BCG finds that local online ad dollars aren’t that local

A new article from the Boston Consulting Group sheds some light on the world of online local advertising, a $21.2 billion market  in the U.S. and cited often by a variety of players from AOL’s hyper local network of news sites, Patch, to Yahoo as a the holy grail of ad dollars.

What the authors found is that small business owners – think of the local mom and pop run pizza parlors and  hardware stores-  only dedicate a fraction of their advertising budget to online.  BCG’s Sebastian DiGrande, David Knox, Kate Manfred and John Rose surveyed 550 small business owners in the U.S. who said that only 3 percent of their marketing dollars go toward online advertising. Instead they turn to newspapers and coupon mailers to find new customers.

“People think the small and medium enterprises are spending a lot of money in digital and the truth is that is not correct,” said Rose, a senior partner and managing director at BCG, said in an interview.

In reality most local online ad dollars come from larger businesses, such as auto dealers or retail chains which look more like national advertisers than small shops.

Rose said there is an opportunity to wrangle more of those dollars from small business  to online even though its difficult to parse the market opportunity since the landscape  is so fractured.

Google sets Zagat free

This morning, Google took the wraps off  how it plans to use Zagat, the popular restaurant guide known for its burgundy pocket books. The Zagat restaurant  listings are now incorporated in Google + and its local service and, more to the point, are now free. People can access more than 35,000 summarized user reviews from Zagat for more than 90 cities across the globe using either Google +, its search function or through maps.

Google said it will continue to publish the guidebooks and expand to other cities like Dubai, Sydney and Melbourne.

Google picked up Zagat for $151 million last September in a move to broaden its offerings for local based content. Founded by Tim and Nina Zagat,  the 30-plus year old eponymous guide  takes customer surveys and compiles them into brief and snappy summaries . It was a pioneer of amassing local restaurant reviews by people but over the years it  faced stiff challenges from upstarts such as Yelp– especially when a majority of Zagat’s content was subscription based.