google, have been unsuccessful at capturing the geographic theme of marketing on a national scale.  That may be due to their inability to cooperate because they’re so large and bulky.  Enter PR.  Public Relations firms on a geographic scale are able to come up with creative ways of reaching local audiences online and can virally expand that both regionally or national.  E-mail may be playing a part, but content appears to be winning out in presentation format where a dining out section of one local website is being used in consort with other local sites to generate an interest through their online promotion.

But firms like Marchex are also getting in on the ‘local’ theme and have teamed with local content sources in sharing both content and advertising.  That kind of creative thinking is on the rise and more boutique advertising agencies like Chitika.com are coming up with ways to lure ad dollars through both innovative technology and targeted intelligence.  Newer technology providers like Snap.com are also attracting partners who are looking to team with innovative agencies in combining both cutting edge technology and better performance matrix of delivery in order to compete.  So while Borrell cites a shift in ad spend, I say parallel to that is a shift in cooperative public relations, where innovative firms are combining technologies and resources to offer ad buyers better conversion rates to compete with the lure of big box ad providers like Google.

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