Local Yokel, Revisited

Back to business. The NewsFactor Business Report, that is. And the problem of local search.
Here we get another perspective on the issue – the numbers.

In the TNS Media Intelligence study of category ad spend allocated to the Internet, it is computer products (18.6%), financial services (17%), diet and fitness (26.1%), and the Internet itself (51.2%) that have the highest percentage of their budgets for online advertising. But people, at least where I come from, do not spend their days buying gadgets, stocks, and diet books. They are working, playing, shopping, and eating.

Let’s talk eating. San Francisco is kind of an anomaly, but it’s my home and I’ll use it as an example if I want to. The state of the restaurant industry, despite taking some hard hits, I would deem “healthy to quite healthy.” And restaurants are a prime example of local business – particularly by neighborhood. The decision to eat at a particular restaurant is not as impulsive as that mini-bag of Skittles at the checkout counter of the grocery store, but certainly less in-depth than the purchase of a new car. Either way, it is still a consumer decision – a decision that, as we now know, can be made or broken by the quantity and quality of targeted advertising campaigns.

Yet only 0.9% of all restaurant advertising budgets go towards online ads, and only about 5% of small and medium-size businesses are using paid search (Kelsey Group). In this case, 2 plus 2 is not coming out to 4. In fact, it’s not even pushing 3. Local restaurants and bars are lagging behind in their online & paid search efforts, and they are not going to increase them unless they feel confident that they will see results from their local community.

Where are these going to come from? How about a 4-5% click-through rates – as opposed to the average at a lowly 0.5%? That’s what Ted Morgan of Skyhook Wireless, the company that is attempting to bring local search technology to the forefront, is shooting for. So far, they have mapped the 100 biggest U.S.
cities (70% of the country) and enabled marketers to locate the exact coordinates of any device with a Wi-Fi antenna, which means PCs and more importantly, cell phones. The location-based Internet search toolbar is called Loki and allows users to find services and product that are geographically relevant. This kind of technology makes me go Whoa, Keanu-style, and makes consumers go, “Hey, that’s right on my way home. I think I’ll check it out.”

What do you think? Is this the future knock, knock, knocking on our door?

Methinks, too, that once restaurants jump on board, retail food stores and department stores, which now also are on the low scale in terms of online ad spend, at 2.1 and 4.4% respectively, will not be far behind.