Local media face growing threat from ìlocal searchî competitors

Newspapers face long-term damage to their business from online local-search products, far greater than the damage done to classified advertising revenue by competitors like Monster.com and HotJobs.com, a new study, ìThe Geo-Google Threat: Search Engines Target Local Advertising,î reported today.

The study, by The Neil Budde Group and the Advanced Interactive Media Group, reports some newspapers may be forced to drop from daily to less frequent publication and that print margins are likely to erode as advertising migrates online and advertisers choose pay-for-performance and self-service ads. In addition, it states, yellow pages may become more immediate competitors to newspapers, noting that two yellow-page publishers have purchased large classified-advertising publications for integration into online services.

ìFor local publishers, which are already fighting the ënew monstersí eating away at classified advertising, this may be a far greater challenge than the first Internet wave,î said Neil F. Budde, one of the reportís authors. ìWell-funded competitors like Yahoo and Google are only starting to target the local market, so local media still have time to respond.î

The 59-page report, with data compiled by eMarketer, reviews the threat from yellow pages, international dot-coms like Google and Yahooís Overture, and direct, targeted ad placement online by local advertisers like car-care shops, plumbers and restaurants. It offers a four-page ìaction planî for newspapers and other local media to meet the competitive challenge and grow their market share of ad spending.

ìThe ability to directly target advertising at consumers, and to determine exactly what the response to those ads has been, gives local advertisers more power than ever before to focus their spending where it works,î said Peter M. Zollman, the reportís other lead author. ìFew local publishers have realized yet how this will endanger their business, and even fewer have responded with effective local search tools for their advertisers.î

The report is available for $895 through www.aimgroup.com or www.neilbudde.com, where free previews are offered. It is a collaborative effort by two leading consulting firms with extensive experience helping media, dot-coms and other organizations develop successful interactive-media services.