Piper Jaffrey recently put out a fantastic paper on many things search and internet related entitled "The User Revolution: The New Advertising Ecosystem and The Rise of the Internet as a Mass Medium". This 425 page report covers a wide variety of topics, but I'm going to concentrate here on those related to local search, and IYP.
Firstly the basics, 70% of Americans are now using the internet, with usage growing 18% per annum. The internet is now the second leading medium at home, behind TV, and is easily the leading medium at work. 82% of users are over 18, and they spend 88% of the total online minutes.
How pervasive is local search? Well, in response to how often users used different services, email came in at 100%, local search actually came in 2nd at 57.6%, ahead of Instant Messaging, online purchases, music downloads, blog reading / publishing, social networking, and the rest. Quite an amazing number really, but does that mean that there isn't that much room for growth? If the potential usage increase that can be had is slightly less than double, then is the market fairly saturated? Not by long shot, unlike a service such as IM, there is a large offline equivalent to local search, that can be migrated online and monetized (once a winning monetization strategy has been arrived at). So what do they consider to be the potential market for local search? Well, they have the current total local ad market (local search, IYP, and classifieds) at $4.489 billion dollars, which makes it 12% of the current offline spend of $37 billion. In their opinion online dollars in this area has the potential to reach 70% of offline spend, so the total potential that they show stands at around 2.59 bilion dollars. This shows that there's clearly a lot of room for growth in this sector. Of course the next question is that of canibalization. Many offline publishers expressed concerns that moving online would chip away at their core offline business. According to this graphic, that isn't happening. Instead the IYPs are expanding the overall market, without negatively affecting the print market which has remained fairly static.
source taken from: http://searchenginetigers.com/2007/03/latest-local-search-facts-and-figures.html
Wednesday, March 7, 2007
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