Last week, I had an interesting chat/demo with a colleague who has been in the local advertising business for the better part of 5 years now.  I'll spare you many of the mundane details, but he had an observation that I thought was really compelling.

We were talking about the economics of newspapers and the evolution of Google Adwords and Craigslist, etc. over the years.  Assume for a moment that it costs something like $500-$1,000 to run a 3" x 3" advertisement in a local newspaper for a week or so, depending on duration, placement, circulation, etc.  Although intuitively, we all think newspaper advertisements are a bad idea and the money could be better spent online… nobody *really* knows because of the lack of tracking in the old model.  Meanwhile, newspaper advertising has the benefit of years of "incumbency status" (i.e. this is how business has been done for a long time and nobody will get fired or criticized for running a newspaper ad, which is to some degree a semi-known commodity.)

Anyway, the "ah-ha" moment was this guy's question of whether or not tracking is a good thing & an appropriate competitive differentiator for internet-based local advertising alternatives.  Are we going to deflate ourselves into oblivion if we rely upon ROI tracking as our competitive differentiator?  It's a great question.

The challenge from a business perspective is to extract as much economic value as we can from a customer who adopts a modernized advertising model.  Customers are continuing to spend hundreds or thousands of dollars a month on newspaper ads, but will they do the same with Internet Marketing that ironically may be more effective as people do more online?