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Kelsey Group Conducts Study On Local Advertising Effectiveness

Staff Writer
Published: 2004-05-17

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The Kelsey Group conducted a study that studied the effectiveness of local advertising in vertical digital directories.

A vertical digital directory is an online property that provides deep amounts of structured content for a niche category, such as travel, real estate or home improvement. The group's findings discovered that VDDs serve two functions: the first being providing content to search engines in response to local queries. Vertical directories also offer a gateway to paid-search advertising for small and medium-sized businesses.

"Online vertical directories have the resources and expertise necessary to buy pay-per-click advertising and compete successfully with sophisticated, large advertisers for limited ad inventory on search engines," explained Greg Sterling, director of The Kelsey Group's Digital Directories: Interactive Local Media Continuous Advisory Service. "Many verticals have also adopted the search engine model for both consumers and advertisers."

Additional findings contained in this report include:

* Verticals are increasingly mimicking search engines, adopting the "search box" as a primary way for users to find information. Many also offer advertisers a pay-for-performance lead-generation ad model similar to that used on Overture and Google.
* Search engines are generally benefiting from the existence of vertical directories, even though the two are potential competitors for advertisers. By investing in paid search, verticals are delivering valuable content and local listings (typically indirectly) to the search engines.

* Vertical-search engine/portal relationships will, in the short term, benefit both sets of parties. Partnerships appear to be the best strategy for both groups to, in the case of search engines, acquire local content and, in the case of verticals, drive traffic to their sites.

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