• by Mark Naples , November 4, 2004

My colleague Ross Fadner reported Thursday from the Kelsey conference at the Hyatt in Jersey City (home of a great view of Lower Manhattan) that while decision makers at almost two-thirds of small- and mid-sized enterprises (SMEs) believe the Internet is a significant advertising medium, a mere one out of seven local advertisers have made media buys in the last year in interactive.

How much of this media buy was spent in Search? Only five percent of SMEs bought local listings, and five percent made buys in interactive Yellow Pages (IYPs). What has kept local advertisers from buying online, especially in search? And when will this big migration of local ad dollars to online begin?

There were two hints to this answer in the news Thursday. One was in Ross's piece, and one is in another news item. Ross quoted Kelsey's Greg Sterling's assertion that the new package deals offered by Yellow Pages providers Dex Media and BellSouth -- which already have a large database of local advertisers through their print Yellow Pages deals -- hold promise because they offer a simplified way of marketing the Internet to small businesses. I'd add to that with the assertion that the same sales people who have already sold these local businesses their traditional directory listings are the best candidates to sell them their online listings - and yup - they'll be selling them in IYPs.

This is hardly complicated conceptually. But, I think it's far too easy for many in our industry to underestimate how complicated our business, buying online, and PPC models are to most SME owners. That is a large reason why sales people will trump self-serve interfaces as used by the major search engines, at least at first.

Here's the second hint - the news that SBC and BellSouth are creating a joint venture that is acquiring YellowPages.com. YellowPages.com will combine SmartPages.com and RealPages.com together into one massive national directory. The folks at Bell South have been very busy - probably because they agree with these assertions and see the breadth of the opportunity. Take a look at the strong numbers reported by the publicly traded IYPs of late. Now, some of these companies are conducting pay-per-call trials and soliciting inquiries from national retailers interested in seeing first hand what pay-per-call can do for them. With other IYPs having closer relationships with traditional directories and their sales forces, this is the path we'll see more companies - and more revenue - taking. IYPs should lead the way in local and in pay-per-call because of their relationships with local merchants.

Now, I'm not the only one who has claimed that local search is the next big thing for our industry. One of the barometers I use for such projections is how intuitive it is to the uninitiated. That is, while it's somewhat hard to explain why natural search optimization is important to someone who doesn't get our business; it's really easy to explain to someone why local search is going to be huge. Just ask them how many years it's been since they opened a phone book.

Some have claimed that the major search engines will put IYPs out of business. Some IYPs claim that they garner 20 percent of their new unique users month-on-month from their relationships with the major search engines. Combine that loyalty differential with the more streamlined path to local merchants, and it's pretty hard to dispute that IYPs hold the key in local search.