Will Local Search Live Up to its Hype?

The potential exists for more geographic-specific search results and advertising, but meeting Web users' needs and getting local businesses to advertise remain challenges, say executives of search and online directory companies.

SANTA CLARA, Calif.—While it may be making headlines, local search remains in its formative days as search engines and traditional yellow-pages companies figure out how to attract users while also snagging often-elusive local advertisers, panelists said Wednesday at a search conference here.

Part of the challenge is striking the right balance between satisfying Web users needs to find local businesses and information and meeting businesses desires for simple, effective, search-based advertising, said search executives gathered for The Kelsey Groups two-day Drilling Down on Local Search conference.

"Were in the second or third inning in the game to build the best local-search experience collectively," said Paul Levine, Yahoo Inc. general manager of local products.

About 98 percent of the 22 million businesses in the United States are small or midsized, and they spend about $22 billion a year in local advertising, Greg Sterling, a program director at The Kelsey Group, said in an opening address. While these businesses are familiar with buying traditional ads, such as print yellow-page listings or newspaper ads, many remain unfamiliar with search-based ads that involve an auction method for bidding on top keywords in search queries to return a sponsored link.

"Some search engines think that if they build it, the local advertisers will come," said Charles Stubbs, president of the Intelligent Media Ventures group at BellSouth Corp.

While local businesses may be confused by search advertising, they are becoming more interested in promoting themselves online. Removing complexities such as keyword bidding is the key to reaching them, Stubbs said. BellSouth, for example, through its local ad sales recently began offering an option for advertisers to buy a set number of clicks a month across major search engines, he said.

Other directory companies also have launched their own search-based ad programs. When it relaunched its directory site in March, Verizon Information Services SuperPages.com added a pay-per-click sponsored link program. As part of the program, it offers to fully manage the bidding process for advertisers and bases bidding on specific categories rather than on generic keywords, said Lester Chu, vice president of strategic planning and marketing.

Next Page: Local-search advertising will grow at slower pace, report predicts.