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Tech Industry

World Wide Web ads turn local

Local targeting could be critically important to ad-based Internet publishers whose banner revenues are coming up short.

    DoubleClick's new service that targets banner ads to Web users in specific localities got less attention than it deserved earlier this month. It is an important development for every ad-supported Web site.

    What's important here is not just that DoubleClick, the biggest service vendor in Internet advertising, enables geographic targeting. Local targeting could be critically important to ad-based Internet publishers finding banner revenue coming up short.

    The beauty of DoubleClick's scheme is that it generates revenue from new advertisers without producing local content, which is costly. Instead, its technology identifies where users are signing on from, then feeds them ad banners from merchants in their area while they're viewing news, sports, or information created without regard to locality.

    The closest analog is "zoned" advertising in local newspapers, national weekly news, or business magazines. I'm always amazed when I see an ad for a local hospital in my copy of Newsweek--especially knowing that hospitals draw virtually all their patients from within 30 miles.

    Frankly, ad-supported publishers need the new revenue. Only a handful of the largest ad-supported Web sites are profitable, and even those are scrambling to add e-commerce revenues to supplement advertising.

    "This is something the market has been waiting for," says Mark Peabody, research analyst at the Aberdeen Group. "For the Internet ad markets [to keep growing], you really need to start wrapping in that local advertising."

    Localizing banner ads may not be a panacea for what ails the online ad business, but they add a welcome new source of ad revenue--regional advertisers.

    Today if McDonald's wants to run a special promotion in 10 Midwest states, the Internet isn't a very suitable ad vehicle. Big Mac's Internet ad options include buying banners on well-traversed Web sites like search engines and promoting an offer most viewers can't take advantage of.

    Or it can identify Web sites with content for Chicago, St. Louis, Minneapolis, and the rest.

    "You can go for the local newspapers, but now with the demise of New Century Network, you're back to dealing with each individual local newspaper, and that's a pain," says Bill Bass of Forrester Research. NCN, owned by major big newspaper chains, sold ad banners on newspaper sites to national and regional advertisers until that operation was shuttered in March.

    The various chains of Web sites with local content--Microsoft Sidewalk, CitySearch, and America Online's Digital Cities--can put together a package, but even the aggregated traffic from a single Web chain is barely enough to be worth the trouble.