I just got out of a meeting with someone I met at a local new media/tech meet up a couple weeks back. I had mentioned at the dinner with him that one of the (several) projects I was working on was based around the idea of local advertising and he was working on a similar site.
It reminded me that it’s always good to talk to people about the market and particular ideas as it helps to say out loud potential pitfalls and potential opportunities. Everyone is tripping over themselves to talk about how big local advertising is going to grow, but there are still a number of problems to get around before it’ll truly be big.
He and I were taking fairly different approachs to our projects, and I’m not sure either solution is necessarily better. My project is focused on providing a service as the primary function - with content that’s fairly simple to gather and produce. The advantage here is that I can more easily expand to additional regions without having to get people on the ground producing original content for me. The downside is that without any particular content I lack a defensible position. The service is easily reproduced (and indeed exists in some areas already). While I have a much greater focus on how to allow accessibility for small-time local advertisers, building and defending my user base will be extremely difficult.
His approach is obviously focused on creating unique content centered around the particular geographic area (primarily at the city level). This creates a great edge if the content is quality. People can only get that specific content in one spot, and he creates a strong means to defend his brand and property as long as the content quality remains high. The downside being that expanding to additional markets becomes more difficult. By requiring a high level of quality in content, he needs to find quality people in each new location. This is assuming, of course, that one market is not ultimately enough to support significant growth. I think you’ll find as you begin to build a brand respected in a local market, growth will come pretty strong for a while, especially as more and more people begin to be comfortable enough with exploring online advertising as such a small scale level. But my concern is that even in a large metro the market tops out too soon to keep most people happy, and the real value is in actually being a national level operation but with content and properties existing at the hyper-local level.
Aside from the general strategy, we also discussed how to best go about building the advertising. Part of the reason for the meeting was for me to share some knowledge of how the online advertising industry works. Ultimately, in regards to the very focused local advertising, I don’t think the overall principles change. I think the winning approach for either of our strategies is by providing two tiers of access. On the one side, you will still need to maintain the traditional sales account exec that goes out to bring in substantial advertisers personally. But you don’t want to that sales person to waste their time chasing $300/month deals constantly, so I think key will providing a very simple self-service system. You want to create something so simple that the local Mom and Pop store owner can come on, easily create a banner ad, and easily choose who it targets and how much it runs.
But the biggest potential I think in really pulling these small businesses into a local platform to advertise is by providing as much transparency and reporting as possible to show just how well they reached specific users. Online is a weird method of advertising to a lot of these local business who are used to at most putting a small ad in the local newspaper. So you need to show them as in depth as you can that they reached people actively interested in their business and that these people responded in some way to the message.
All in all, it was an interesting conversation and left me with a lot to think about towards this problem/opportunity.
