In a panel on mobile local ad networks, Verve Wireless CMO Greg Hallinan, xAd CMO Craig Hagopian, Where VP of BD Dan Gilmartin and AT&T Interactive SVP William Hsu each offered data and context to validate mobile’s efficacy.

Hagopian: xAd’s geocoded ads earn 3 percent to 8 percent CTRs, with secondary actions on these ranging from 25percent to 50 percent. This can be explained by the mobile search user’s “intent to act on information within an hour.” The query chain, or funnel, is dramatically compressed.

Hallinan: Verve’s local display network is seeing a “significant increase in the volume of locally sold mobile ads.” And once on-board, those businesses show a high propensity to renew, and at three to five times the level of the initial spend.

Tsu: Similar to Verve, AT&T’s branded local display network is driving $3 eCPMs on average. These can escalate to as high as $10 to $15 in some cases.

While local targeting is essential to capturing mobile user intent, the panelists added that context plays an equally central role in optimizing an ad’s relevance for an individual consumer. As an example, Where recently ran a campaign for Halls that geofenced a one-mile radius around the areas of a city where the flu index spiked, driving consumers to nearby CVS, Walgreens and Walmart.

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Even though it’s a seemingly dead simple and compelling concept, Truka admitted that while most local businesses have a general awareness of what Groupon is (primarily driven by their own personal use), “they still don’t exactly know how it works for the most part.” In other words, time to take a step back.

As Groupon has exploded from its Chicago roots to a 43-country phenomenon that plans to IPO at a $25 billion valuation, it has also learned a measure of patience about what works, for whom and at what threshold. In Truka’s words, “measure twice, cut once” with merchants.

BIA/Kelsey already sees the original deal-a-day concept evolving into a broader, deeper universe of marketing, promotional and transactional products and services. Similarly, Groupon is redefining itself as a “city guide.” Its entry to mobile (Groupon Now), verticals (travel, live events), consumer-packaged goods (General Mills pilot) and loyalty (Quiznos punch card deal) suggests that redefinition is well under way.

For traditional publishers, the Groupon threat is twofold. The company is stealing share of mind and wallet from merchants. It’s also grabbing local sales resources. “We definitely hire YP reps,” Truka said. “It’s a very similar industry, and they make great reps.”

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Taking merchant content and syndicating it across a bunch of channels is a key effort for Local Matters, the tech firm now being led by CEO Tom Higley. Speaking at DMS ’11 in Denver, Higley said the company’s new “DigitalSeen” product is an example of the new environment that is evolving to serve merchants and put them in a closer proximity to revenues. Working with merchants won’t work if it is “doing business as usual,” he said.

“I’m a start-up guy, a tech guy,” he said. “You can actually hold forth on a vision and prove if it works or doesn’t work. You don’t need to put the whole company at risk to do so.”

Engagement features are also important. “It is about more than search,” said Higley. He noted that Local Matters is focused on a set of questions, such as: How do I connect? How are my friends engaged? What kind of continuity is there with the account? “These things are nascent. We are just beginning to explore these things. But they are closing the loop in the online and offline space.”

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At DMS ’11, Marketplaces Program Director Peter Krasilovsky painted a sunnier picture of the robust and still-rising group buying industry. Among the notable growth signals are exceptionally big email lists with high (yet declining) open rates, a “no money down” value proposition and the equivalent of free advertising for participating merchants.

Groupon’s Chicago mailing list, in fact, more than doubles the combined lists of the market’s two daily newspapers. This opens up a universe of integrated marketing and promotional possibilities for SMBs far exceeding the deal of the day.

BIA/Kelsey’s recently updated deals forecast reflects our bullish view of the market. VP of Research Mark Fratrik sees the user base broadening. Combined with better personalization and targeting of deals (including mobile and flash deals), the result will be more relevant offers to a bigger audience. The forecast charts revenues increasing at a decreasing rate, ramping from $1.9 billion in 2011 to $4.1 billion by 2015. Mobile integration, specialized niches (B-to-B, for instance) and loyalty/retention tools can amplify the market even more.

Then there’s the evolving role of social signals in driving deal virality. While Facebook recently withdrew its Deals product and Yelp has scaled back, we still see promise in providers that are able to create powerful recommendation and referral loops that tap into social connections and affinity-based buying communities (moms, to name just one).

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What does digital transformation truly look like? And how far along the path to a new revenue model are directional publishers? Those questions were front and center at DMS ’11, as Dex One Chief Strategy Officer David Sharman, YP New Zealand CEO Scott Pomeroy and Local Search Association President Neg Norton debated “the future of Yellow Pages.”

Sharman was quick to clarify that his organization no longer views itself as a “publishing company,” instead transitioning to a broader marketing and solutions value proposition that is increasingly driven by a performance-based mobile product set. Ultimately, the core asset remains the same — not the print book, but the established brand and connected sales resources.

Pomeroy, who has aggressively accelerated digital initiatives at YP NZ since taking the reins in January, raised more radical notions of transformative change. Rather than squeezing the final revenue drops from a legacy channel and methodically marching toward digital, he volunteered that traditional media have a responsibility to at least consider running a digital-first business in which digital would be spun off as a separate entity. He reminded the audience that “the market awards value in a digitally based business that is growing.”

Naturally, that raises questions of innovation…if YPs, even with some new internal blood, are positioned culturally, operationally and financially to iterate at the speed that the digital environment requires?

Pomeroy asserted that YP NZ is not a technology company, but an “interpretive marketing services” specialist. For Sharman, it’s all about smart partnerships that fulfill client needs. Perhaps the sweet spot is thinking like a tech firm, even if it’s not a core competency.

