Archive for the 'geotargeting' Category

The Challenge of Fine Segmentation in Local Advertising

This post is the first in a series on Improving Local Ad Performance.  My perspective is primarily that of local information publishers and application providers.  In this post I lay out one of the fundamental challenges of local advertising: the need to finely segment it by geography and business type.  I’m going to focus on local searches, but the principles apply to other types of local information and advertising as well.

Local Searches: Sliced Very Thinly

Local searches are highly targeted.  This makes  makes them both an advertiser’s biggest fantasy and their greatest nightmare.  It presents a number of unique challenges.

As a minimum, local searches are distributed across many different geographies and types of businesses — and this is only the tip of the iceberg since you can also take in to account the user’s context, behavior and preferences.

Local Searches are Thinly Sliced

Local Searches are Thinly Sliced

These thin slices have implications for both publishers and advertisers:

  1. Each category/locality combination receives a small percentage of all traffic.  So publishers need large volumes at a national level or they have to specialize in particular geographies, vertical categories or demographics.
  2. These highly targeted searches are often most meaningful to small and medium sized businesses serving the niche but acquiring the necessary mass of these smaller advertisers is extremely challenging.
  3. National or even regional advertisers have to find ways to make campaigns truly meaningful at a hyper-targeted level.

Like for Like Targeting Alone Won’t Get You There

Most people approach targeting of local advertising by having the advertiser define the category and location they want to target.  Then, the advertisement is presented when a user performs a search in that category and location.  This frequently takes the form of offering the user alternatives to their request.  I’m going to call this ‘like for like’ targeting.

While easy to understand, this approach has a number of lmitations.

In high value categories, demand exceeds supply.  Businesses in categories like Locksmiths or Attorneys are often willing to pay a large fee for a lead.  Unfortunately, searches in these categories are rare, so while the inventory is very valuable and sells quickly and at a premium price – you just don’t have that much of it!  In fact, as the diagram below illustrates – the value of a category (from an advertising perspective) has no relationship to the volume of searches it experiences!

Search Volumes and Value by Category

Search Volumes and Value by Category

Unless you have a huge number of advertisers, for the (vast?) majority of local searches you won’t have a like for like match on the basis of category and location.  At least not one that’s truly relevant.  Providing a user with alternatives that are too far away or always providing them with the same small number of national advertisers undermines the credibility of advertising suggestions.

And the flip-side of the above, is that for many truly local advertisers you won’t have enough traffic to give them a meaningful set of leads.

Finally, in many local search use cases, users aren’t open to substitution.  A true category search – where a user is  open to suggestion and recommendation (and thus relevant advertising) is a relatively small – albeit very valuable – part of a publisher’s search inventory.  Instead, the most frequent use cases result from a user trying to complete a transaction with a business they’ve already selected.  They are most often looking for a phone number or directions.  In these cases it can be better to provide them with an ad that complements their current choice and context rather than trying to get them to substitute their choice.

Tackling the Like for Like Challenge

There are several possible – largely complementary – ways to approach this problem.  I’ll be exploring these options in some detail in future blog posts as part of the Improving Local Ad Performance Series.  Follow me on Twitter, subscribe with an RSS reader or subscribe by email so you don’t miss any of the series.  A quick summary of some of the approaches:

  1. In addition to like for like targeting, target local advertising based on context, behavior and preferences.  With appropriate analysis and targeting models it is possible to deliver relevant and complementary advertising in a way that results in a better match between available inventory and available advertising.
  2. Focus your efforts on being the ‘go to’ destination for the higher value ‘category’ or ‘research’ type searches – either broadly or within verticals.  Yelp is an example of a company that has done this by focusing on creating a community of reviewers making it a destination for people seeking opinions.  The advertising Yelp provides is primarily of the ‘like for like’ type – which is appropriate given that most people viewing review pages are in fact open to suggestion.
  3. Participate in some sort of exchange or market where you can buy traffic (i.e. by using AdWords for example) or gain access to advertisers (i.e. by working with a Yellow Page publisher for example).
  4. Focus your resources from both a publication and advertising perspective on specific verticals.

