Today we debuted a new polling feature on our Local Media Blog in an effort to provide another interactive way for our blog readers to comment on issues in the local media space. Our first poll asks about your take on SMB videos in 2008.  

The new poll feature ties with the launch of our Chief Executive Outlook brief. Each month The Kelsey Group’s CEO, Neal Polachek, will present a topic and provide TKG’s point of view on it along with relevant data and a related poll question. We hope to generate dialogue with and among you — the members of The Kelsey Group community – on the subjects that are most important to the global local media business. Subscribe to the Chief Executive Outlook and you’ll receive an e-mail notification the last week of each month that a new issue is available. 

With regards to the poll on the blog, we will be changing the topic frequently to get your take on various industry issues – or maybe just to find out who you think will win the Super Bowl. (Go Patriots!) 

It takes just a second to participate and you will receive immediate results on where your opinion fits with our other readers. No registration required! We chose Vizu as our provider for its slick graphical appearance and immediate results. 

Check back often for new poll topics!      

I read with interest a recent post by Jennifer Osborne on Search Engine People regarding how Millennials fundamentally search for products and services differently as compared with those 30 years old and older. One of the fundamental differences Osborne points out:

Millennial Brains do not have the same neural networks that ours do.
That’s a fancy way of saying that they haven’t been trained to use category search. Young people no longer use the Dewey Decimal system and paper Yellow Pages (headings). If they want to find something they go to a computer terminal and look up exactly what they’re looking for. And with a few refined searches, they usually find it.

Our neural networks (those 30+) have been programmed to do category type searches. But the average 16 to 24 yr old doesn’t know how to do category level searches. If a 21 yr old has a leaky sink, they’re going to search under “leaky sink” not “plumbers.”

At The Kelsey Group, we are often asked about print product innovation from a product orientation view, but of late we have been examining how the print product can and should fundamentally change from a usage and navigational standpoint. Taking Osborne’s points a bit further, perhaps the way to fundamentally change the Yellow Pages is not a another product or specialty section but rather it is the core navigation of the product that needs to change.

One idea some major U.S. publishers have privately discussed is the notion of introducing a keyword version of the Yellow Pages that takes the most used keyword searches (natural search terms and widely used category terms) and creates a new directory that is “search” friendly. Some publishers have subtly begun experimenting with this with the introduction of new categories and “referral headings” that guide people to where they can find the information they are seeking.  

Publishers have access to the most popular keywords both from their own IYP properties as well as from their SEM efforts that should provide enough insight into the new way people search for local business information. Creating a new way of navigating the product would mean breaking apart a 100-year-old paradigm, but the fact remains that the product needs to fundamentally change if it can hope to hold off the decline of usage in the under-30 segment of the marketplace. Introducing a keyword version of the Yellow Pages would allow users to select the version that best suits their needs – category search or natural search.

The goal of local advertisers is to be found and contacted; changing to a form of natural search in print seems like, well, a natural step for publishers to explore to help push more leads and address the search needs of a growing segment.

GetVendors.com, a California-oriented start-up profiled here last August, has been acquired by Matchpoint, a 30-person service, backed by Oak Investments and IdeaLab and incubated by a team of largely LookSmart veterans. Matchpoint got started a year ago and launched in late summer 2007.

President Peter Adams says too many companies have focused on the search marketplace vertically. But Matchpoint takes a broader, horizontal view, listing up to 2,000 categories. “We can generate leads for any kind of business,” he says. “The next step up from pay-per-click is per-per-lead.”

“Consumers go to search or Yellow Pages,” adds Adams. “But they are getting millions of results. And they don’t (learn) anything about the businesses” from these sources. With Matchpoint, advertisers can provide fairly complete information. They are also provided with HTML links, which can include photos. No plans for video, however, are in the works.

