1. John Kelsey Chairman The Kelsey Group Geodomain and the Transition to Local Marketplaces “Just Put on Your Sneakers” The Kelsey Group

2. Visionary The Alternative Press at the Crossroads “The electronic medium offers several advantages to print  Instant search capabilities based on predetermined criteria  Direct placement of ads by readers  Instant updating  The ability to respond to ads electronically” Dan Pulcrano – 1993 It wasn’t just the alternative press, it was all traditional media. © 2008 The Kelsey Group2

3. 3 About The Kelsey Group  Kelsey Group coverage areas:  Search: local, social, mobile and video  Marketplaces: verticals, classifieds and transactions  Global Yellow Pages and directories: print and Internet  Data, forecasts and recommendations drawn from quantitative user and SMB research, industry meetings with participants at all levels and a dash of insight  Advisory services, consulting, conferences, reports  Providing predictions since the depression(example)

4. © 2008 The Kelsey Group4 Some of Our Clients...

5. After One Day in the GeoDomain Industry  Favorite word: Intuitive  Backgrounds of players: Diverse  Most frequently discussed subject: Value of GeoDomain names  Most important issue: Building a successful business  Next growth phase: From national to local (or vice versa)  Presentation theme: Key trends in local online advertising  Requirement: Work hard, play hard  Summary: You get it © 2008 The Kelsey Group5

6. It’s All About Real Estate © 2008 The Kelsey Group

7. Are you the Baltic Ave. or Park Place of the Geo-Domain Industry? © 2008 The Kelsey Group7

8. History of TKG and City Sites  1988 – Consulted in Operator-Assisted Yellow Pages  1995 – First conference on city guides  1996 – Research conducted on city guides  1997 – Formed Internet Local Advertising & Commerce Association (ILAC) – later merged with IAB  1998 – Created Local Online Commerce advisory service  2001 – Tech crunch, 9/11, exit of private equity money  2003 – Launched Interactive Local Media  2007 – Introduced Marketplaces © 2008 The Kelsey Group8

9. 1997 Local Markets on the Web Conference: Profiting from Local Content & Advertising  Keynote Speakers  Peter Winter, President, Cox Interactive Media  Marty Yudkovitz, President, NBC Interactive  Jeff Mallett, EVP, Yahoo!  Frank Schott, General Manager, Microsoft Sidewalk  Mayoral Debate  SF Gate, DigitalCity San Francisco, JustGo San Francisco, Your Town San Francisco, Yahoo! San Francisco  Other Sessions  Local Advertising Sales: The Moat Around the City?  Partnerships/Alliances and Content: Sleeping with the Enemy  Building Traffic in a Competitive Marketplace  Vertical Opportunities for Local Markets © 2008 The Kelsey Group9

10. The Definitive Event for Businesses and Local Services on the Web 1998 © 2008 The Kelsey Group10

11. The Online Directories & City Guides Survey AttributesImportance to success of a city guide Challenge your company faces in this particular area Accuracy of Information ___ Being First in Market ___ Branding/Name ___ Consumer Awareness ___ Distribution/Traffic ___ Funding ___ Management ___ Partnerships with Key Players ___ Sales Force ___ © 2008 The Kelsey Group

12. The Online Directories & City Guides Survey What % of revenue will come from each source?1998200020052010 Advertising___ Subscriptions___ Transactions/ Hosting ___ Communications___ Other___ TOTAL100% Name three city guides that you consider to be the most useful. 1. __________ 2. __________ 3. ___________ © 2008 The Kelsey Group

13. Importance to Success of a City Guide/Online Directory 199819971996 1.Accuracy of Information 1.Accuracy of Information 1. Sales Force 2. Consumer Awareness2. Distribution2. Accuracy of Information 3. Partnerships3. Consumer Awareness3. Advertiser Relationships © 2008 The Kelsey Group

14. Challenge Your Company Faces in the Particular Area 19981997 1. Consumer Awareness 2. Distribution/Traffic2. Partnerships 3. Sales Force3. Accuracy of Information © 2008 The Kelsey Group

15. What Percent of Revenue Will Come from Each Source (Asked in 1998) 1998200020052010 Advertising 90745646 Subscriptions 3 4 3 3 Transactions/ Hosting 3163446 Communications 1 2 3 2 Other 3 4 4 3 100 © 2008 The Kelsey Group

16. What Percent of Revenue Will Come from Each Source 2010 199819971996 Advertising465456 Subscriptions 3 410 Transactions/ Hosting 463625 Communications 2 5 4 Other 3 1 5 100 © 2008 The Kelsey Group

17. 17 Local Has Not Been a High Priority for Many City.com Sites – But Local is the Next Frontier  Higher value of local will keep local sites in business.  Gold mine of localized national advertisers will boost share  Sales force is a major issue  80/20 rule becomes more critical in the current economy  Local online advertising (and marketing) is a strong growth area

18. $605 Billion Global Advertising Market in 2007 Source: The Kelsey Group (2007) Note: Figures are rounded.

