Our very own Steve Espinosa had some some interesting thoughts on how Twitter could monetize it’s traffic.

Over the last couple months we have heard many different ideas on how Twitter can successfully monetize their surge in popularity, growing user base, and overall traffic. The ideas range from charging for an account, charging for premium accounts, simply adding AdSense, and the list goes on. What we haven’t heard is how Twitter could add local search into their business model, monetize it successfully, and create more user generated content.
When you think about it almost everything that is on Twitter is inherently local. The simple question “What are you doing?” implies that because, unless you are at home watching TV, you are doing something that is local, whether that is local to you or to someone else. The obvious example of this is when you go out to a restaurant and write about that on Twitter, whether you say “Going out to [insert name here] with @stevemcstud” or “Just had a great dinner with @stevemcstud at [insert name here]“. If you simply perform a search on Twitter for “restaurant in”, the point being to see how many people tweet “I am going to restaurant in [insert city]” or “Anybody know of a good restaurant in [insert city name]?” you can see that with just that one phrasing there are tons of results of people talking about local restaurants.

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I recently came across this article from eMarketer.

New data provided by the Search Engine Marketing Professional Organization (SEMPO), based on research conducted by Radar Research, sheds light on how search marketing dollars are being spent.

In 2008, $13.5 billion was spent on search marketing. The space was mostly made up of paid placement and search engine optimization (SEO), with a sliver going to technology providers whose software assisted in the execution of search campaigns. Paid search ads saw 88% of the total pie, SEO only 11%.

The ratio of paid placement to SEO will change in the future.

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While on the road to the Kelsey Group Marketplaces 2009 event this week I stopped by Barnes & Noble to pick up the new book by Jeff Jarvis, What Would Google Do?  Early on in the book, Jarvis quickly states and focuses on the fact that small is the new big. Companies can start up with a couple people and not grow past 20 and still attract a large amount of customers. At Kelsey this was proven over and over again.

Small businesses will soon be overwhelmed with the amount of choices they have to market their business online through SEO, PPC, Social Media, and Mobile Marketing. A great great of this is the start-up dotMenu, which started out by simply hiring stay at home moms to go out and scan in menus from local restaurants for $2 a piece. This allowed them to keep overhead down, efficiency up, and grow within the constraints of cash flow. In 2008 dotMenu ended up taking 3,000,000 online restaurant orders.

The consistent trend of people connecting, sharing, and collaborating on the internet is only going to have a positive effect on small business marketing. When companies and individuals become more open, competition grows larger. When competition grows larger, innovation begins. Products will start to become more transparent, ROI for marketing efforts will become clearer to small business, and the businesses that provide real value will rise to the top, whether they are small or big.

Every time I attend a Kelsey Conference I am amazed at the overwhelming amount of new start ups attending the conference. But the one thing that is more overwhelming than that is the fact that all these start ups are striking partnerships with companies 1000x their size without even a blink. 2009 is going to bring an enormous amount of opportunities for small business to get online, with the big question not being ‘should we be online, but who should we be online with?’

Now that small is the new big, things are going to be a lot more clear for small business.

In this economy it’s tough to see really great companies having such a horrible time of it. Google is down to 325, newspapers with storied histories are dropping like flies (the mighty Seattle Post Intelligencer published its last print edition this morning) and media innovators in the local space like SpotRunner have just announced another large round of layoffs. Given this desolate landscape there is clearly a move towards value.

We work with thousands of local companies making sure they are clearly incredibly focused on maximizing their limited marketing budgets. Our typical customers are very sensitive to both the cost of marketing and the value they get from it. As the yellow pages collect dust at the back of closets local businesses still need to reach out to people looking for all over the nation our low cost high impact package which gets our customers new business through search. We do one thing really well. We get small business to the top of the search results for search terms they care about for a low monthly fee. It may not be as cool as TV advertising and it certainly doesn’t have the tradition that print advertising has, but it works and it’s affordable for most businesses.

How important is it that local businesses get to the front of search?….well there are several things driving this issue. First is behavior, people online search in a particular way. In search they go to the front page and typically select from the results displayed on that page. Very few ever look further than the first page…if you aren’t on that page then the chances are that online is not going to generate many customers for you. How big is the opportunity? Let’s look at the numbers: There is certainly a lot of search traffic going on. Reports differ but typically US search volume is in the 15-20 billion per month range and depending on whose numbers you believe anything up to 40% of those have some level of local interest. That’s a lot of search, lots of people looking for goods and services.

However if you take the number of people looking for things and divide that huge number by the number of locations and activities people are searching there may only be a few hundred people searching for any service or product in any location in any month. The good news is that those people are highly focused on finding what they are looking for and typically close to a buying decision and those intensely valuable searches are going to be spread between the companies on the front page of search.

In an economy headed for nuclear winter with local businesses looking to squeeze the last drop of value out of their marketing dollars our low cost high impact search visibility package is a great fit. We will focus on making our product the richest deepest most effective way for local businesses to get customers, it’s all we do and it’s what we do best.

According to the U.S. Local Media Annual Forecast, 2008-2013, by BIA Advisory Services and its Kelsey Group, current and foreseeable economic conditions will reduce overall local advertising spending through 2013. BIA/Kelsey forecasts U.S. local advertising revenues to decline from $155.3 billion in 2008 to $144.4 billion in 2013, representing a negative 1.4 percent compound annual growth rate.

Only the local interactive segment will show growth throughout the forecast period. All other local media will experience marginal to rapid declines in the next 18 to 36 months, says the report. A small number of traditional media will rebound with a revived economy beginning in 2011, though most traditional media will continue to decline at a slower pace.

According to the forecast, the interactive segment (mobile, Internet Yellow Pages, local search, online verticals and classifieds, voice search, e-mail marketing and other interactive revenues generated by traditional media players) will grow from $14 billion in 2008 to $32.1 billion in 2013. The traditional segment (newspapers, direct mail, television, radio, print Yellow Pages, non-digital out of home, cable TV and magazines) will decrease from $141.3 billion in 2008 to $112.4 billion in 2013.

Tom Buono, president and CEO, BIA Advisory Services, says…

“As the shift to online accelerates, and the demand for accountability metrics grows, there is an increased urgency for traditional media companies to develop and embrace new business models that incorporate digital strategies… to drive business…”

Neal Polachek, CEO, The Kelsey Group, concludes …

“the share shift… could actually be more pronounced… successful integration will require considerable attention to business models, product innovation and sales channel evolution.”