"Local" webvertising?

We had an interesting speaker in my Pricing class yesterday. He contrasted Google's use of auctions for advertising (Bidding for AdSense Keywords) with traditional media buy patterns (TV, Print, Radio etc.)Since online ads are measured in clicks (a viewer action) rather than impressions as in traditional media, companies ROI on advertising money is much easier to quantify. One of the speaker's "thoughts for the future" was the idea that local advertising would play a bigger and bigger part of overall internet ad revenue. Will it?

On one hand, the potential for selling ads on Google Maps or other map-it sites is clear. Restaurants might pay to appear on the map while someone was searching for driving directions towards a theater for example. As a map becomes less and less useful the more ads are placed on it, Google might manage this map space in an auction style as well. Provided that Google, or whomever, can provide some simple way to facilitate these media buys from local companies this strategy makes a lot of sense.

The problem I see with the "local" concept is that I'm not sure it applies very well to the internet beyond the "map software" space. While the web in many ways is much more "precisely targeted" than traditional media, the one area where old media is better targeted is by location. It is much easier to reach residents of a particular city block by placing an ad on the side of a bus shelter than it is by using the internet. I think one shouldn't discount the power of traditional media just yet: It has become one of a set of tools rather than the only available tool.