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Business

LOCAL WEB AD FIRMS GO DOOR-TO-DOOR

By
Holly Ware
Published July 9, 2007, 9:00 a.m. ET

As more people turn to the Web to find a restaurant, barber shop or plumber, Internet firms big and small are vying to attract the millions of local merchants that have yet to advertise online.

Google, Yahoo! and IAC’s Ask.com are targeting small businesses by bulking up their local search services, adding information and listings to woo eyeballs and advertisers.

The major portals face competition from a number of upstarts that have sprouted in the last 18 months – Smalltown, Mini-Cities and CitySquares, to name a few – and are building local sales forces in some cases.

These smaller players are drilling down into communities with so-called “hyper-local” destination sites that supply ZIP-code level news, business listings, blogging, social networking and citizen journalism.

Their goal is to corral the huge but fragmented market for local advertising, which is estimated at more than $100 billion annually. Many small businesses have never advertised online and don’t have Web sites.

“It’s an untapped opportunity with so many local ad dollars and no clear winner,” said Mike Boland, a senior analyst with the Kelsey Group.

All the online firms are going up against newspapers and traditional yellow pages directories that have huge sales forces and strong relationships with local merchants.

“Newspapers and yellow pages have succeeded at this for decades, but they have lots of heavy overhead,” said Hal Zucker, CEO of Smalltown, which has set up sites for San Francisco Bay Area communities such as Millbrae and San Mateo. “Our overhead is really, really low.”

Providing more depth on local businesses, such as tidbits about the best bar in a specific neighborhood, remains a challenge for the big portals and is where “hyper-local” sites believe they have the inside track.