Google: $31 billion local dilemma

The local advertising opportunity is currently wide open.
Written by Donna Bogatin, Contributor

I heard Google make its case for Local at the Kelsey conference last month. In “Google: $31 billion local winner?” I analyze Google’s local positioning and underscore that “to date, Google has not succeeded in gaining critical mass among local merchants.”


Why not? Google claims to make “targeted, measurable advertising” affordable for the small business masses.


Google multi-billion dollar revenues are derived from a new media fangled, self-serve, Google-centric, automated advertising system. The millions of SMEs that Google covets, however, still will only do business the old-fashioned, labor-intensive, advertiser-centric way: in person, and on their terms.


The typical small business account is high-touch, but not high ticket. Local merchants expect Yellow Pages and local newspaper reps to march their “feet on the street” over to their front doors to solicit, and earn, their ad budgets. Local advertising accounts are not easily booked; Regular hand-holding and substantial negotiation are the norm.


Google’s hands-off, bid up your own ad rates, blind online auctions are not compatible with the traditional SME’s conservative, grounded mindset. Google’s high-profit margin AdWords business is not profitably scalable in a one-off, in-the-field, direct sales effort across millions of dispersed merchants.


The local advertising opportunity is currently wide open.


High-profile, venture capital backed, locally-focused, online start-ups that launched with much fanfare and support are in critical condition—Judy’s Book, Backfence, InsiderPages—, unable to gain sufficient traction within local communities or with local advertisers, and management ranks in disarray.


Google and Yahoo offer local mapping wizardry and the promise of local content and user-friendly tools, but are still used primarily as general search engines for online navigation.


Yelp is an up and coming, trendy, social networking style local review site, but has had to resort to paid local “fans” to bolster its traction (see “Diggers Digg cash? So do many other ‘users’”).


Google believes it has a rightful destiny to sell ads, efficiently, in every medium, in every sector, in every country…but SMEs are not easily swayed by Google’s grandiose vision.


ALSO: Google: $48 billion newspaper friend or foe?

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