Krasilovsky Local Super Forum

Peter Krasilovsky VP and Program Director, BIA/Kelsey

BOLO 2011

Interactive Local Media: The New Wave

2© 2011 BIA/Kelsey

About Us: Navigating The Local Ecosystem

Search Engines

Broadcasters

Re-sellers

Technology Providers

Yellow Page Companies

Verticals and Newspapers

VCs, PEGs

3© 2011 BIA/Kelsey

Our BIA/Kelsey Word Cloud

4© 2011 BIA/Kelsey

Come to ILM West San Francisco December 12-14

Bob Pittman, CEO, Clear Channel

Also:Kara Swisher, AllThingsDZorik Gordon, ReachLocalTodd Rowe, GoogleJohn Paton, Digital First

5© 2011 BIA/Kelsey

Today’s Local SuperForum Agenda

1. Sizing The Local Market and Hot Trends (Krasilovsky)

2. Local Opportunities in Media (Triplett, AZ Republic)

3. The Local Search Opportunity (Yeich, Relevant Ads)

4. Local opportunities in Rich Media (Simon, Local.com)

6© 2011 BIA/Kelsey

Local = $132 Billion: Local/Local vs. National/Local

• Local/Local SMBs make up 38% ($50.5 Billion) • National/Local make up 62% ($82.5 Billion)

38%

62%

7© 2011 BIA/Kelsey

Interactive is Minority of Today’sLocal Spending

Newspapers18.9%

Direct Mail28.7%

TV13.9%

Radio10.8%

Yellow Pages8.3%

OOH4.9%

Cable4.1%

Magazine2.4%

Online / Interactive 6.9%

ERPM*0.8%

Mobile0.3%

2010 U.S. Local Media Revenues — $133.2 Billion

Digital revenues associated with traditional media (e.g., Web sites associated with local TV stations, local radio stations, newspapers and magazines) are included in the revenues for the traditional media. Revenues for Internet Yellow Pages that are associated with print Yellow Pages are included in the overall Yellow Pages media category.

*ERPM = E-Mail, Reputation and Presence Management

8© 2011 BIA/Kelsey

US: 2010 Interactive Ad Market $29.8 B

Search; $12.90

Display; $8.80

Classifieds & Ver-ticals; $4.90

ERPM, $0.46

Lead Gen.; $2.20

Local Video; $0.03

Mobile Display; $0.02

Mobile Search; $0.04 SMS & Other; $0.10

Source: Proprietary research by The Kelsey Group, mid-2007. Sample: 1,200 SMB advertisers in 4 major US MSAs).Methodology: Telephone survey. Cosponsor: ConStat.

Search has gotten local advertisers

online

9© 2011 BIA/Kelsey

US: 2013 Interactive Ad Market $58.57B(CAGR 15%)

Search; $26.70

Display; $12.60

Classifieds & Verticals, $4.94

ERPM, $3.1

Lead Gen.; $6.30

Local Video; $1.80

Mobile Display; $0.57

Mobile Search; $2.27 SMS & Other; $0.27

Display will grow at a

slower rate; major revenue

growth will come from targeted

“directional media” and

mobile.

10© 2011 BIA/Kelsey

Bracket Very Low Low Medium High

Range of Annual Spend $0 - $1,500 $1,500 -

$5,000$5,000 - $19,000 $19,000+

Av. Annual Spend on Adv.(Monthly Spend)

$410 ($34)

$2,516($210)

$8,436($703)

$25,564($2,130)

Percent of SMBs (by count) 61% 16% 17% 5%

Percent of Total Ad Spend 7% 12% 42% 39%

*Base: LCM respondents that have a “web site or homepage”.

Source: BIA/Kelsey estimates based on LCM data, Estimates are sensitive to assumptions.

Local Local Spending: The Big Guys Spend Disproportionally More


Auto Dealer Marketing Spend: Online

Onli

ne C

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Email

Mkt

gSEO

Display

/Ban

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Onli

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ay P

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ead

Keywor

ds IYP

Oth

er0%

10%20%30%40%50%60%

Spend

Spend


Use of Media Has Exploded for Both SMBs and Consumers

The ratio of media used by Consumers is 2x what SMBs buy.

SMBs

Consumers

*Number of different media used by consumers when shopping for local products or services.

Note: Each survey wave typically identifies a larger number of media to choose from, so there is some “longer menu” effect captured in this data.

Sources: BIA/Kelsey surveys.


Local Use of Social Media Is Widespread

Twitter

Blog

Other Social Network

E-Mail

Facebook

0% 10% 20% 30% 40% 50% 60%

19%

22%

25%

43%

48%

Local business SMB usage of various “social media” is already intense. In our research, nearly half reported using Facebook for advertising or promotion. 40% said they have a Facebook page specifically for their business.

Use of Social Media

Sources: Local Commerce Monitor – Wave 14 (BIA/Kelsey and Constat)


New Businesses are Younger; Use More Social Media

0-3 Years 4-6 Years 7-10 Years

11+ Years0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

17%22%

28%

37%

32% 32%

18%

7%

Print YP

Twitter

Print YP: Overall 29%

Use of Print Yellow Pages vs. Twitter(by Age of Business) Wave 14 (Q4 2010)

Twitter: Overall 19%

Twitter versus YP usage tells a story about embrace of social media. While Yellow Pages usage stays at 29%, Twitter use has grown 2X to 19%. Usage levels by SMB age suggests further growth by Twitter and erosion of PYP in most age brackets.

