Research firm Kelsey Group is blowing the whistle on the
local-search market, saying that it will hit $13 billion in 2010. Two years ago
it was at a mere $3.4 billion – or a glint in the marketer’s eye, you might
say.

So it goes in this Ad Age article
which explores the multiple possibilities surrounding local search. Admitting
that the actual implementation of the system is “beguilingly difficult,”
Fredrick Marckini, founder of search-engine-optimization firm iProspect,
reveals that creating an efficient local search campaign is going to be a
serious challenge. “It looks simple, but it turns out to be really
complicated.”

Yes, yes.

Rome wasn’t built in a day. Well, the big search guys are already up on it. They
(Google, Yahoo, MSC, and Ask.com) been working on geographical targeting,
limiting search by city or metro area, but haven’t yet zeroed in on users who
are within say, a quarter-mile of the merchant. They’re also dealing with lack
of information. Listings, hours, driving directions, etc. are easily obtained
from big retailers, but smaller businesses are tricky little guys who elude
their crawlers. Also, in terms of user-generated content and reviews,
categories outside of the usual restaurant, bar, and boutique reviews are few
and far between.

Back to Rome.  I’d like to take a minute to suggest a thesis topic for some struggling
American sociology student who has not found their truly amazing and “original”
idea. Chew on this: the need for automated local search system is an
intrinsically American problem. Many other countries are composed of such
highly localized communities with in-depth knowledge of their own history,
residents, traditions, and economy, that the concept of local search might not
even exist. Looking for the best place to buy organically grown kale? Eh, my
boy Giuseppe’s wife’s cousin has a farm, che bello, and his stand is next to
the tabacchi off of what used to be Via
Castiglia but the sign got knocked over, but just turn right at the bike shop, which
by the way, just got in some comfortable seats that your parts will thank you
for tomorrow. I can’t even begin to tell you how many “local searches” I made
in Asia, too, began with “Well…” and ended with a
serendipitous surprise.

Wow, I just got really distracted by the organic kale and subsequent journey it took me on. But really, to make a point, that is the point. We fear distraction. No, I take that back. The sheer volume of forwarded "distractions" like this one is proof enough. No, we fear uncontrollable distraction (but not as much as we fear uncontrollable irregularity, of course). American culture is inherently selfish in nature – we want what we want, and how we want it – and it is also extremely efficient, perhaps because of that. Local search is, in fact, going to blow up, not only because we are creatures of habit, creatures of personal taste, but because we are also creatures of convenience.

Good timing, Jason Lee Miller. In his March 7 article on Web Pro
News called “Know Thy Market: Beyond the Click-through,” he states that search
marketers tend to focus more on the click-through than their relationship with
their customer:

Think of it this way: in the cartoons of old, two characters
are stranded on a small desert island. It doesn’t take long until one sees the
other as a pork chop, and the pork chop doesn’t appreciate it one bit. If
customers become dollar signs in your hungry approach to them, they’ll sense
it, and avoid you the best they can. It’s important to eat, everyone knows, and
click-throughs and bottom lines are what make the whole endeavor worth it. But
there’s an art to seduction, and if achieved, loyalty results – closing one
sale one time has little bearing on long-term success. Success, ultimately,
takes closing many sales many times over.

Branding. Presence. Target markets. Starting to sound
familiar? Being in the right place at the right time, and, as Martin says, over
and over and over again. Search is overrated: “People don’t just go to Google
and type in a word they’ve never heard of.” How did they get to that point? A
social bookmark? Viral video? A blog? Finding those factors – and quantifying
them – is how things are going to work from now on.

Martin Wesley talks impressions, reach, frequency, and branding. Oh, and episodes of 24.

Do you remember when Internet radio was just in its infancy?
Sure, it was some time ago, but we clicked our way through to channels like Live365 and reveled in the fact that we
could choose to listen to LiquidSoulElements, Rockland USA, or Streaming
Rodgers & Hammerstein Soundtracks – not that you’d ever admit to it.

And they’ve been making some cash money. Revenue from online
streaming music radio is at $500 million, a sharp rise from $49 million in
2003. This makes sense, as volume has increased to 57 million weekly listeners,
with online radio in a more popular position than satellite radio,
high-definition radio, podcasts, and cell-phone-based radio combined.

But now, thanks to the new ruling
from the Copyright Royalty Board on March
2^nd to raise royalty rates from $.08 per song per user to $.19 by
2010, the growing trend may be cut short. Or, as groups like Save Net Radio or SavetheStreams.org
which offer a petition, signed by
more than 10,000 so far, to get Congress to re-evaluate the CRB decision.

 The decision will:

hurt working artists, damage small record labels,
and force law-abiding small webcasters, already paying a large portion of their
revenue per month in royalties, out of business. This decision will also damage
hundreds of small businesses providing goods and services to working artists,
small record labels and small webcasters.

This seems rather extreme, but considering that the rates
are retroactive – meaning the first increase actually takes effect on all 2006
revenue, and that even at that rate, sites would have to pay "about 1.28 cents" per listener per hour, according to
the Radio and Internet Newsletter’s (RAIN) calculation.

Here’s
something to twist your tongue on: If Piper Jaffray pegs the price of publicity
and promotional expenditure to be $81.1 billion by 2011, how many pecks of paraguayan pesos did Piper Jaffray pick?

ClickZ gives a
summary of the results of the research firm’s report on the expected growth
rate of the industry in the next five years. The general feeling is positive –
as we knew it would be – but the numbers are starting to make us dizzy. Two
months ago, the official Piper Jaffray & Co. “Internet ad revenue forecast”
was at a mere $78 billion. Why the change?

