Posts Tagged ‘Borrell Research Report’

18
Jun 09
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Borrell Research Prompting Transparency And Innovation In Local Search Advertising

By David S. Kidder

We believe that with more transparency, better technology, and properly managed customer expectations, the local search advertising industry can scale and profit more rapidly. The endgame is observable advertising performance that drives satisfaction among local businesses.

As we developed Clickable Platform, our local advertising technology, we became intimate with market friction hindering the growth of local search advertising. To better understand the challenges and opportunities, we commissioned Borrell Associates, a research and consulting firm that tracks local ad spending, to study the economics. We released this seminal report last week. (You can download the full report here.)

Borrell conducted their research independently to drive objectivity and transparency, and explore new areas beyond our own core technology focus. They delivered with an important insight: high customer dissatisfaction is driving high customer attrition.

Importantly, Borrell reported that Clickable addresses half the problem at this phase of market maturation with scalable technology that delivers meaningful ROI. The other half of the solution: local advertising resellers must properly manage customer expectations around the purpose and value of search advertising. The two must work in concert.

We since have received encouraging feedback, and prompted constructive debate. Thanks to all who’ve responded publicly or privately. Below are additional perspectives since the research has circulated widely.

  • Guiding Next Phase Of Local Online Advertising: Our intent was to strengthen the performance of search advertising for local businesses. After collecting feedback from our partners and other insiders across the local advertising industry, we believe the research prompted an overdue industry-wide discussion of online advertising economics. The research has already been downloaded thousands of times, shared many more times, and received coverage in some of the most important news outlets and analyst blogs. It is helping to redirect the course of the next phase of local online advertising.
  • An Accurate Barometer: The overwhelming reaction was that the research was an accurate barometer of the marketplace, validating disparate, internal accounts. It provided local-advertising executives with critical perspective on the challenges and opportunities of creating and growing more profitable local online advertising service businesses. In fact, the report already has become an important internal strategic marketing tool, according to dozens of feedback messages from executives at major local media companies.
  • Some Confusion: Because of the sensitive nature of customer attrition for reseller businesses, Borrell interviewed a wide range of company representatives and kept their identities and companies confidential. This was an effective and valid method to obtain data that are otherwise difficult to surface. With high annual churn rates revealed, we weren’t surprised to see some resellers quietly acknowledge them, while others challenged them. In nearly every challenge, we surfaced a misunderstanding between average monthly churn rates and annual churn rates. Specifically, Borrell’s research examined annual churn rates — that is, the number of customers in a year who will remain customers the following year. Most industry insiders immediately acknowledged that Borrell’s numbers were norm, and not far from their own.

As always, we welcome your feedback and added commentary.

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7
Jun 09
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Local Search Advertising Market Will Be Led By Companies That Invest In Scalable Technology And More Efficient Business Models (Report)

By David S. Kidder

When we started Clickable, we decided to only create products or features that deliver measurable ROI, either by driving profit or by saving time. With this disciplined approach, we effectively ‘built the business backwards’ – by strictly listening to the customer, and watching the data. As a result, we recently entered the local advertising market with Clickable Platform. Platform is the first white-label solution that allows online advertising resellers to rapidly scale online advertising and lead-generation programs profitably to a full continuum of local businesses.

As we developed Platform over the past year, we became intimate with market forces that are hindering the growth and long-term sustainability of the local search advertising industry. To better understand the challenges and shed light on the opportunities, we’re thrilled to release today a new research report authored by Borrell Associates, a research and consulting firm that tracks local ad spending. We commissioned this analysis of the economics of local online advertising to help strengthen the performance of search advertising for small and local businesses.

We’d love your feedback on this research, which you can download for free. We present many conclusions and insights, and we’re extremely interested in your frontline feedback to incorporate into the products we build for our own customers and partners.

Key findings from the Borrell Associates report:

  • Local Search Advertising Is A Massive Opportunity: Locally placed search advertising in the U.S. is projected to grow 30 percent over the next five years, from $4.1 billion in 2008 to $5.3 billion in 2013.
  • Winners Will Adopt Scalable Technology And Recalibrate Their Economics: This growth will be led primarily by advertising service providers that adopt scalable technology infrastructure and recalibrate their economics to allocate more customer investment to search media spend.
  • Customer Churn Is A Major Challenge: Many online advertising resellers and affiliates, who service local businesses, churn half their customers within a year’s time, and some lose as many as 90 percent. This often is due to missed expectations and a lack of return on investment for local-business customers.
  • Success Requires ROI, Easily Understood: Critical points for local advertising success include correctly pricing advertising products for local businesses, and devoting a greater percent of their investment to advertising on their behalf. Most important, advertising products and value must be easily understood by local businesses. That requires a shift from selling Web site clicks to selling measurable leads and phone calls.
  • Tools, Simple Reporting and ROI Central: Affiliates and resellers of search advertising who do not invest in sophisticated technologies will continue to see high levels of customer attrition. In response, new affiliates and resellers who optimize and scale SEM advertising performance through simple software tools and reporting – that clearly communicate and deliver value – will be poised to capture a larger share of the local advertising marketplace.
  • Managing Customer Expectations, Retention & Up-Selling Key To Growth: The most successful local search advertising service companies will not only manage expectations through simple reporting and greater ROI, but by migrating customers to higher average monthly media spends.

Again, the report is downloadable for free, and we’d love to hear your feedback in the comments section below. And if you’re interested in learning more about our Platform and partner program, you can contact us here.

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