Sources: BIA/Kelsey surveys


The Move Away from Horizontal Media

• Inevitably, there is a move away from Horizontal media (newspapers, Yellow Pages) to specific Vertical media focusing on one segment or theme.

• Verticalization is a smart move as horizontal media begins to decline.

• Verticals provide different entry points for consumers, and boast synergies among related categories (i.e. dining, events)

• The promise of vertical media is:– Focused content– Higher value search– Better leads – Better conversion rates


Verticals: High CPM Rates

•CPM rates for verticals are highly attractive. They range from $5 to $60 depending on the vertical. As a general rule, rates are higher when they are more specifically tailored towards high value customers.

•Sources: Adify, Centro

Vertical Category

Typical CPM

Tech $10-22

Moms $15

Travel $8-9

Local $7-9

Sports $3-4


Vertical Features for Different Generations

LEGAL SHOPPERS• Gen Y – Divorce,

custody, family law• Gen X – Wills & Estates• Boomers – Most diverse

legal needs

AUTOMOTIVE SHOPPERS• Gen Y – 2x more likely to go

online to buy/sell a car• Gen X – 2-4x more likely to

have used Craigslist.com• Boomers – 2-3x more likely

to have contacted in person

INSURANCE SHOPPERS• Gen Y – 2-4x more likely

to be researching employer insurance

• Gen X – Least likely to want to talk live

• Boomers – Quote aggregators

RESTAURANT SHOPPERS• Gen Y – Chain Restaurants /

Take-out - Delivery• Gen X – Independents

*AT&T – Compete Vertical Shoppers Study. See slide 5 for limitations. As previously noted, not subject to 3rd party review.


Verticals Increase The Size of The Funnel at The Initial Search Level (Awareness)

Purchase

Vertical Lead

Web Search


Vertical Users: Greater Tolerance for Advertising When It Is Relevant

• Vertical sites have a major advantage over other publishers:

“Consumers love our advertising.”

Mitch Golub, President, Cars.com


Increased Vertical Spending is Projected

4%

11%

0%

20%

Wave X Wave XI

Spend More on Verticals? (Print or Online)

Source: BIA/Kelsey LCM survey.

Verticals, (“Specialized Directories”) offer more targeted opportunities and often reach new more affluent target audiences


Classifieds on WalMart? Deals from AARP?

• The new marketplace platforms have extended the reach of items and services to be sold.

• Walmart, MasterCard and AARP are among the non-media brands that are now posting classifieds and offering deals.


Group Buying: THIS is ECommerce

• More than 95 percent of $2.5 billion space is oriented toward local.

• Daily deal publishers earn ecommerce revenues with a no money down model.

• Deals represent an alternative to a non-intuitive, search-centric approach.

• Deal participants can see higher impressions than traditional media. They can be upsold with product add-ons.


The Disruptive Potential of Deals

• The ability to effectively target consumers based on transaction and search is creating an inevitable clash between:– Destination deal sites (Groupon and Living Social) – Search giants (Google); – Sales leaders (AT&T) – Financial Institutions (MasterCard, Visa, Amex).


Chicago’s Most Subscribed Media

• The size of Groupon’s base in each market generally follows population size. The exception of Chicago, its headquarters. Although Chicago is the #3 market by population, it is Groupon’s largest market.

• Groupon’s email subscriber count in Chicago is much larger than both major Chicago papers together.

Weekday Circulation Subscribers

Groupon 1,505,000

Chicago Tribune 441,508

Chicago Sun-Times 251,108


Advertising + ECommerce

“They get huge exposure exclusively about their business….300,000 emails (in Chicago)….. It is better than Thrillist and Daily Candy, which have CPMs of $250. That would be about $75,000. But with us, it’s all free.”

Andrew Mason, CEO, Groupon


BIA/Kelsey Forecast: Deals U.S. Gross Revenues (Sept. 2011)

2010 2011 2012 2013 2014 20150

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

$873

$1,970

$2,455

$2,987

$3,564

$4,171

US

$ M

illio

ns

+36.7% CAGR

Source: BIA/Kelsey (2011)


The New Retail Constellation: Cracking The Code on Impulse Buying

Retail

Rating and Reviews

Video

Inventory

Offers

Deals

Sharing


Mobile Ad Spend: Local vs. National

2009 2010 2011 2012 2013 2014$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$279 $386 $493 $607 $733$922

$213

$404$692

$985

$1,402

$2,025

Non-Location Targeted Location Targeted

US

$ M

illio

ns

Note: Numbers are rounded.


Intent on Local

• “Local search on the mobile device indexes higher than the desktop by about 2 to 3 times,”

-- Diana Pouliot, Mobile Ad Sales Director for Google


Mobile Local Advertising: Evolving Towards Local (Eventually)

• Majority of the roughly $800 million U.S. mobile ad spend is brand advertisers and agencies.

• Market evolutions: move toward local– Better geotargeting for national brands (national – local)– More adoption by SMBs (local – local)


Use of Mobile Advertising By SMBs

Usage levels of mobile advertising (all formats) by SMBs remains very low – still in the single digits.

SMB Use of Mobile Advertising

Source: Local Commerce Monitor Wave 14. November 2010.


Local Mobile: Not Just Advertising


Thank You

Questions and Comments

Peter Krasilovsky

[email protected]

Personal Blog: www.localonliner.com

Company Blog: www.blog.biakelsey.com

mailto:[email protected]

http://www.localonliner.com/

http://www.blog.biakelsey.com/

Krasilovsky Local Super Forum

Business

interactive local media

local use of social

traditional media

local local spending

media triplett

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ratio of media

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