The Challenge Becomes Even More Acute in Mobile

Increasingly, local searches are occurring on mobile devices.  On the one hand, mobile devices offer the promise of even richer context information (where you are right now).  On the other hand, the more limited screen real-estate means that providing the most meaningful suggestions (or advertisements) becomes even more critical.

This post is part of a series on Improving Local Ad Performance.  To receive future installments you can:

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Simple Product, Flat Fee, Proven Performance

Simple product, flat fee, proven performance – those are the ingredients for a successful local advertising offering to small and medium sized businesses.  Google’s new Local Listing Ads seem to have the right ingredients.  There are lessons here for all local advertisers.

Simple Product

Small business owners are busy running their business.  They don’t have the time or inclination to figure out complex products.

In Google’s case the offering is simple to set-up and easy to understand.  To set-up up local listing ads, you just have to:

  1. Claim and verify your Google listing (a good idea any way).
  2. Select your landing page – which defaults to a very functional Place Page provided by Google (so you can almost ignore this step).
  3. Select the categories where you want the ad to appear.

Google then creates your ad automatically (based on the information in your listing) and presents it based on the category  a user is searching, the location where they are searching and the location of your business.  All optimization is performed by Google.  There are no controls to tweak and monitor.  The ads automatically include a tracking number (more on this below)

Flat Fee

The business owner pays a flat monthly fee which is apparently based on their location and the categories they’ve targeted.  There is no bidding – it’s no haggle-free pricing.

Oh – and the first month is free.

Proven Performance

Google provides detailed information through Local Business Center that includes:

  1. How many people saw your ad.
  2. How many clicked on it.
  3. How many got directions to your business.
  4. How many people called your business.

And – whenever you receive a call you get a whisper telling you ‘this call brought to you by Google’.

The service is fully transparent.  At the end of the first Free month a business owner will easily be able to assess whether or not the service is providing value to them for the fee they are paying.

Applying the Recipe

All providers of local advertising can follow the same recipe:

Simple Product – This has always been a strength of traditional media like the print yellow pages.  People understand how the product works.  Someone visits you in person to set the product up!  But many digital offerings fall short by failing to ensure a functional landing page is used.  Google has addressed this with their Place Pages which are designed for optimization.  A landing page is an integral part of a complete digital solution – without one there are a lot of wasted clicks.

Flat Fee – I’ve said this many times.  Small businesses want simple pricing – combined with proven, transparent performance.  People too often link the idea of performance driven advertising with variable, performance driven pricing.  This just scares a lot of small business people.

Proven Performance – This is the most important part: you have to deliver the leads to the merchants and PROVE that you’ve delivered those leads.  Google’s service is fully transparent.  As a merchant you don’t control where and when you ad get’s placed, but you do know how well it’s performing and can choose to carry on or not.  As I’ve written before, all forms of advertising should be tracked – including print media.  Imagine a small business owner hearing ‘this call brought to you by the print yellow pages’ every time someone called a number from the book.  That would prove value in the media to them.

More on Local Listing Ads from Mike Blumenthal and Greg Sterling.

Want a review of your local advertising product  strategy?   Contact me at eric AT predictabuy.com.

More Geo-Targeting Goodness

The ‘location aware’ internet is evolving very quickly.  There were a bunch of new anouncements last week.  Location awareness in mobile devices and desktop browsers supports both an enhanced user experience and the abilty to serve more relevant advertising.  This will be a transformational event for local advertisers.  Here’s a wrap up of some of the action:
googleearth1-1

Google Earth Adds Businesses

From Techcrunch:

By adding a “Businesses” layer to Google Earth, you’ll be able to see businesses by default when you start the application. Google Earth will list businesses like restaurants, bars, banks, gas stations, and grocery stores. As you zoom in further to the map, you’ll see more businesses. When you click on the icons, you’ll get additional information like the address. telephone number, reviews, and hours.

