Buying Online Ads For a Local Audience

By ALAN S. HOROWITZ

Consumers are turning to the Web to find local products and services and that means even small firms need to have an online advertising plan to reach new and existing customers.

Five years ago, when Pat Sheetz bought Mari's Skin Care, a skin care and day spa in Dallas, nearly 70% of her business came from print yellow pages advertising, with 15% to 20% from referrals and the rest from other print media. Today, she says, print yellow-page ads contribute only half as much business as they used to, while local Internet advertising has made up the difference. Ms. Sheetz says she does much of her online advertising on Verizon's SuperPages, one of big players among local online directories.

The most common online ad service local businesses use is what's called "pay-per click," which are the ads that appear adjacent to or above search results on Yahoo, MSN, Google and others. Advertisers buy the rights to keywords and then pay only when someone clicks on the ad and visits the advertiser's Web site.

Firms new to online advertising need to be prepared for customers who contact them via the Web. "It's one thing to have them come to your site, but you need a decent Web site once they get there," says Gary Mastroddi, general partner at Ettore Salon & Spa in Philadelphia.

The cost of these ads varies dramatically because they are typically sold through an auction process. The more a business is willing to pay per click, the better the ad is positioned on the search results. Local firms can start small with pay-per-click ads to test the medium and find what works and what doesn't.

A business might pay as little 10 cents for a keyword ad, but popular search words will be more expensive because businesses bid against each other for the rights to appear alongside those results.

"The tendency initially is to overbid, to bid for number one position," says Brian Huber, of The San Francisco and Sausalito Electric Tour Company, which provides tours of San Francisco on Segway scooters. "Bidding for number one doesn’t work in every category because the return on investment doesn’t work out. You have to test your ads."

With Google, Yahoo Local, SuperPages and others, keyword purchases can be targeted to a local market because the sites analyze the search query to establish what location that person is searching for.

To get started with pay-per click, businesses can sign up with one of the services listed here. Also, local sites like newspapers and online city guides offer pay-per-click advertising.

Michael Jimenez, owner of Michael's Custom Built Upholstery in San Rafael, Calif., which manufactures custom upholstered furniture, says Yahoo helped him pick about 100 search words that he pays a total of about $30 a month for. On Google, he pays $50 a month for 50 words. The words include upholstery, chair and slipcover.

Businesses may, like Mr. Jimenez, find the Web expands their market. Though he focuses on his local market, consumers surfing the Web have found him and placed orders for his custom furniture. He’s done business in Los Angeles, and given bids to potential customers in Alaska and Florida.

Mr. Mastroddi says he changes his search words depending on various promotions he is running. For example, at the beginning of the school year, he says he might run a special for college students and have "college" among his search terms.

Owners should also monitor and analyze the financial results of their online advertising. The vendors can provide a lot of statistics: pay attention to them and see what works and what doesn't.

"Understand what an incremental call [from a prospect] is worth to you," recommends Rod Diefendorf, vice president of online and local search at InfoSpace, which provides online marketing technology to aggregators like SuperPages and Dex. "Understand your conversion rate [the frequency you convert callers or those who click to your Web site into paying customers] and the average value of that customer."

Businesses also need monitor the position of keyword ads they pay for because other firms can sweep in and pay more for the same keywords to receive more prominent placement. Some providers like SuperPages and Right Media allow firms to see what others are bidding for keywords.