Most of the top ad-supported websites have the geotargeting capabilities, by one method or another. I could sit here and debate the merits of registration-based targeting over IP mapping until the cows come home (which I've actually done in more than one prior column), but that wouldn't make my point. My point is that there are bigger enemies of local online advertising than geotargeting methodology.
Personally, I think the lack of standardization of methodology hurts us more than the comparative accuracies of the various methods. I'm tired of explaining the differences in methodology from site to site to clients who couldn't care less and just want their ads delivered accurately with a minimum of spill. But until we standardize methodology, we're going to have to spend time giving the "Geotargeting 101" to every client that wants to know whether or not they can buy local Internet advertising.
I think that any website that wants to have a serious geotargeting offering to advertisers should standardize under declared user ZIP code as the preferred method. Sure, this means collecting a lot of data from users, but it's the right thing to do if we want to standardize. The folks selling IP databases can claim increasing accuracy all they want - IP mapping will never be as accurate as user-declared data. If we standardize targeting methodology, explaining local advertising online to technophobic clients becomes a lot simpler and we'll probably see more ad dollars as a result. The minimal spill is also a great selling point.
"If the capability is there, then why haven't we seen a tremendous increase in local online advertising?" you might ask. Take a look at who's advertising locally online. Plenty of large advertisers target ads regionally or locally. Telcos do it all the time to minimize spill outside their mandated geographic footprint. Auto manufacturers do it all the time, even to support local dealerships. All sorts of larger advertisers in a wide variety of categories advertise locally online. But what are we missing here?
We're missing a huge chunk of the market - the small businesses. Local advertising will really take off when we see, for instance, the independently-owned pizza shops in New York competing with Domino's for inventory within the ZIP codes they serve. But these small businesses don't have the benefit of the counsel of large advertising agencies. So how do we get them in the game?
Maybe we do this by taking a page from the paid search model. (This is where I agree with Cory and believe he's on to something.) Local search could be huge, but that's only a piece of it. What we truly need is a way for advertisers with small budgets to be able to test online advertising in a self-serve manner, in much the same way that they take advantage of paid search now. The paid search players have hundreds of thousands of customers, many of which launch their own paid search campaigns without geotargeting. If we could devise a way to make local online advertising self-serve, we could be onto something huge.
What percentage of ad impressions are wasted on a billboard in a major metropolitan area on people who are "just passing through?" What about on newspaper ads that spill into the suburbs when the advertiser is trying to reach only the urban portion of the circulation base? On spot radio that spills into neighboring DMAs? I disagree with Cory - put online up against traditional any day and if the ads are targeted in the right way, online can target locally better than most. Local online's problem lies in the complexity of the offering, not in the capability itself.