What it means: Another place for local businesses to be found by people on the move.

Yahoo! Testing Localization of Global Home Pages

From Search Engine Watch:

Yahoo! has been testing a new homepage for a long time now. The latest test involves localization features for global homepages. For example, if you live in the UK, you can get local transportation information via a widget on the left sidebar. The India homepage will feature a cricket app.

What it means: Browsers and web applications are increasingly becoming location aware — meaning both content and advertising can be made relevant to the location.  (There are also rumors of Microsoft testing location awareness in IE 8.)

Twitter Might Add Location Information to Each Tweet

Here’s what Robert Scoble wrote:

“He told me they are going to add features that look like friendfeed’s “likes” and “comments.” But he said they would be different, though. Also, during his talk at #140TC he told the audience they would make other changes to support search, including adding location based info to each Tweet.”

via The Praized Blog.

What it means: This could continue to strengthen Twitter’s role as a source of real-time information for local search.  It will also make it easier for local businesses to ‘watch’ for local activity of interest to them.

Yahoo! Placemaker Identifies Place References in Text

Yahoo! has been busy developing a great suite of tools for Geo-application developers.  It includes a high quality interactive map offering and FireEagle which is perhaps the most comprehensive approach currently available to securely share your location with others.  The latest addition is Placemaker which identifies place references in unstructured data like documents, web pages and tweets.

Not surprisingly, someone has already built a fun mash-up that marries Placemaker and Twitter: TweetLocations.  Just enter someone’s twitter id (you don’t have to be logged in) and it finds references they’ve made to places.  Try it with my friend @galinsky – a fellow Canadian who has been on an extended trip through Europe.

What it means: A way to derive location information from what people are saying.  This could also be used by local businesses to watch for local references – among other things.

Truly local advertising set to emerge

A number of announcements this week suggest that truly local, geo-targeted advertising is gaining momentum.

To take-off, three things are required:

  1. Broad availability of geo-reference information in browsers and mobile devices.
  2. Advertising platforms that exploit this information to deliver advertising.
  3. Local advertisers who can benefit from such precise advertising.

This past week saw announcements on all three fronts.

Increased Availability of Geo-reference Information

Skyhook Wirelesss announced the availability of a ‘one-touch’ location capability for publishers.

The Loki plug-in works with all major Internet browsers and operating systems to determine the precise location of any Wi-Fi-enabled device instantly, given the user’s permission. Web developers can use visitor location information to personalize content, ease local searching, deliver localized ads and more.

Major websites such as Flickr, Mapquest and Weatherbug are incorporating the technology.  It makes it easy for web developers to deploy the sort of location based smarts that have been very popular on the iPhone:

“The WeatherBug iPhone application has been extremely successful in part due to its ability to be location-aware. Loki enables us to instantly offer this same, rich experience to our desktop and laptop users and was incredibly simple to integrate,” said Chris Sloop, co-founder and CTO of WeatherBug.

Geo-Targeted Advertising Platforms

Google and Placecast both announced geo-targeting ad vehicles this week.

Google announced a Maps Ad Unit:
mapsadunit

Placecast joined with Alcatel-Lucent to create a platform for delivering advertising to ‘on-the-go’ consumers.  Consumers ‘sign-up’ for the service and the kind of messages they want to receive.  Then when you are near a place that might be interesting you will get an ad sent to you.  (Might be a bit spooky – but it is opt-in.)

Local Advertisers

And finally, TechCrunch reports that the Village Voice is planning a Local Ad Network.  This makes a lot of sense to me.  They already have a relationship with local advertisers – why not help these advertisers get exposed in other media?

Getting access to the local advertisers – often small and medium sized businesses – who can really benefit from such highly localized advertising will be the biggest challenge.  Or the biggest opportunity!