Local Search technology and advertising in local search results

Local search is, to my mind, one of the big growth areas of search engines and search marketing in 2004.

As I type this at the end of 2003, finding local businesses and organisations online is more difficult that it should be. I have to use a specialist Yellow Pages website and hope the site search technology is good enough to provide relevant results. And there are 100s of local companies who haven't paid for a Yellow Pages entry, but do have websites or an online listing in a trade directory etc.

So instead I can use a search engine - and yes they may display local company websites in their results, but these may not be those offering what I am searching for. Or it could be companies miles away who have put the name of the place I searched for in their site text to get me to their site (somebody teach them about relevant traffic!).

So I believe that we will see in 2004 the development of 3 areas of local search technology:

- interfaces that allow searchers to easily refine their search to the type of business and area in question,
- crawlers that spider websites and try to understand the area the company serve and use this information to serve the main ('natural') search results (Google has this in testing),
- solutions that enable PPC advertisers to target their adverts regionally (possibly as a result of two or three keyword searches built using the interfaces mentioned above. Again, Google already have this for a limited number of US areas).

Some of the improvements these developments will offer are:

- improve search experience for the searcher,
- increased user loyalty for the search engines or Internet Yellow Pages who get this right,
- higher quality traffic for website owners (e.g. searches for "lawyers" become "lawyers London", "lawyers Islington", "lawyers Surrey" etc.),
- more advertising opportunities for local business in pay-per-click results, as searches become more locally targeted and so offer the possibility of a sustainable ROI from search advertising
- possible new developments in search adverting - tailoring ad copy or special offers to the demographics of different areas for example
- the use of local search technology to aid personalisation of search results to your individual tastes and needs (e.g. showing local restaurants if they search for "eating out")

Below are links to some articles and papers on local search I have written or contributed to:

Local search: the next big thing in pay per click

My examination of the state of local search in the September of 2003, and some predictions for what is next (written as Overture and then Google both announced trials of their local search solutions).

I have also contributed to The Kelsey Group's 2nd White Paper on local search: "Digital Directories: Interactive Local Media - 'A Closer Look at Local Search'" released in December 2003.

Below is a copy of an interview I gave with Greg Sterling of eContext (published by The Kelsey Group) in the Autumn of 2003 about local search.

Q. Will local search extend the pay-per-click/pay-for-performance [PPC/PFP] ad boom to small businesses?

A. Yes. There are many businesses that serve a limited geographic area - for example, lawyers, car dealers, restaurants, etc. - that don't currently use pay per click (or even have a Web site) because there is no specifically local traffic for them to receive from the search engines. Many of these are service-sector businesses, or they sell products people want to see and try before they buy (such as cars). There are SMEs [small and medium-sized enterprises] that use PPC advertising now. They bid on generic keywords (e.g. "lawyers") with creative that clarifies the area(s) they serve (e.g., "lawyers for the south of England only") because there are few actual local searches (mainly because many consumers are still not good at using two or three keywords when searching). These advertisers are crying out for local search traffic.

This will be especially true of local search on mobile phones and PDAs; businesses that don't directly advertise online now, like restaurants, will have reason to. Japanese mobile phones already offer details of local services, like Noodle stores.

Putting local search results on mobile devices will be easier for search engines, Internet Yellow Pages (IYP) and mobile networks once local search on the Web has taken off, because a bank of advertisers will have been built up.

Q. What are the obstacles to small-business adoption of paid/local search?

A. Obviously the lack of a Web site will restrict many SMEs – but these days the cost of a Web site detailing the services a business offers and its location is relatively cheap. Any business that is committed to the Internet as a sales channel will be prepared to make a modest investment in a Web site.

Setting up and maintaining pay-per-click campaigns can be labor intensive for SMEs. This will be an obstacle for some. But there are an increasing number of consultancies and agencies that will create and manage campaigns for SMEs, as well as articles and Web sites that offer step-by-step guides for SMEs wanting to manage PPC campaigns themselves.

The first obstacles are educating SMEs about the concept of pay per click in general and local search within that context, but these are obstacles that can be overcome. The SME market is already being targeted by the sales and marketing efforts of the major PPCs. For example, Google recently gave customers of UK hosting company One and One a 50-pound (about US$88) credit for their AdWords program.

Q. Will local paid search steal share/revenue from other advertising media? If so, which ones are the likely victims?

A. Two of the most important characteristics of PPC (which advertisers have told me they love) are the accountability and transparency of the model. Advertisers can tell exactly how many people saw and clicked on their ads, how much each click cost and the overall cost over any time period. With conversion tracking on their Web site, they can also see which search engines and keywords convert into sales/registrations. This enables them to refine their advertising and increase their ROI.

There is no other form of advertising I know of that offers this level of transparency. As more consumers search locally online, the traditional forms of local advertising they have used offline – printed directories and telephone-based services – will suffer. Online is often easier for consumers (they feel more in control) and will therefore attract advertisers seeking those consumers.

This shift has already been anticipated to a degree in the UK by Thomson Directories, which launched a PPC engine, WebFinder, earlier this year. But I expect a more likely situation to be IYP companies partnering with PPC engines and putting their PPC results on their Web sites. Their sales forces can then sell PPC to advertisers on the basis of getting listed on the IYP Web site (for local search traffic) and the PPC engines network - including major search engines (which will probably implement their own local search technology). This will be an attractive package for SMEs.

Q. How big is the potential market in Europe for geotargeted advertising via paid search?

A. Right now there are no figures for the potential size of the local search market in Europe. However there is a strong market for Yellow Pages-style services offline and online (e.g., the UK Yellow Pages Web site Yell.com).

As mentioned, Thomson Directories launched its own pay-per-click engine earlier this year. So far it has a limited distribution network, but this shows the importance placed on local search in the UK marketplace.

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