19. $707 Billion Global Advertising Market in 2012 3.2% CAGR 2007-2012 Source: The Kelsey Group (2007) Note: Figures are rounded.

20. © 2008 The Kelsey Group20 SMBs = 38% of Local Ad Dollars Data source: Universal McCann (R. Coen). Kelsey Group estimates. Data source: Kelsey Group estimates for SMB <100 employees (at all locations), based on Local Commerce Monitor survey data (3 years). Modified by industry-specific sources and interviews. This Project Total Advertising $286 B Local $98 B SMB >100 National (making local buys) (34%) (38%) Spending on Advertising (2007E) National $188 B (66%) Combined = $61 B (62%) SMB <100 $37 B

21. Key Outputs Interactive Advertising  Search advertising as defined by performance-based advertising models and driven by total search query volume  Local search advertising revenues driven by keyword search queries, which include implicit and explicit “local intent”  Display advertising as defined by sponsorship and rich media ad propositions  Classified advertising  E-mail advertising and marketing  Lead generation © 2008 The Kelsey Group

22. 22 U.S. Interactive Forecast: 2007 – 2012 15.2% 25.8% 23.5% CAGR 2007-2012 US$ Millions 28.1% Total revenues to grow from $22.5B to $62.4B Note: Figures are rounded.

23. © 2008 The Kelsey Group23 Advertisers Are Confronted With a Complex, Fragmenting Market Source: Piper Jaffrey (2006) More choices require more guidance

24. © 2008 The Kelsey Group24 BracketVery LowLowMediumHigh Range of Annual Spend $0 - $1,500$1,500 - $5,000 $5,000 - $19,000 $19,000+ Avg. Annual Spend on Advertising (Monthly Spend) $410 ($34) $2,516 ($210) $8,436 ($703) $25,564 ($2,130) Avg. Annual Spend on Web Site* $911$628$2,670$6,117 Percent of LCM Sample (by count) 61%16%17%5% *Base: LCM respondents that have a “Web site or homepage.” Source: Kelsey Group estimates based on LCM XI data. Estimates are sensitive to assumptions. 4 Brackets of SMB Ad Spending Behavior

25. © 2008 The Kelsey Group25 Local Businesses Relying on More Channels The number of different media used by SMBs increases significantly in the higher spending brackets Number of Different Media Used (Count) Source: The Kelsey Group LCM Wave XI (2007) Supports the need for a balanced portfolio of local media options

26. The Kelsey Group © 2008 SMBs by Ad Spending Bracket Annual Spending on All Types of Advertising & Promotion Mean = $2,800* *Excluding a handful of SMBs spending over $40,000

27. The Kelsey Group © 2008 Uncertain of spending plans: 8% Wave X, 4% Wave XI. SMBs Intentions for Overall Ad Spending

28. © 2008 The Kelsey Group28 Users Want More Features, Too * Features that received a rating of 8, 9 or 10 on a 10-point scale. Source: TKG User View Wave IV, February 2007, total sample 501; Wave V, March 2008, total sample 988. Methodology: Online. Cosponsor: ConStat. Top-3 Ratings for Feature Importance (on a 10-point scale*)

29. © 2008 The Kelsey Group29 Geodomain Approach Is Different; Will It Be Disruptive?  Silos of traditional media are giving way to the Internet that can do it all  But Web sites belonging to traditional media are moving away from their parents  There is no one, right way to succeed because each site is unique. Provide the content that meets the needs of your marketplace. (Branson.com vs. Richmond.com)  Building a successful business is HARD. Don’t ever get complacent (example).

30. © 2008 The Kelsey Group30 The Big Picture: GeoDomains at the Crossroads  The industry needs to go back and learn a lesson from what the research said in 1998. Success will come from  Accuracy of Information/Compelling Content  Consumer Awareness  Partnerships  Seize the day: Prioritize opportunities and utilize technologies aggressively  Capitalize on your strength by being the go-to local site. The sales force is key.  Leverage the URLs to make strategic alliances with key players (social nets, vertical sites). An Outsider’s View

31. © 2008 The Kelsey Group31 Parting Thoughts: 7 Rules of the New Environment (Zillow’s Rich Barton) 1.Consumers crave information and power. 2.If it can be known it will be known – by all. 3.If it can be rated, it will be rated. 4.If it can be free, it will be free. 5.Pros who are active players in the new vertical marketplaces win. 6.There can be no vertical marketplace without community. 7.The digital media model rules (local is giant).

32. © 2008 The Kelsey Group32 Thank You! John F. Kelsey, III The Kelsey Group jkelsey@kelseygroup.com “Just Put on Your Sneakers”