Think local – act local

The recent rise in daily deals Websites (like Groupon) and the rise of mobile applications has proved to small businesses that an online presence does drive in-store traffic.

I’m not really sure why this seems revolutionary, people in our industry have been claiming that for years.  I think it’s because there is so much more money in national clients that we, as an agency, simply don’t bother going after the little guys.  That might be a mistake.  Just a few years ago, small businesses spent $96bn on local advertising – only 4% of that was for online advertising.  The rest went to TV, radio and print, despite the fact that 50% of media consumption was done online, according to a 2009 report from Forrester Research.  Now analysts estimate the local online ads market could be worth more than $35bn by 2014, according to the Kelsey Group.

As an agency, tapping into this opportunity isn’t going to be easy.  The first challenge is educating small businesses that the opportunity exists.  “Local merchants don’t come to you, you have to go get them,” says Zorik Gordon, chief executive at ReachLocal, a group that helps small businesses navigate and manage the web of online advertising options.  Educating small businesses is challenging because of the amount of resources that we would have to allocate.  On paper, it doesn’t make much sense to pay a top sales person $100 an hour to go door to door in small towns to sell $200 in advertising.  However, if you can come up with a community action plan – essentially getting the small businesses to come to you – it may make sense.  Of course, that leads right into the second problem, which is educating small businesses that the opportunity exists – but in a way that makes them think they can’t quite do it themselves.

It’s tough to pull that off when the big guys are working hard to make it easier for small businesses to do it themselves.  “We are and will start experimenting with reaching out to smaller businesses,” says Emily White, Facebook’s director of local strategy.  She says the company will make it easier to buy ads, create business profiles and develop new functions that blend social connections with local commerce.  Google has made significant advances in the local ad market with new tools such as Boost, launched in January, which simplifies the ad-buying process and Tags, launched last summer, which allows businesses to attach a short message, link, or coupon to their Google Maps listing.  The company is also using its new consumer review feature, Hotspot, to court small, local business.

Starting in Portland in December and then Austin this month, Google is delivering marketing kits to local businesses, including “Recommended on Google” stickers for shop windows.  The stickers include an NFC  (near field communication) chip that allows data to be swapped between devices via short-range wireless technology, or a 2D barcode that shoppers can scan with their smartphone for immediate access to the business’s Hotspot reviews.  The hope, says Carter Maslan, Google’s director of local search, is that the effort will not only improve local search results for users, but will also demonstrate the value of Google search metrics so small businesses will eventually sign up for Places, Boost, Tags and the AdWords service, where they pay for their information to appear in search results.

Others are also getting into the act.  In January, Yelp introduced the ability to make restaurant reservations directly through its mobile app.  Google’s Android system can generate local results to product searches that match the GPS location of the phone.  Last December, Ebay acquired local shopping engine Milo and its collection of inventory data from local merchants without an online presence, and combined that with Red Laser, a smartphone app Ebay bought last year that allows users to scan bar codes to bring up prices for the same product at nearby retailers.

NFC chips in mobile phones are expected to play a growing role in local payments and loyalty deals.  As the battle over local marketing intensifies, companies will continue to develop new tools that highlight their products.

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