Krasilovsky Local Super Forum

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  • Here’s how the $133 billion breaks out today. A couple of points. Too many people in the interactive space prematurely write off traditionally media. Don’t do that. In fact, traditional media is still highly effective, and highly synergistic with interactive.
  • About $30 Billion a year. Search is the real driver here. About 44 percent of all spending. Actually, not easy to separate local and national spending
  • $59 billion. We think search will rise only slight on a percentage basis. But you’ll see a lot more targeted and mobile revenue. Rep management. Display will grow, but at a slower rate as advertising elements become hybrid affairs.
  • The smallest advertisers (Very low) don’t create much of a viral effect with advertising compared to medium sized advertisers such as realtors and restaurants and large local advertisers such as hospitals, car dealerships, and educational institutions. They spend less, and they disproportoinally poor results from advertising.Worthwhile? They are hard to reach. From a sales perspective.But the volume is tremendous.
  • Small businesses use about 4.6 advertising sources. A far cry when they’d put all their money in Yellow Pages, or classifieds. It is interesting to compare to Consumers, who use 7.9 sources of reference information for purchases.
  • Ad sellers can’t ignore “free” anymore. Will they pay to have someone manage their free accounts?
  • Where TV has always played…..
  • They are becoming consumer facing brands. And they have local components.
  • Web 2.0 things have really jumpstarted retail’s presence. Etailing Group: 50% of larger sites have online promotions now, such as limited hour Deal a days, in store only deals, and sweepstakes. 83 percent of larger retailers link to social networking site. Not just facebook and twitter. 43 percent are utilizing video via YouTube.We think local retailers will find a large voice as well.
  • Location targeting is the real key for mobile advertising. It will be getting bigger and bigger.
  • Not many SMBs using today .
  • Groupon Now

Transcript

  • 1. Interactive Local Media:
    The New Wave
    Peter Krasilovsky VP and Program Director, BIA/KelseyBOLO 2011
  • 2. About Us: Navigating The Local Ecosystem
  • 3. Our BIA/Kelsey Word Cloud
  • 4. 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
  • 5. 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)
  • 6. 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)
  • 7. 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.
  • 8. 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.
  • 9. 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.
  • 10. 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.
  • 11. Auto Dealer Marketing Spend: Online
  • 12. 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.
  • 13. 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)
  • 14. 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
  • 15. 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
  • 16. 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
  • 17. Vertical Features for Different Generations
    LEGAL SHOPPERS
    • Gen Y – Divorce, custody, family law
    • 18. Gen X – Wills & Estates
    • 19. Boomers – Most diverse legal needs
    AUTOMOTIVE SHOPPERS
    • Gen Y – 2x more likely to go online to buy/sell a car
    • 20. Gen X – 2-4x more likely to have used Craigslist.com
    • 21. Boomers – 2-3x more likely to have contacted in person
    INSURANCE SHOPPERS
    • Gen Y – 2-4x more likely to be researching employer insurance
    • 22. Gen X – Least likely to want to talk live
    • 23. Boomers – Quote aggregators
    RESTAURANT SHOPPERS
    • Gen Y – Chain Restaurants / Take-out - Delivery
    • 24. Gen X – Independents
    *AT&T – Compete Vertical Shoppers Study. See slide 5 for limitations. As previously noted, not subject to 3rd party review.
  • 25. Verticals Increase The Size of The Funnel at The Initial Search Level (Awareness)
  • 26. 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
  • 27. 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
  • 28. 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.
  • 29. 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.
  • 30. 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).
  • 31. 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.
  • 32. 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 $75,000. But with us, it’s all free.”
    Andrew Mason, CEO, Groupon
  • 33. BIA/Kelsey Forecast: Deals U.S.Gross Revenues (Sept. 2011)
    +36.7% CAGR
    Source: BIA/Kelsey (2011)
  • 34. The New Retail Constellation: Cracking The Code on Impulse Buying
  • 35. Mobile Ad Spend: Local vs. National
    US$ Millions
    Note: Numbers are rounded.
  • 36. 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
  • 37. 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)
  • 38. 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.
  • 39. Local Mobile: Not Just Advertising
  • 40. Thank You
    Questions and Comments
    Peter Krasilovsky
    pkrasilovsky@biakelsey.com
    Personal Blog: www.localonliner.com
    Company Blog: www.blog.biakelsey.com