The way the company works is it gets consumer profiles, determines their needs and sorts its database of businesses to come up with ideal matches. “We look to see what the consumers type in the forums,” says Adams. “For eye care, they’ll ask how you correct your vision. Or maybe they’ll note if they had prior corrective surgery.”

After developing a list of leads, Matchpoint then calls the businesses, in case they aren’t glued to their PCs. The company is also studying the introduction of other confirmation platforms, such as instant messaging.

Consumers, for their part, get to see the entire list of businesses generated – typically, five. They have the option of calling businesses directly. But for reasons of privacy, businesses do not get to see the consumers’ information.

The cost of leads is based on an auction model. Some low-cost categories, such as wedding cakes, can go for $2. Others, like online trading, can go for $30.

Currently, advertisers are blended in with other listing companies, which are provided with up to 10 free leads. But if the level of advertising kicks up, advertisers might take up every slot.

Adams also notes that the company has aspirations for building a network far beyond the destination site (i.e., Just Eyes, which is touting Lasik Surgery using Matchpoint). “The forums are syndicatable widgets that other publishers can embed on their site,” he says, noting that Matchpoint already has a deal in place with MediaSpan to pitch its 1,500-plus publishers.

Quick, what industry gets the highest customer service quality ratings from U.S. adult consumers, according to an August 2007 Harris Interactive poll? No. 1 is supermarkets with 92 percent giving them a good rating, No. 2 is online search engines (84 percent), and tied for No. 3 (78 percent) are computer hardware companies, hospitals and banks. My personal opinions are irrelevant, but I must admit that supermarkets would not have been at the top of my list. What is interesting to me is that 84 percent of respondents said search engines provide good customer service. This piece of wisdom came from eMarketer Daily, which ran a fascinating story on “Search Marketing’s 800-Pound Gorilla.” EMarketer is an expert on giving you enough information to make you hungry for more and then offering the whole report for a fee. In this case, Search Engine Marketing: User and Spending Trends is worth every dollar to anyone who is interested in the search engine business.

The author, David Hallerman, senior analyst at eMarketer, writes:

“However, the term ‘customer service’ is likely used broadly here, since one would guess that the vast majority of people who have used a search engine have never actually spoken with or e-mailed the people running that engine. Most probably, these results imply that people like what they get from search sites.”

Imagine that. There’s no greeter at the front door, nobody to bag your purchases, not even a smile from a candy-striper or a teller. All you get is what you, yourself, are able to pull out of a search engine. I have never built a boat in a bottle, or even attacked a complicated crossword puzzle. But I have done a lot of searching, and when I find what I’m looking for, often on a local search, there is a great deal of satisfaction. In a blog tomorrow, I plan to see if there is any way to compare satisfaction of using a search engine with other ways of finding products and services, such as Yellow Pages or newspapers.

Mr. Hallerman’s article refers to the huge number of people in the U.S. alone who used search engines last year. It’s at least 155 million and that number will rise by 25 million in 2011. Search advertising spending continues to grow, even if it is at a slower percentage pace than in previous years simply because the absolute number is already high. As the chairman of a company that spends a fair amount of money on paid search marketing every year, a key issue to me has been whether I’m getting my money’s worth. People don’t report to us that they are coming to a Kelsey Group conference or buying a report because of a paid search or contextual ad. Forrester’s Research, according to this eMarketer report, would reinforce this. Fifty-nine percent of respondents say they don’t pay attention to search ads, and 36 percent don’t trust them. Meanwhile, eMarketer is predicting that U.S. search advertising spending will grow from $8.6 billion in 2007 to $16.6 billion in 2011.

Consumers are happy. That’s good. And advertisers are continuing to pump more money into search advertising, despite the fact that consumers report they’re not paying much attention to the advertising, or worse. Some of this is clearly the novelty effect and the fact that advertisers want to be on the leading edge. Still, the bottom line is return on investment. This suggests that at some point, perhaps sooner rather than later, Yellow Pages and other traditional media are going to look pretty good compared with some of the new media options.

