Monday, March 07, 2005

Study: IYPs at a Competitive Disadvantage in Local Search

ClickZ Internet Advertising News

Here's an interesting article about a recent Forrester report showing IYPs at a disadvantage to local search provided by the search engines.

In a nutshell, the problem is that IYP (Internet Yellow Pages) sites put out by publishers don't get anywhere near the traffic geenrated by the search engines.

On the other hand, the search engines don't have the YP publishers' capability of gathering relevant information on local businesses and selling them advertising.

So it comes down to this . . .

Should a YP publisher who has always made his money by selling into his own publications start acting like a local advertising agency and sell advertising that appears on multiple properties?

It's a bigger problem than you think because the YP publishers are valued on the predictable cash flow that is generated by the directories. Moving to a business model that has far worse margins, a much higher advertiser churn and a questionable asset base may not make great strategic sense.

On the other hand, there is no way that, or will ever generate traffic comparable to Yahoo or Google.

Ultimately, we'll see something in the middle, because advertising does not sell itself. There is simply no replacement for the huge army of sales reps calling on local businesses.

Also, no Internet property has proven that they can build a financially sustainable model employing a large diverse sales force selling only online advertising.

Ultimately, the advertiser wants qualified leads, and the publisher is in the best position to deliver those leads.

So what do you think?


Anonymous Jim Hobson said...

I believe that the two mediums, IYP and Organic Search, will co-exist for many years. The IYP medium serves a different consumer base than does a true Search Engine. Buyers tend to prefer IYP (local search) when they need to spend money/shop/travel locally and use Organic Searches for info gathering and ordering specialty products or services which may not be available locally (i.e., tulip bulbs from Holland). The Search Engines ranking systems make it difficult for most local, small business sites to be found thereby making Organic Searches for local info very frustrating.

It would seem inevitable that there will become some formalized partnering between major IYP and Search Engines whereas the cross-referencing would increase the utility value of both products. Theoretically it could build traffic and user loyalty by providing a single point for comprehensive searches.

The continued development of handheld wireless devices will boost the value of IYP through the demand from people needing immediate, local info. The technology concepts being developed for voice activated, interactive yellow pages through home television is further evidence that IYP is gaining strength and increasing its value to consumers. My money is on IYP.

9:36 PM  

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