Startups Aim to Reinvent Local Advertising

Automatically tailored display ads could attract small businesses.

Advertising has been a killer Internet business model, making billions of dollars for Google and others. But a number of startup companies think there's a huge untapped market in providing automatically tailored display advertising to thousands of local businesses.

Ad slot: PlaceLocal automatically generates ads for local businesses by crawling the Web. Credit: PaperG

Yelp, which aggregates customer reviews of local businesses, has tried to provide targeted local advertising with varied success. Now a new crop of startups are hatching plans to provide more effective advertising services to local businesses. The aim is to ease small businesses into online advertising through familiar channels such as newspaper sites, and to help these locally focused websites increase revenues by making it easier for them to service small accounts.

"There's a lot of overhead to service small advertisers," says Roger Lee, chief operating officer of PaperG, an advertising company whose customers include the Boston Globe, the Houston Chronicle, and Newsday. Most local businesses don't have the budget to pay an advertising agency to design ads for them, he explains. And it isn't cost-effective for newspapers to offer ad design services for accounts below a certain size. Lee, formerly the publisher of the Harvard Crimson, Harvard University's student newspaper, says his company wanted to find a way to use technology to fill this missing link between local businesses and local newspapers.

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PaperG is testing a software system called PlaceLocal that automatically generates ads for local businesses by crawling the Web. The system scrapes the Web for basic information about a business such as its address, phone number, and opening hours. Even if the business doesn't have its own Web page, data can often be pulled from third-party services such as Yelp or Google Maps. The system then uses semantic analysis to find and extract photos and positive reviews, and it builds an ad automatically using Adobe's Flash software. The business owner or newspaper ad sales representative can customize the ad, so if PlaceLocal didn't choose the best photo or review, it's easy to select another.

Lee adds that 50 percent of small businesses don't have a website, and PlaceLocal can also be used to generate one. That way, if someone clicks on a business's ad, there is somewhere to direct them. The company is also working on algorithms that would adjust the look and feel of an ad depending on the most common types of content that turned up when crawling the Web. For example, if the system found lots of photos, it might design a more image-heavy advert. Besides making it easy to create an ad once it's sold, Lee expects PlaceLocal to help representatives sell ads in the first place. "The sales rep can have a beautiful ad designed for every lead sheet," Lee says, "which makes a real difference in the conversation."