Google competing for local advertising dollars, but not the only player in town

Google appears to be heating up the competition for local advertising—one of the last bastions for traditional media players. Until recently, consumers looking for pizzas or dentists would get global results when they searched those terms online. But not anymore. Last year, Google made changes that identify a user’s location through a computer’s IP number, automatically generating local results. Local search is an important priority for the search giant. More than eight in 10 people use search engines to find local businesses, according to Google’s figures. Google would not provide figures on its Canadian advertising sales. Now local businesses are facing more competition for advertising. “Yellow Pages shot themselves in the foot in 2004, when they accepted money from Google and gave them access to all the information advertisers use,” Scott Wilson, CEO of RankHigher, a Burlington-based search engine optimizer (SEO) marketing company, said in an interview. Google made similar deals with Yellow Pages’ counterparts globally, and used that information to create its Local Business Center site to compete with local players for advertising dollars, Wilson said. “Now people can find their information online instead of looking it up in the Yellow Pages.” Google’s Local Business Center allows businesses to create a search listing for local customers and to “learn where your customers come from and what they search for to find you,” the site says. Google AdWords—the company’s pay-per-click, targeted advertising service—is taking a bite out of the revenues of newspapers and other publications, Wilson said. “With its geo-targeting, businesses pay about a $1 per click and get longevity, versus $1,000 for a newspaper ad that gets thrown out.” But Google is only one of many contenders for dominance in local marketing, said John Hinds, CEO of the Canadian Newspaper Association. He said the online advertising market is tough for everyone, and multiple players are jockeying for position. “Google is an aggressive competitor, but there are so many others. There’s Yahoo, Craiglist, and so on,” he said. “I’m not hearing from my members that Google is their main worry in the Canadian context.” But newspapers are evolving, moving their classified listings online to compete, he said. “Transcontinental has its own local site, and Torstar and the Globe and Mail have moved their classified sections online.” Despite Google’s power in the market, Hinds said he believes local providers still have a hometown advantage. “But,” he added, “whoever is first in the local market will be a big determinant of success.” Other industry observers disagreed. “I dispute the fact that Google is taking away marketing from local players,” said Paula Gignac, president of the Internet Advertising Bureau (IAB) Canada. Local publications may be suffering more from their own failure to transition online than from competition from Google. Although most local print publications are moving their content and advertising onto the web, they may not have the expertise to set up compelling online display ads with the right sales cues, she said. “They may not be taking this to the level they should, or looking at selling sponsorships, email lists and other types of advertising,” she said. There are all manner of online advertising tactics to help create consumer awareness, but search is low on the branding strategy scale, she said. “Search doesn’t have a lot of branding to it. But its advantage is it’s trackable, and it should be used to get people to take an action.” Although online display ads are best to create consumer awareness, many local players believe bare-bones search ads are enough. “Display plays a bigger role in driving people down the funnel than was thought before, and influences huge amounts of sales. More and more, people know that now,” Gignac said. Online media consumption is the only media category that’s been increasing year-over-year, she said. “It’s number one for the 18 to 34 age group, but television and radio are still the top two for the 55-plus group. So if you only do an advertising campaign online, you’re losing potential customers.” Traditional advertising in print, television and radio still commands the lion’s share of advertising dollars in Canada. According to IAB Canada’s 2009 figures, online advertising comprised 11 per cent of the $14 billion in advertising spent on all major media in Canada. Online media now occupies third spot, both in terms of both of time spent by consumers with media and marketing spend by advertisers. Search advertising comprised 38 per cent of the total online advertising dollars in Canada, and continues to lead in its share, followed by display at 31 per cent, and classifieds at 30 per cent.

Google competing for local advertising dollars, but not the only player in town

Broadcast | February 25, 2010

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