According to a recent Direct Marketing Association survey, “The absence of a brick-and-mortar store is becoming prevalent among retailers, since 41 percent of survey respondents don’t have a physical store.” This is quite a surprising finding and certainly has significant ramifications for local media sales representatives who continue to identify and pursue new business opportunities.  

In the past, Yellow Pages sales reps were assured they would be able to locate new businesses simply by the fact that they would sign up for telephone service and provide their physical brick-and-mortar address. If the 41 percent number is accurate, it shows how difficult it can be for local sales reps to identify and sell to these virtual retail locations. This situation is challenged further when the virtual business lacks a business line that would place the advertiser in the local area or the online business prefers online communication only and does not desire any phone calls to their offices.  

If increasing numbers of retailers are “going virtual” and giving up their brick-and-mortar locations, it seems to further push the balance of local marketing toward online media since this is where they are actively seeking customers. The question becomes what strategies are being developed to identify and sell to these unique “local” customers. Traditional sales prospecting methods need to be adapted to address local online retailers and the sales message and communication of value certainly needs to be different for the YP product set.  

Coming up in 2008 we will be examining how online media is being sold and how business prospects are being identified and approached to see what new strategies and best practices are emerging to address a retail world increasingly doing business online.    

In a significant development, AT&T’s Yellowpages.com is replacing Yahoo! Local Search for AT&T’s broadband and Internet customers. It is a move that will greatly enhance Yellowpages.com’s position in the space. The company recently told analysts it expects to attract 2 billion searches in 2008 and 3 billion by 2010.

The move is part of a broad multi-year reworking of AT&T’s existing deal with Yahoo! that gives Yahoo! $300 million to $400 million in upfront cash, according to analysts interviewed by paidContent.

It replaces a previous deal that was primarily based on providing Yahoo! with a share of every AT&T broadband user for a co-branded AT&T/Yahoo! portal and sell through of premium services – an arrangement that AT&T has publicly chafed at.

According to published reports, the previous deal brought Yahoo! roughly $300 million in high margin cash flow. A complete collapse of the deal was unlikely, but the renegotiated terms reflect AT&T’s strong position in the company’s many markets like wireless, directories, and increasingly, the Internet.

AT&T is clearly focused on building up its own portal efforts. The new deal will have a portal “powered by Yahoo!.” With the Yahoo! deal completed, it is adding access to its portal and e-mail for all AT&T customers, not just AT&T Internet customers.

The news comes at an interesting time. Last week, the wireless spectrum bids were due and AT&T will clearly be a contender. Further, Google is rumored to benefit substantially from increased mobile traffic from the iPhone available exclusive through AT&T Wireless.

It is unclear if the deal essentially cuts Yahoo! out of being a local search destination site for AT&T customers. In an environment where top portal and search brands are recipients of mobile usage, that seems unlikely. Regardless, it gives Yahoo! more opportunity to sell display and search advertising throughout the AT&T network. It is something that could have strong dividends as Yahoo! battles directly with Google and others. No doubt, retaining tight control of the carrier deck will allow AT&T to steer traffic accordingly.

It is of no small coincidence that last month, AT&T reworked corporate branding to reflect the company’s intended direction. What was once “AT&T Advertising & Publishing” is now being touted at “AT&T Advertising & Search.” The merger between Yellowpages.com and Ingenio, a $250 million transaction, confirms our belief that AT&T is moving the company toward a fully integrated cross-channel marketing company.

It also extends the reach of the Yahoo! portal to the old BellSouth territories recently integrated into AT&T, and extends Yahoo!’s content beyond the desktop to mobile as well – something that will be much more important over time.

According to paidContent, Yahoo! may see declines over $150 million to $200 million in revenue due to the deal’s restructuring. But there clearly is also plenty of upside if Yahoo!’s advertising is widely used, and mobile develops as strongly as anticipated.

