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.
Also Wednesday, Jupitermedia Inc.s Jupiter Research issued a report predicting that local-search advertising will grow at a slower pace than online advertising overall. Jupiter expects local-search advertising to grow 15 percent annually, compared with 19 percent annually for overall online advertising.
To grow the market, more players are likely to emerge to help local advertisers reach search engines, said David Galvan, Yahoos director of business development. Yahoo, for example, does not expect to put a full sales force on the ground in local markets, but local advertisers still will be seeking promotion through its search ad programs, he said. Yahoo early in March expanded its local search features.
“Theres a need for a layer of middlemen that could come out of anywhere,” Galvan said. “They will find way to get stuff to the local level.”
On the consumer side, though, executives from search and directory companies agreed that demand is rising only for geographic-specific search results and for local content, as more and more Americans are always connected to the Internet through broadband.
Brendan Benzing, America Online Inc.s executive director for AOL Search and Directional Media, said he recalls a rush in the late 1990s to target local markets online, only to watch expectations exceed reality.
“Ive been on a hype roller coaster before,” Benzing said. “But consumer behavior really has changed on the Internet. The consumer is beginning to use the Internet as a utility, and that will lead to local search being used more and more.”
Ultimately, local search and content will become more integrated into the search experience as the volume of structured and unstructured information grows, said Sukhinder Singh, Google Inc.s general manager of local search. Singh said she expects a wider array of partnerships among search providers, local directory providers and other local content providers to create a pool of local data.
Google has focused on creating a single search-query box where information across a spectrum of areas, including local, can be found, Singh said. Google last month launched a beta version of its Google Local search.
“It would be foolish not to think in three or four years that search engines and Internet yellow pages dont include each others feeds and, quite frankly, feeds from others,” she said. “If its the same data set or content set, then it will be about the consumer choosing the entry point thats important to them.”
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