Krasilovsky Local Super Forum

Interactive Local Media:
The New Wave
Peter Krasilovsky VP and Program Director, BIA/KelseyBOLO 2011

About Us: Navigating The Local Ecosystem

Our BIA/Kelsey Word Cloud

Come to ILM West San Francisco December 12-14
Bob Pittman, CEO,
Clear Channel
Also:
Kara Swisher, AllThingsD
Zorik Gordon, ReachLocal
Todd Rowe, Google
John Paton, Digital First

Today’s Local SuperForum Agenda
Sizing The Local Market and Hot Trends (Krasilovsky)
Local Opportunities in Media (Triplett, AZ Republic)
The Local Search Opportunity (Yeich, Relevant Ads)
Local opportunities in Rich Media (Simon, Local.com)

Local = $132 Billion: Local/Local vs. National/Local
Local/Local SMBs make up 38% ($50.5 Billion)
National/Local make up 62% ($82.5 Billion)

Interactive is Minority of Today’sLocal Spending
*ERPM = E-Mail, Reputation and Presence Management
Digital revenues associated with traditional media (e.g., Web sites associated with local TV stations, local radio stations, newspapers and magazines) are included in the revenues for the traditional media. Revenues for Internet Yellow Pages that are associated with print Yellow Pages are included in the overall Yellow Pages media category.

US: 2010 Interactive Ad Market $29.8 B
Search has gotten local advertisers online
Source: Proprietary research by The Kelsey Group, mid-2007. Sample: 1,200 SMB advertisers in 4 major US MSAs).
Methodology: Telephone survey. Cosponsor: ConStat.

US: 2013 Interactive Ad Market $58.57B(CAGR 15%)
Display will grow at a slower rate; major revenue growth will come from targeted “directional media” and mobile.

Local Local Spending: The Big Guys Spend Disproportionally More
*Base: LCM respondents that have a “web site or homepage”.
Source: BIA/Kelsey estimates based on LCM data, Estimates are sensitive to assumptions.

Auto Dealer Marketing Spend: Online

Use of Media Has Exploded for Both SMBs and Consumers
The ratio of media used by Consumers is 2x what SMBs buy.
Consumers
SMBs
*Number of different media used by consumers when shopping for local products or services.
Note: Each survey wave typically identifies a larger number of media to choose from, so there is some “longer menu” effect captured in this data.
Sources: BIA/Kelsey surveys.

Local Use of Social Media Is Widespread
Local business SMB usage of various “social media”is already intense. In our research, nearly half reported using Facebook for advertising or promotion. 40% said they have a Facebook page specifically for their business.
Use of Social Media
Sources: Local Commerce Monitor – Wave 14 (BIA/Kelsey and Constat)

New Businesses are Younger; Use More Social Media
Twitter versus YP usage tells a story about embrace of social media. While Yellow Pages usage stays at 29%, Twitter use has grown 2X to 19%. Usage levels by SMB age suggests further growth by Twitter and erosion of PYP in most age brackets.
Use of Print Yellow Pages vs. Twitter
(by Age of Business) Wave 14 (Q4 2010)
Twitter: Overall 19%
Sources: BIA/Kelsey surveys

The Move Away from Horizontal Media
Inevitably, there is a move away from Horizontal media (newspapers, Yellow Pages) to specific Vertical media focusing on one segment or theme.
Verticalization is a smart move as horizontal media begins to decline.
Verticals provide different entry points for consumers, and boast synergies among related categories (i.e. dining, events)
The promise of vertical media is:
Focused content
Higher value search
Better leads
Better conversion rates

Verticals: High CPM Rates
CPM rates for verticals are highly attractive. They range from $5 to $60 depending on the vertical. As a general rule, rates are higher when they are more specifically tailored towards high value customers.
Sources: Adify, Centro

