Last Thursday I did a webcast for Search Marketing Now on local search called “Local Search Advertising: Challenges and Opportunities.” The slide presentation and a recording of the webcast are available here. Those who didn’t attend can still hear the webcast and access the slides by registering for free.

The presentation was intended to be a very broad introduction and discussion of the topic and some of the complexities and issues associated with local search. One of my personal “projects” is to expand the definition of “local search” from the currently narrow idea of “searches performed on mapping sites, Internet yellow pages and local search engines” to the more expansive but more accurate concept of “a process whereby users seek information online with the ultimate intention of conducting an offline transaction.”

The presentation addressed user behavior, ad spending, local search market share, technical challenges and small business advertiser issues. Here are a few highlights:

  • Locally targeted ad spending in traditional media is worth about $100 billion annually, which is roughly 35 percent of total ad spending in the U.S.

  • Local search spending (narrowly defined) was worth about 15 percent of total online ad spending in 2006
  • As many as 2.2 billion monthly search queries in the U.S. may carry a local intent, though as many as 50 percent of those may not include a geographic modifier
  • While the hold traditional media had over the entire “local value chain” (advertisers, content, sales and audiences) has been disrupted by the Internet, they still exercise a significant influence over consumer buying behavior
  • One of the hallmarks of the local search market is its enormous fragmentation, which makes it more complex for consumers but especially advertisers
  • Marketers have had mixed experiences to date with local search, but believe it still holds great promise; consumers have largely favorable views of their local search experiences
  • Small businesses understand the importance of the Internet but have been slower to adopt online and paid search marketing because of time, confusion and self-service challenges

At the end of the webcast there were numerous questions, which we couldn’t get to because the hour was up. I’ve selected a few of those questions (reproduced largely verbatim) and will attempt to provide short answers here. Q: What do you think is the biggest barrier keeping small local businesses from using online marketing?

As I suggested above, the main challenge is time. Small business owners are time-starved and have more than they can generally handle just with their own operations. Asking them to become online or search marketing experts is almost too much to expect. Having said that, small businesses were among the first to adopt search marketing; but the vast majority need help and guidance, and would prefer for someone to “DIFM” – do it form me. I go into some of the challenges and issues of small business and search marketing in this post. I also talk about a cottage industry that has emerged to help them adopt local search marketing in this post.

Currently, something less than 5 percent of the “addressable market” of small business advertisers is using some form of paid search.

Q: If you were a small business, would you try and do this yourself or use a third party like a SuperPages.com?

As I suggest above, it’s a function of time and inclination. Most small businesses would prefer to have someone handle SEM for them. However, some number of people prefer to do it in-house. In the second referenced post immediately above there is a list of companies that offer simplified search marketing, with simplified pricing, for small businesses. Many local media companies, such as yellow pages and newspapers, work with these local SEM firms to offer a branded version of their services to local advertisers.

When you work with a third party, which is in turn outsourcing SEM to someone else, you’re going to pay additional costs. But it’s familiar a trade-off: time vs. money. SuperPages, for its part, acquired SEM firm Inceptor and does all the local SEM for its advertisers in house. Q: If I search for a “dentist” with out any geo qualifiers, it is my understanding that the search engines now use the IP of the router to deliver results (businesses) within that region. True?

Yes, all the major search engines are using IP targeting to serve ads when they can sufficiently identify the computer’s location and they “infer” the user is conducting a local search. It’s a fairly safe bet that queries such as “dentist,” “lawyer,” “plumber” or “sushi” are local because they are typically “fulfilled” locally. Google, for example, will serve a mix of local and non-local ads in such situations. And on Yahoo’s Panama platform, local ads, with local content, will potentially get a higher quality score than more “generic” national ads.

IP targeting is imperfect but works fairly well. Wifi “triangulation” can also be used to identify user location for ad serving. Having the user input a default location is another strategy. In all likelihood location awareness will eventually be incorporated into the browser. Q: Can you please discuss how in the future local search will track demographics?

As local search moves from DMA to zip to neighborhood it will become a proxy for demographic targeting in many cases. Demographic and pseudo-demographic ad targeting is currently available from the search engines. Microsoft and Yahoo use consumer registration data to offer varying degrees of demographic targeting. Google does it through site targeting now but may use registration data over time to do the same.

There are large amounts of of U.S. Census and other data that can be layered on top of maps. That data will ultimately be available through search engine ad platforms to help marketers refine their campaigns geographically.

Q: Why do consultants like you keep saying mobile is going to be huge when consumer surveys say people won’t want to pay to see ads or pay to get more information? And who are the big mobile platform players?

There are more than 2 billion mobile devices in the world and roughly 230 million in the U.S. For every survey that shows people are ambivalent about advertising on their mobile phones, there are others that argue people want access to content on the go and are willing to view ads that are “relevant” to their interests. Ad targeting makes a big difference in consumer receptiveness to mobile advertising.

Usability issues have so far kept large numbers of people from adopting mobile content and search but the situation is rapidly changing as carriers, search engines, handset makers and content providers all work to improve the user experience. Right now the overwhelming number of mobile users are using their phones for traditional voice communication, followed by text messaging – as many as 50 percent of mobile users have sent or received text messages – and then mobile Internet use (about 32 million in the U.S.)

Beyond the carriers, the major search engines and portals are the dominant players in mobile currently. There are “upstarts” (e.g., Twitter) and social networks (i.e., Facebook) that may find great success in mobile however. Q: Google seems to be making a big move into cost per action. My theory is because SMBs don’t have time to optimize PPC campaigns versus national companies.

I think there’s great potential for CPA in the local space. I’ve written fairly extensively about that here. I would argue it’s not so much about time as about the more “tangible” nature of the lead being delivered. On the continuum you move from CPM to PPC to PPCall to CPA in terms of the “concreteness” of the lead or action. Local businesses really don’t know what a click is but they do understand calls and, even more, sales.

Q: Could you please explain the implications of the Geomas lawsuit for Google, Yahoo and smaller players like Marchex and Local.com?

Here’s a post I recently wrote on the issue. Basically the patent is going to have to work its way through the courts. If the initial action against Verizon succeeds it will potentially mean that everyone providing local search (as defined by the patent’s scope) will have to pay licensing fees to Geomas. Ultimately, however, my belief is that the company is seeking to be acquired for its IP portfolio by one of the big local players.

It’s also possible that the action will not succeed under the U.S. Supreme Court’s new “obvious” test in patent litigation.

More to come

There were a number of highly specific, tactical questions about improving rankings in local search results and access to free sources of traffic that are beyond the scope of this particular column. However, those issues will be among those we’ll be addressing in future columns and at the forthcoming SMX Local & Mobile conference this fall.

Greg Sterling is the founding principal of Sterling Market Intelligence and publishes Screenwerk, a blog focusing on the relationship between the Internet and traditional media, with an emphasis on the local search marketplace. The Locals Only column appears on Mondays at Search Engine Land.

Related Topics: Channel: SEM | Local Search Column | Search Ads: General | Search Ads: Mobile Search | Search Engines: Maps & Local Search Engines | Search Engines: Mobile Search Engines | Search Marketing: Local Search Marketing

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About The Author: is a Contributing Editor at Search Engine Land. He writes a personal blog Screenwerk, about SoLoMo issues and connecting the dots between online and offline. He also posts at Internet2Go, which is focused on the mobile Internet. Follow him @gsterling.

Connect with the author via: Email | Twitter | Google+ | LinkedIn



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