When a local advertiser buys an ad in a local newspaper, they do so because they want to reach a local audience. That seems pretty clear. The local business has chosen to advertise in a local newspaper, magazine, or other printed media because they know it will be distributed within their community to people they hope to reach.

Now, do the same rules apply online? Does advertising on the website of a local media company allow you to reach a local audience? The answer: IT DEPENDS.

For example, I asked a few friends around the country to send me screen shots of what CityPages.com looks like when viewed from their computers. (Thanks!) Here is what they saw:

People in Cleveland see ads for W.A. Frost (a 12 hour drive for dinner) and Hamline University.

Cleveland CityPages

People visiting from Boulder, CO see ads for Bedlam Theater and the Minnesota Orchestra. Megabus doesn’t go to or from Colorado:

Boulder CityPages

And I grabbed this shot while in Vancouver, BC earlier this week that includes ads for the State Theater and Megabus:

CityPages.com Viewed from Vancouver, BC

An interesting thing happens when local newspapers and magazines go online: their reach expands well beyond their local market. In many ways, that’s good thing. But local advertisers need to be aware of how this can effect the performance of their ads.

Business that depend upon people physically visiting their place of business suddenly find themselves running national and international ad campaigns while assuming they’re reaching the same demographics as the site’s print edition.

In some cases, local businesses probably would be interested in advertising to people outside the Twin Cities, but they’d probably want to pay a different rate for that type of traffic since the ROI would surely differ.

Local advertisers need to start asking questions about the geotargeting of their ads. Are their ads being displayed solely to people in their community? Or, are local advertisers paying for ad impressions served to people well beyond their geographic target markets?

Ad serving technology that allows for geotargeting of ad impressions has been available for years. I’m not sure if CityPages doesn’t have this technology in place or if they’re simply not choosing to use it.

I asked CityPages about their ad serving technology and use. Here are a few questions they did not respond to after previously being very responsive to questions regarding web traffic:

– What percentage of your website’s visits come from Minnesota? This can be found in Google Analytics by clicking Visitors > Map Overlay (the log the total) > United States (then log Minnesota’s total). Divide the Minnesota number by the total.

– Do you think your local online advertisers realize their ads are being shown to a national/international audience?

– Are they paying on a CPM basis for these ads? Is the rate the same regardless of where the visitor to the site resides?

– Do you have the ability to focus the geographic reach of ads? For example, could you set W.A. Frost’s ads to serve to just people in MN or the Twin Cities (I know the technology exists, but don’t know if you’re ad platform supports doing this)?

– Do you quote your site-wide traffic numbers to local advertisers, or do you quote them a reach that’s relevant to their business (metro, statewide, etc)?

– Does VVM [Village Voice Media] do any ad serving reciprocity between properties? For example, someone from Phoenix visiting CityPages.com could see ads that are local to Phoenix that have been sold by the Phoenix team.

I think the questions are fair and should be asked by anyone in the business of making online ad buys for local businesses.

How big of a problem is this?

CityPages’ Kevin Hoffman told me via email that “more than 50 percent of our traffic is local.” From a local advertiser’s standpoint, that would mean that less than 50% of their ad impressions are likely being served to people who are not local. How much less? Good question.

Traffic Quality

The tactics used by CityPages to drive traffic to their site will be the topic of a future post. For example, a CityPages blog called The Blotter (mentioned here when it’s author, Emily Kaiser, over-generously borrowed from this site), is rarely linked up in the local blogosphere and has less than 100 subscribers according to Google Reader, somehow managed to grow from 35,000 to 250,000 page views per month in just two months. If the site isn’t getting linked up locally, and hasn’t build a large subscriber base, where’s the traffic coming from? Tune in next Thursday to find out.

Local Media Money

Local media sites face an interesting predicament. Generally, you can charge a higher rate for ads you sell directly vs. what’s available through ad networks. So if local media sites only serve local ads locally, they’d likely see a significant drop in ad revenue potential over a large portion of their ad inventory. But serving higher CPM local ads to non-local businesses surely isn’t the right answer. Done enough, it will either lead to local businesses giving up on online advertising due to poor performance, or CPM deflation to get pricing in line with the value of an average ad viewer.

Summary: If you’re an online ad buyer for local businesses, make sure that you know to where the people are who are going to see the ads you’re buying.