We have speculated for some time that AT&T is a natural fit for Yahoo! in terms of an eventual merger or sale. While this news doesn’t sway us one way or another, we do believe these two companies are moving closer together and an eventual marriage of some type is more than a remote possibility.

(This post was co-written by Matthew Booth and Peter Krasilovsky.)

Classifieds can now be sent in via text messaging thanks to SMS Pal, a text message classified ad company. The service costs 99 cents for every listing and is charged back as a premium SMS message to the user’s carrier. The classified ads run on line at smspal.com and in local participating newspapers.

Based in my town of Carlsbad, CA, the company was started last July by former Apple Online Store engineer Joe Moreno, who noticed lots of texting activity in 2005 when he served a stint in East Africa, where he was stationed as a Marine Corps Reserve.

Moreno’s innovation is taking out several text words for classifieds, including “sell,” “job” and “skills.” Instead of renting out his own short code, he is working with an SMS aggregator. Using his service, ads can be up in 160 characters. “Most cellphones make a ‘ping’ when the cell tower has processed it,” he says.

SMS Pal’s first affiliate is a small Arizona newspaper, The San Tan Sun News. SMS Pal is currently in discussions with other newspapers and has aspirations for international outlets. Moreno’s expectation is that the local papers will serve as promotional partners, supplying print display ads, etc. A number of newspapers are already using texting to deliver news headlines, he notes.

Moreno says the East Africans have made a marketplace around their cellphones since they don’t have ready access to the Internet. In the U.S. Moreno expects the service to appeal equally to smartphone-savvy users sitting in Starbucks, as well as less advantaged people who don’t have easy Internet access. He has observed, for instance, that African-Americans and Hispanics are the heaviest users of cellphones. Without Internet access, “they can’t use Craigslist; they can’t use eBay,” he says.

The next step for the service is to provide users with SMS updates. “People will want to be looking for specific merchandise or jobs. They’ll want to find babysitters and lawn service workers.” As with ad placements, the alerts will also run 99 cents.

When it comes to small businesses on the Web, is it really only about video? AdReady, a new Seattle-based company started by Classmates.com alum and backed by Madrona and Bain Capital, thinks banners are really where the impact is.

Local marketers who test online video ads have seen “they can’t hold a candle to a well-optimized banner ad,” says VP Jamie Lomas. Lomas says that in addition to being optimization ready, AdReady has developed a number of templates for local verticals. For instance, it has banners specifically geared toward real estate professionals. Other templates address elective health care, automotive, etc.

It is pitching its services to metro-level clients, as well as “emerging national” companies that want to geotarget in just one or two regions (i.e., Alaska Airlines). But “hyper-local businesses – the moms and pops — aren’t really there yet,” says Lomas.

The cost of optimization and the creative have been big barriers to entry for local businesses, adds Lomas. But he thinks AdReady has significantly reduced those barriers. The company has programs starting at $500 per month, and currently has “75 to 100 clients.” In addition to its own direct clients, it plans to work with media companies and others on a white-label basis.

Local search based marketing specialist eLocal Listing today became the latest in a growing wave of companies to offer video advertising to SMBs. As pointed out in last week’s post “Universal Search Paves the Way for Local Video,” an opportunity exists — outside the IYP realm — to distribute videos on search engines using SEO strategies.

One issue, however, is that the majority of SMBs aren’t willing or able to shoot a video ad, convert it to a digital format, upload it to YouTube, and build a corresponding landing page with optimized meta-tags and site copy.

ELocal Listing primarily targets these SMBs by offering not only video, but also a way to get online in the first place. It specifically caters to businesses that don’t have Web sites — a sizable segment, as we’ve mentioned, and one that is most likely to need help getting their video shot, edited, uploaded and optimized.

“Since a majority of our small-business advertisers don’t have a Web site, clicks can be meaningless to them so we drive phone calls,” says President and CEO Tim Judd, adding that the company is using call tracking numbers to do so.

