In the afternoon session at the BIA/Kelsey DMS conference on Wednesday afternoon, two players in the local search industry talked about the growing local display market and the use of display by SMBs. Moderated by Matt Booth of BIA/Kelsey, Tyler Bosmeny from PaperG and Warren Kay from iPromote spoke about the increasing use of display advertising by SMBs. Specifically, these industry participants talked about the improved efficiency that is occurring as this industry matures.

According to the most recent BIA/Kelsey Local Commerce Monitor survey, 11% of all SMBs use online banner or display advertising. Both Tyler and Warren agreed that it is an incredibly growing method for SMBs to get information out about their product or service.

One reason for this growth has been the significant increase in the inventory of display advertising that has been generated by social networks. This increase in inventory has naturally led to lower prices for this advertising, making it a more “doable” buy for many SMBs. An additional benefit of the increased inventory has been the ability to better able “dice and slice” this inventory either geographically or by different demographics. Having a more targeted audience for display advertising makes it much more desirable for SMBs.

What’s the future for display? Will it be larger than search for SMBs? Of course, that will be seen. But, the feeling of the panelists was clearly that local display will become an even more important vehicle for SMBs to attract and retain its customers.

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Over the past year, American Express has embarked on a series of initiatives centered on digital advertising intelligence for SMBs. These include SearchManager (via Clickable) for SEM and multiple social media experiments with Facebook and Foursquare. Now, its small business-focused OPEN division is rounding out the suite with AdManager, which utilizes AdReady’s dynamic display capability to enable merchants to more effectively leverage the format.

Amex OPEN VP Rob Ciccone told BIA/Kelsey that the platform aims to solve the two chief problems that prevent SMBs from actively and effectively incorporating display: It’s “too complex and too expensive.”

AdReady has simplicity in mind with the dashboard it is furnishing to address these problems. Businesses can choose from hundreds of ready-made templates that can be quickly customized. Once the creative is in place, they can then pick from multiple forms of targeting and select media sources for placement across established networks (Yahoo Network, Google Network, DoubleClick Exchange and more). Facebook campaigns will also be included. Banners ads with video and animation are available as well.

The goal is a self-serve vehicle that any SMB can feel comfortable using. And, as Ciccone emphasized, the basic AdManager tool is available to all SMBs, not just OPEN cardholders. Premium tiers, with dedicated advisers for more complex campaigns, are also available.

The jury on the future of display is still in deliberation, with some retailers decrying its static and hard-to-track characteristics, while others, such as Google Chairman Eric Schmidt, extol it as a booming opportunity (Schmidt’s market forecast: $200 billion).

We see display in the throes of an evolution that ultimately could prove revolutionary to its long-term relevance. This can occur as creative, formatting and targeting all push forward by incorporating more dynamic rich media forms and leveraging the social graph for deeper consumer insights.

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BIA/Kelsey projects that total U.S. social advertising revenues will surge from $2.1 billion in 2010 to $8.3 billion in 2015, growing at a 31.6 percent compound annual growth rate (CAGR). Driven by Facebook, social networks will command a majority share (51 percent) of all display ad impressions by 2015.

The inaugural social advertising forecast is part of BIA/Kelsey’s U.S. Local Media Annual Forecast. The full release can be read here.

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For iPromote CEO Michael Barr, “a picture is worth a thousand words.” Now he’s trying to convince third-party publishers, and the local clients they represent, that it’s a no-brainer to serve keyword and location-based display ads alongside the text-based search ads they are already running. This is expressly what iPromote does with its LocalSearch offering.

Barr believes the answer is automated ease-of-use — that simplicity creates scalability. Only then will large-scale sellers add display to their toolkit and SMBs embrace it. The LocalSearch solution is built around the core idea of taking the work out of display while still producing fast, targeted ads to fulfill inventory needs and satisfy ROI demands.

A local merchant’s Web site or business listing URL is inserted, iPromote uses a combination of the client’s information and its own database content to create a display ad, and the publisher or business then pinpoints where and when the ad will run and the campaign budget.

The geotargeting built into the interface means that when a user queries a particular term and location, a locally and contextually relevant display ad will serve. Location-aware features enable “locally relevant display ads,” which, according to Barr, convert at a 2-5 times higher rate that generic display.

Image Credit: iPromote

The ads can be branded with either the publisher’s or the advertiser’s name. A dashboard allows for real-time campaign management and ready-made changes to ad content (drag and drop new photos, revise the business description, etc.). Ads are also optimized for mobile platforms.

IPromote is already in motion with several partners, and Barr has set a high-priority goal of attracting major IYPs and local search directories to the service … those that serve thousands of SMBs. These publishers would reserve display real estate on their search results pages and subsequently be able to bundle display offerings with existing search campaigns to drive down the cost of lead generation.

Once publishers place the ads on their own sites, they can then select other locations to distribute the ads. They can also blast them out across the iPromote Ad Network, which includes Yahoo, Bing, CitySearch, Local.com and many more publishers.

Barr and his team are banking on resurgent growth in the display market, and recent data show he’s on to something. This week, IAB reported that display-related advertising revenues for the first half of 2010 rose almost 16 percent year over year.

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