The eternal challenge pushing back against these disruptive approaches is actual strategic implementation. As Norton summarized: “Where we’ve fallen down as a group is execution.”

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Two companies investing in self-service advertising for SMBs agree that self-service is an important and growing category, but isn’t likely to replace direct sales.

This morning’s panel at DMS ’11, “SMBs and Self-Serve: Ready for Prime Time?” featured Paul Levine, COO of the real estate site Trulia, and Ørjan Hanssen, a product manager at the Swedish directory and search company Eniro.

Also, a service component is critical to transitioning small-business advertisers from full-service to self-service.

Speaking first, Levine tried to debunk some myths he sees about online advertising and self-serve, and offered some tips for successful execution.

Myth No. 1: Online Is an Add-On. Levine pointed out that newspaper print classified revenues have plummeted over the past five years, with the main categories of real estate, autos and jobs having more digital revenues than print.

Myth  No. 2: Online Can’t Deliver Foot Traffic. Levine had a two-word response to this: ask Groupon. Online can also drive phone calls.

Myth No. 3: Creating Content Is a Hassle. Levine talked about new tools making this easier than ever. Example? Food cart culture in San Francisco, where vendors use Twitter as their sole marketing platform.

Next Levine offered three tips for selling online in a self-serve environment.

Trulia has kept the freemium funnel filled, with reviews, free webinars and so on. It drives to a ratio of 10 free engagements for every one that is paid.

Tip No. 2: Peer Pressure Is Powerful. Ego plays a big role in SMB decisionmaking, so it makes sense to exploit it. “Realtors are all about their personal brand, so we make sure they understand what their peers are doing.”

Tip No. 3: Cross Over and Back. It’s a mistake to treat self-serve as a discreet channel. Trulia has both self-serve and direct sales, and the two should be integrated. When a customer comes into Trulia via self-serve, a salesperson is assigned to make contact to retain and upsell the customer.

Eniro‘s Hanssen talked about the Scandinavia Ad Networks product, built with the help of systems software vendor Amdocs.

Hanssen said Eniro’s key insight was that if it is going to compete with 100 percent self-service business models, it needed to differentiate itself with a strong service component.

“We had the opportunity to use service as leverage to help SMBs take a step toward self-serve,” Hanssen said. “There is a need for a solution that supports them on the journey from full-serve to self-serve.”

Some of the methods Eniro has used to help SMBs down the path to self-serve include using detailed performance reporting as well as live customer support. The reporting is designed to promote engagement by the advertiser with the self-service platform.

During the questions and answers session, Levine said he doesn’t see self-service as a replacement for live salespeople. “You will find few examples of services that are 100 percent self-service to SMBs.”

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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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“From where I sit, I am at the intersection of cool maps, our growing search share and local commerce,” said Sampson. “It is a great place to be at Microsoft.” What is quickly evolving are the troika of “context, time and location.” Each is enfranchised by the rising use of mobile devices, and “really change[s] the state of advertising,” he said.

Local is especially important, and 20 percent of all searches are now location-based — something that has been pushed up by the improving technology capabilities and open APIs for maps and other features. Windows phones, for instance, allow users to turn location on and off based on what time it is and where they are. Deals are being geoparsed as well.

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Yellowbook CEO Joe Walsh made a very direct case this morning for massive consolidation in the core U.S. Yellow Pages business sometime over the next couple of years. Ultimately, Walsh believes there will be a single national print Yellow Pages company, which he says will be an excellent platform to pivot to a digital business.

As moderator Neal Polachek noted, Walsh arguably fundamentally changed the U.S. Yellow Pages industry by offering a direct competitor to the incumbent Yellow Pages publisher in major U.S. markets, something that was fairly rare before the late 1990s.

That competition, based on the premise that incumbent Yellow Pages advertising was overpriced, spurred a wave of me-too competition in large markets, creating a huge oversupply of Yellow Pages in most U.S. cities. The economy and the shift to digital is beginning to correct this oversupply.

“We are seeing the fifth and sixth book begin to go away,” Walsh said. He compared this excess of competition with the more recent oversupply of daily deal companies. “We are seeing the over the top stuff starting to shake itself out, leading to a more direct and full consolidation next few years.”

On yesterday’s Future of Yellow Pages panel, Dex One Chief Strategy Officer David Sharman referenced consolidation indirectly when he expresed a desire for Dex One to gain a fully national platform to sell digital advertising solutions. Last year, Dex One was widely rumored to be a potential merger partner for SuperMedia, but that deal never materialized.

In his presentation, Walsh said his modeling shows that consolidating two hypothetical large directory businesses that are seeing roughly 15 percent annual revenue declines, as well declining EBITDA despite cost cutting, could stabilize revenue declines and eventually return to EBITDA growth within a few years.

Asked what will trigger this consolidation, Walsh said it will just take the right group deciding the opportunity is ripe.

“We are almost there. It will take a financial group that says ‘I see it, let’s go.’ Some would argue it has been sitting there for a while,” Walsh said, adding that it won’t happen this year. “But defiinitely before the next time I am here.”

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Sieben noted that companies that integrate with the API gain access to YPG’s 1.5 million business listings and 1,200 salespeople. To date, more than 30 apps have been built with the API. A site such as “Flushfinder,” for instance, directs people to local public bathrooms.

Major partnerships have also been formed with players such as Twitter, Poynt and CBC. Sieben said the data are being used by large national brands to incorporate local Yellow API into local campaigns, such as IAMS, the pet food company. “We are mapping an API ‘Rosetta Stone,’ ” said Sieben.

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