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Thanks to John Battelle for pointing to a PaidContent write-up of a WSJ story about the rising cost and scarcity of quality online inventory.

Here's a post from earlier this year about the inventory conundrum. For multiple reasons (inventory is a big one), even if all users abandoned traditional media, the advertisers couldn't shift all their spending online.

So what are the implications for local? Let's put aside Home Depot, Whole Foods and Target trying to reach me, the Northern California consumer, for the moment.

Small businesses aren€™t likely to be able to compete with larger brands and national advertisers for limited inventory (this is Did-it's Kevin Lee€™s point). But SMEs will compete through proxies such as online Yellow Pages, newspapers and verticals. These and other €œaggregators€ will find ways to buy traffic on behalf of these local businesses€"which don€™t want to deal with the complexities of search marketing anyway.

That's the "Local Search Ecosystem."

I spoke to StepUp's CEO Kendall Fargo this morning, who's got a deal with Google (Google Base) to do just that — deliver local product sellers to Google and deliver search traffic to those local retailers. Perfect marriage.

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