Vertical Features for Different Generations
LEGAL SHOPPERS
Gen Y – Divorce, custody, family law
Gen X – Wills & Estates
Boomers – Most diverse legal needs
AUTOMOTIVE SHOPPERS
Gen Y – 2x more likely to go online to buy/sell a car
Gen X – 2-4x more likely to have used Craigslist.com
Boomers – 2-3x more likely to have contacted in person
INSURANCE SHOPPERS
Gen Y – 2-4x more likely to be researching employer insurance
Gen X – Least likely to want to talk live
Boomers – Quote aggregators
RESTAURANT SHOPPERS
Gen Y – Chain Restaurants / Take-out - Delivery
Gen X – Independents
*AT&T – Compete Vertical Shoppers Study. See slide 5 for limitations. As previously noted, not subject to 3rd party review.

Verticals Increase The Size of The Funnel at The Initial Search Level (Awareness)

Vertical Users: Greater Tolerance for Advertising When It Is Relevant
Vertical sites have a major advantage over other publishers:
“Consumers love our advertising.”
Mitch Golub, President, Cars.com

Increased Vertical Spending is Projected
Spend More on Verticals? (Print or Online)
Source: BIA/Kelsey LCM survey.
Verticals, (“Specialized Directories”) offer more targeted opportunities and often reach new more affluent target audiences

Classifieds on WalMart? Deals from AARP?
The new marketplace platforms have extended the reach of items and services to be sold.
Walmart, MasterCard and AARP are among the non-media brands that are now posting classifieds and offering deals.

Group Buying: THIS is ECommerce
More than 95 percent of $2.5 billion space is oriented toward local.
Daily deal publishers earn ecommerce revenues with a no money down model.
Deals represent an alternative to a non-intuitive, search-centric approach.
Deal participants can see higher impressions than traditional media. They can be upsold with product add-ons.

The Disruptive Potential of Deals
The ability to effectively target consumers based on transaction and search is creating an inevitable clash between:
Destination deal sites (Groupon and Living Social)
Search giants (Google);
Sales leaders (AT&T)
Financial Institutions (MasterCard, Visa, Amex).

Chicago’s Most Subscribed Media
The size of Groupon’s base in each market generally follows population size. The exception of Chicago, its headquarters. Although Chicago is the #3 market by population, it is Groupon’s largest market.
Groupon’s email subscriber count in Chicago is much larger than both major Chicago papers together.

Advertising + ECommerce
“They get huge exposure exclusively about their business….300,000 emails (in Chicago)….. It is better than Thrillist and Daily Candy, which have CPMs of $250. That would be about $75,000. But with us, it’s all free.”
Andrew Mason, CEO, Groupon

BIA/Kelsey Forecast: Deals U.S.Gross Revenues (Sept. 2011)
+36.7% CAGR
Source: BIA/Kelsey (2011)

The New Retail Constellation: Cracking The Code on Impulse Buying

Mobile Ad Spend: Local vs. National
US$ Millions
Note: Numbers are rounded.

Intent on Local
“Local search on the mobile device indexes higher than the desktop by about 2 to 3 times,”
-- Diana Pouliot, Mobile Ad Sales Director for Google

Mobile Local Advertising: Evolving Towards Local (Eventually)
Majority of the roughly $800 million U.S. mobile ad spend is brand advertisers and agencies.
Market evolutions: move toward local
Better geotargeting for national brands (national – local)
More adoption by SMBs (local – local)

Use of Mobile Advertising By SMBs
Usage levels of mobile advertising (all formats) by SMBs remains very low – still in the single digits.
SMB Use of Mobile Advertising
Source: Local Commerce Monitor Wave 14. November 2010.

Local Mobile: Not Just Advertising

Thank You
Questions and Comments
Peter Krasilovsky
pkrasilovsky@biakelsey.com
Personal Blog: www.localonliner.com
Company Blog: www.blog.biakelsey.com

Krasilovsky Local Super Forum

by BOLO 2011 on Oct 12, 2011

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Krasilovsky Local Super Forum Presentation Transcript