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.