According to Dave Morgan of
Mediapost’s Online Spin, there were several factors for the upturn. There were the
usual suspects, like video, search, social media, and mobile (though technically
mobile marketing was not included in online).
One important one for small advertisers is the explosion of niche content and
the related segmentation of audiences. But the “large and in charge” are still
going to be responsible for the majority of online ad spending. Exactly how
much, we can’t be sure: “$60 billion in four years? $80 billion in five years?
No matter what numbers you believe, even if they are significantly less than
these two, we’re in for a wild ride.”

The
user-generated trend of course did not go unnoticed by the experts. “Usites,” I
think was the term. Very cute. Another adorable term coined by PJ&Co.: “communitainment,”
which means transaction-based communication mixed with online entertainment and
communal activity.

So,
the future is in the hands of the consumer. As more and more of them “take the
reins when it comes to controlling their media diets, and spend more time
online and creating their own content,” it leads to the inevitable –
advertisers boosting their budgets.  Now
the question is: if they boldly boost their budgets, will the bubble bleed and
burst?

In Part III of the series, Martin Wesley speaks about the growth of the company.

It all started with Homer Simpson – you know, as so many
stories do.

Business Week was
talking about how News Corp was going to start allowing MySpace users to
embed Fox video and TV shows, like the Simpsons, on their home pages. It would be a way
to vastly increase content distribution and ultimately generate more revenue for the
already booming Fox Interactive Media, the digital division of the company,
which is expected to earn $500 million this year.

Peter Levinsohn, the division president, said that
the talks were aimed at creating the "most robust video offering on the
web." Hmm. Sounds like they’re declaring a duel with YouTube.

But at 40 billion page views, MySpace is certainly in a
position to be the one to present the challenge. And in terms of earnings, as Mediapost’s Wendy Davis notes, Merrill
Lynch has said, in so many words, that MySpace is going to be the cash cow for
News Corp.

In addition to selling online video ads, MySpace can
significantly increase its revenue simply by selling more inventory itself.
Last year, the company only sold about 10% of its inventory directly, through
its own ad sales force. About 40% of the site’s inventory was sold as remnant,
while around 50% went unsold.

Too much space on MySpace?
I don’t know, the last time I looked, it seemed a little crowded to me.

Why would that be? Oh yeah.
The ads. Maybe it’s just my own anti-MySpace biases shining through, but I find
TheirSpace extremely disorganized and intrusive. As CNN predicted
exactly one year ago, “MySpace runs the risk of alienating users if advertising
becomes prevalent.” Now we have a whole new issue: what’s going to happen when the
videos start rolling out of control?

Not too long ago, that kind of comment might be a catalyst
for verbal abuse. How can you not like MySpace? But I feel like I can get away
with saying this, though, because there are so many others out there, so you
can say you “prefer” another. How gentile. The obvious alternative would be
Facebook, but oh, wait, they’re buddying
up with video, too, the other way around. ComCast has agreed to show the best
of the user-generated videos submitted for the “Facebook Diaries.” Mama mia.

Brad Stone in the NYT article “Social
Networking’s Next Phase” had a different take entirely. Forget those two,
he said, “social networks are sprouting on the Internet these days like wild
mushrooms.” What kind of mushrooms? There is even a start-up, Ning, that came out of the soup (for the third
time) to offer the service of “Start Your Own Social Network! About Anything!”

Let’s have a contest, I say. Who can start the most bizarre, freakish social network, that is so niche that only one person can possibly join? First prize is a Shetland pony; second a lifetime supply of Simpsons episodes, delivered to you from the Digital Axle MySpace page. Yes, we have one. Want to be our friend?

These days, you can get anything custom-made. Want a nice suit? Your Italian (um, or Chinese) tailor will measure you up -and down- and make you the handsomest man in the office. Pretty much anything, from cars to homes to the sandwich bar at the cafeteria, can be customized to make you feel special and unique.

What about data architecture? It may not be first on your list. But Martin Wesley, in Part II of our interview, reveals the secrets behind Blackfoot’s customized user interface, built to spec for the client to integrate extra data sources.

Now that is something that makes me feel all warm and fuzzy inside.

Emily Tan of Ad Age this week had a little chat
with some digital media bigshots about the biggest trends or challenge in the
industry in 2007. The one thing that everyone seemed to agree with was how to
use online
video as a marketing and advertising platform. Thank you, Captain Obvious.

We liked Tribal DDB Worldwide CEO Matt Freeman’s
response:

The most important challenge in digital media for 2007 is that the industry is
diversifying faster than it is growing. The exploding diversity of digital
media channels, platforms, properties, behaviors and requirements — expounded
by the geographical expansion and idiosyncrasies — has widened the gap between
what marketers can afford to embrace and what consumers are consuming.

If you go to the party with the goal of gathering a diverse
set of contacts, not only do you end up with a stack of useless business cards,
but you end up looking like an idiot. Spread yourself too thin in order to
incorporate all of the new channels, you risk losing your depth and
credibility.

To this we say: Billy, don’t
be a hero.

So how do you solve this Catch-22?

Freeman says, “With finite budgets and infinite media choices, the challenge
for marketers is to become attractive rather than merely present, to not just
buy media but to also earn it.”

Damn straight! Go to the fiesta decked out in your finest gear. Be a sparkling
presence and earn the attention you get. You’ll be a winner in the end.

Spiraling into the never-ending circles of "Excel Hell"? Martin Wesley, CEO of Blackfoot, Inc., explains that it doesn’t have to be this way.