The price tag is also designed to be SMB friendly: The landing page is $99 and then the monthly fee to get placed in Google and Yahoo! is $159. This is not unlike the local SEM and SEO services of the likes of ReachLocal, Marchex and LocalLaunch. But the new video offering sets it apart and is essentially a free add-on at the existing price point. The idea is that these videos, in addition to the landing pages, surface in local search results.

“We’ve had top results in Google within three days of creating and submitting the video,” says Director of Product Development Steve Espinosa. “These are terms such as ‘painting in Columbus Ohio’ or ‘photographer in Sacramento.’ These aren’t small cities.”

The video creation process itself is similar to Spot Runner in that the advertiser picks an ad from a selection of stock footage that is specific to its business category. The video is then customized with the company’s information, custom photographs and an end card (see example from the above Yahoo! SERP here). This is also like EZShow except that it doesn’t have the same level of customization.

“You pick a video you like, and we’ll assemble it with the information you want shown at the end, add the music, and then it becomes part of your online profile,” says Judd.

The company will roll out with about 1,000 videos in 20 categories, and its goal is to eventually have tens of thousands of videos in a couple hundred categories (it also allows advertisers to use existing creative, if they have it). Over time, it also hopes to see some viral marketing advantages — explored last week — as the videos show up in top spots in Google and Yahoo! and carry its own branding (watermark).

This viral distribution and SEO strategy is a double-edged sword, according to Espinosa. Though the universal search movement enables opportunities to get video into top spots in major search engines, the rapid evolution of these search algorithms requires constant modification, and some serious SEO chops.

“Our content syndication strategy and our profile pages have changed three times in the past two quarters to adapt to how Google and Yahoo! read and establish authoritative documents for their algorithms,” says Espinosa. “It’s constantly evolving and our strategy has to constantly evolve along with it.”

Last week, I finally had the chance to download the newest iPhone “firmware” (v.1.1.3) that was launched at Macworld. It included a number of minor enhancements to the overall usability of the device and some upgrades across its main functions. Perhaps the most trumpeted of these were the Google applications upgrades, which included new interfaces for Gmail and other Web-based applications that are optimized for the iPhone screen and interface.

Google Maps, for example, has a nice new feature that enables the device to tell where it is and show its location using a circle on the map. This is very similar to Google’s “MyLocation” feature launched in November for Windows Mobile- and Java-enabled devices. And like that product, the new iPhone feature uses cell towers (and Wi-Fi nodes care of Boston-based Skyhook Wireless) to triangulate a device’s location.

Over the weekend I got to use it for the first time on a drive down to Fresno, CA (don’t ask my why I was going there). One simple advantage I found was that it allowed me to see (numerous times) if I had missed my exit on the complicated drive. And in this way, it is a step toward being a substitute for an expensive in-car navigation system if you happen to already have an iPhone. Though it doesn’t have exact location and spoken directions, some argue the technology is better than GPS in urban areas.

The feature also eliminates the need to type in your location when doing a local search, which may seem like a small thing but makes the mobile local search process more seamless and user friendly. The main point here is that it is one more feature that makes the iPhone more usable and appealing to mainstream audiences — a slow march that the device, along with Google Android-based devices, will accomplish.

Compare this with traditional hardware and software standards in the mobile device world that were only good enough to attract a meager set of early adopters to mobile local search. This comes down to the simple reality that phone carriers aren’t the best arbiters of software and search-based technology. Yet for many years they ultimately ruled over the mobile hardware and software that consumers end up with.

Now that this power is shifting to those that should have it (i.e., Apple, Google), we’ll see much better standards, applications, consumer penetration, and as a result, more defined location-based services, advertising models and monetization. And around and around we go.

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Related: Skyhook Wireless, the company behind the iPhone’s new mapping feature, will join us on stage for the TKG sessions at SES London (agenda here).