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How to See the Future Via a Rear-View Mirror

ClickZ News asks the loaded question, could portals eat local content publishers' lunch? A new JupiterResearch report predicts it's possible that portal sites could steal advertising revenue from yellow pages directory sites and local content sites if they don't watch out, now that the traditional ways of organizing and retrieving information are changing drastically.

As noted in the Jupiter's report, Yahoo, MSN and Google have "begun to blur the boundaries that have traditionally separated yellow pages advertising from other local directories, classifieds, and retail advertising." For instance, the report cites Microsoft Live Expo's serving of local display ads alongside local classifieds, Yahoo Local's community pages featuring restaurant reviews and local business recommendations, and Google's blending of local search results and business listings.

According to the report, 52 percent of visitors who clicked to Verizon's SuperPages listings first visited an unaffiliated portal site, and 34 percent of those who clicked to Qwest's DexOnline.com did the same. In light of this, "Portals have a tremendous opportunity to capture this traffic for themselves and add it to their mix of local online directories and advertising," the report concludes.

"If you're a user, you'd probably just as soon stay on the portal if you could," commented JupiterResearch Media Analyst Barry Parr. He calls that "a huge threat," not only to directory sites but to newspaper and other local sites selling classifieds and local display advertising.

Shawn Riegsecker, the president of local media services firm Centro, disagrees. He believes content sites have 'no need to worry' about portals dipping into their ad dollars, because they typically don't sell ads to traditional yellow pages advertisers. Content sites like local newspapers tend to attract advertisers from the real estate, jobs and autos categories, while yellow pages players rely on plumbers, restaurants and contractors, he said. Historically, that is true.

However, I find this whole topic fascinating, because it reminds me of how some people attempt to predict the future by merely using 'tradition' as their only measure of what's possible. How could the newspaper and yellow-page publishing industries both miss the opportunity to capture a greater share of online advertising? Simple, they're constrained by their own traditional thinking regarding what qualifies as competition.

Consider the story of Western Union, as an example of this type of myopic thinking taken to the extreme. Why wasn't this company a leading player in the data communication and email services sector? They rationalized that they were a telegraph company that transported cablegrams, that's why. If it isn't a cablegram or a telex, then it's probably not competition they figured. By the time that they had broadened their horizons (stopped looking back through their rear-view mirror) it was already too late.

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