KEY POINTS:
Business appears to be getting over its indifference towards the internet as an advertising medium.
When The Internet Bureau, an Auckland-based agency specialising in online ad placement, hosted a seminar on search marketing last week, managing director John Schofield was pleasantly surprised that more than 100 people turned up.
Schofield said the strong attendance mirrored growing interest from advertisers in what what they could achieve online as major local sites beefed up their content over the past six months.
Last week's seminar included presentations from two of the big players, Yellow Pages and Yahoo! Both companies gave attendees a preview of soon-to-be launched initiatives aimed at luring eyeballs to their respective sites.
Yellow Pages, the $2.24 billion business recently hived off to overseas interests by Telecom, is close to flicking the switch on a revamped search capability for its site, which impressed those who saw the demo at last week's seminar.
Yahoo!Search Marketing, meanwhile, has been developing a new advertising engine which will enable the global giant to target local content and ads to New Zealand web searchers.
The development these two big online brands are undertaking shows what is going on in internet ad land. Essentially, the race is on between the global giants and the home-grown heavyweights.
Yellow Pages said last month it was not in direct competition with the likes of Google and Yahoo! They did "global search" but Yellow Pages had a huge head start on "local find-it" through its database of 200,000 New Zealand businesses.
It would be too big an ask, Yellow Pages said, for the likes of Google to put in place the local infrastructure required to cultivate a database similar to the database Yellow Pages had nurtured over the years.
Since then, however, we've seen Yellow Pages get very defensive about protecting its database, with threats of legal action against businesses using its site to harvest contact details.
And Schofield, for one, believes Yellow Pages may be underestimating the Google threat. He points out Google already has a strong focus on local search in the US market.
"They haven't put that same focus into markets like New Zealand but one would expect it's only a matter of time before they do," he says.
"The Yellow Pages people are relying on their relationship with New Zealand internet users, offering a strong local product and looking to ensure they maintain a strong share of that market in the face of what will eventually be some looming international competition."
Competition is also hotting up at the local level from the likes of apnfinda, the joint venture involving APN Online, part of Herald publisher APN's stable of businesses.
This month apnfinda unveiled upgrades to its suite of sites (Finda, Wises, UBD and apndata) in a bid to "meet the demand for high-functioning local search engines".
Dwayne Alexander, chief executive of apnfinda, argues the current jostling around site improvements should expand the online advertising pie.
He points out that online's share of total advertising spend in New Zealand is a meagre 2.9 per cent, whereas it is 8.5 per cent in Australia and 18 per cent in Britain.
Schofield agrees online's significance will continue to grow.
He predicts the 2.9 per cent figure will leap before the end of this year when new, more inclusive systems for measuring industry spending are put in place.
His guess is that current online ad spending is underestimated by a factor of at least 50 per cent.
"The pot is going to be growing for everyone," adds apnfinda's chief of products, Shane Bradley.
"It's up to ourselves, Yellow Pages and the rest of the people who are in the online space to develop better sites and drag the advertising revenue through.
"It wouldn't be a risky bet to say that in the next three years online advertising is going to double in this country."
Bradley is right, but that doesn't mean traditional ad options such as print are about to fade away.
While Yellow Pages talks up the growth of its online revenues, it also concedes that ads in its printed products will continue to account for most of its sales in the medium term.
Carmel Cervin, general manager of long-time directory publishing business Cervin Publishing, says when her business launched a new directory last month, Property Services Auckland, it produced both a hard copy and a matching website.
"The key for us is to grow both together," she says.
