Competition for Local Online Ad Dollars Heats Up

Marketers are likely to spend up to $16 billion in the local online ad market in 2011.  How they go about allocating that money is the subject of intense competition between vendors ranging from online sites published by local newspapers to big companies like Google, AOL and Yelp. Several recent articles in major publications have outlined  the ways that media space and search providers are angling for a piece of this business.

Industry giant Google has been moving into local market advertising in a big way. As last year closed, the company was offering small businesses who signed up before December 31 a $100 credit for $100 of Adwords spent by mid-​February. The company has also employed hundreds of reps to sell its local advertising search services. And for an additional $25 a month, businesses can make sure consumers see coupon or videos as part of the search results.

Sensing a category killer, other companies are moving quickly to position their own services. Specifically, AOL and Yelp are using technology from start-​up Yext to offer online ad services to local businesses who have not been happy with search. The new technology is a service called Tags. The fixed-​fee service will allow a marketer to customize messages it shows customers and include special offers and phone and address information as part of the search result. Partners, locally, will also include Citysearch, Yellowbook, SuperPages and more.

Analysts believe changes like this to the online search market may boost local ad market growth. Until now, writes Emily Steel for the Wall Street Journal, search advertising has been “a baffling business for newcomers” who struggle to understand which ad words to bid on.  It’s too soon to tell which service provider will rule the online ad market. Small businesses must weigh these options along with the investments they make in their own websites as well as in traditional advertising formats. But 2011 may be the year of change in the local online ad market.

[Source: Steel, Emily. Websites Ally Against Google to Sell Local-​Business Ads. Online​.wsj​.com. 29 Dec. 2010. Web. 14 Jan. 2011; Google Offers $100 Deal to Local Businesses as Competitors Dig In. Mediabuyerplanner​.com. 30 Dec. 2010. Web. 14 Jan. 2011] 
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.