A report from today’s opening panel at SMX Local & Mobile, Denver, Colorado.

Huge market, huge confusion, huge challenges—that could summarize discussion on the Meet the Local Search Engines panel, consisting of some of the major players in local search—including major search engines’ local search properties, an exclusively local search engine, the largest Internet Yellow Pages (IYP), and a search marketer in the local space.

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Session moderator, Greg Sterling, Founding Principal of Sterling Market Intelligence, started off the dialogue with his one word summary on why local search is really important. “Money.” Even with the increased ad, business and consumers spends online, Greg explained that online money is a tiny sliver of what’s being spent offline. All the transactions are happening in the real world, and the real world is the last mile of search.”

Justin Sanger, Founder and President of the SEM firm LocalLaunch, concurred with this stat: “In local search, the majority of activity (93%) takes place offline.”

Yet for all the local consumer interest, business are barely taking advantage of the online local space. So, what’s right and wrong with local today? What’s holding the market back?

Sterling gave his 3 reasons local businesses are not spending online to the degree of market opportunity: budget, lack of time and personnel, and confusion.

One disagreement brewed over whether a lack of content is prevalent online today. “There’s not enough business content online.” said Sanger. “Businesses aren’t putting it on, and we need more content for the experience to get better. User generated content is going to be key to the process.”

Other panelists disagreed, including Matthew Berk, Lead Search Architect for the online ad solutions provider, Marchex. “There’s plenty of local content. The question is how to make best use of it. For example, do you really want to go through all 120 reviews of a restaurant? There’ have to be better tools to help us make decisions, rather than just a volume metric.”

All of the panelists agreed that the growth of the local space will depend on better merchant education. Part of this problem could be attributed to the lack of maturity of the local online space. “There’s a lot of different places to advertise in local, and without the consolidation, it leads to a lot of confusion.” said Greg.

Heath Clarke, Chairman and CEO of the search engine Local.com, explained that a portion of the responsibility falls on the merchants, themselves. “I believe the failure rate of small businesses is 80% in 5 years. The reality is that a lot of these small businesses don’t even know how to advertise, period. They’re not very good at it. It’s going to be challenging to get the message out with this more advanced form of advertising, no matter how good it is or simple it is. Part of the challenge is we have to educate businesses how to be better at marketing their own businesses, not just at what we do.”

Frazier Miller, Director of Product Management, Yahoo! Local, defended the search engines and IYPs in their ongoing efforts to educate merchants. “At Yahoo, we work closely with our partners, because one of the key things in the space with reaching out to merchants is how to educate them, millions and million of merchants. The traditional IYPs have made lots of progress thinking of their channel in terms of how to best educate their merchants with how to advertise online (education), at the same time they’re conflicted with their own properties they’re purchasing. We need to clarify and offer more educational packages that are broad-based and objective as possible and across multiple areas (SEM, direct mail, etc.), not just one property in a direct channel.”

Another contentious issue was Sanger’s predication that the IYPs will diminish and fall by the wayside to the major search engines in the local space.

Matt Crowley, CMO of YellowPages.com, argued that the IYP market and returns are steadily growing. “We’ve only started building relationships with advertisers, and we’ve seen the average revenues per click increase in the last 24 months. That’s a strong indication that the businesses we’ve partnered with are investing more, it all points to stronger ROI.”

Grant Crowell is CEO and Creative Director of Grantastic Designs. The Locals Only column appears on Mondays at Search Engine Land.

Opinions expressed in the article are those of the guest author and not necessarily Search Engine Land.

Related Topics: Channel: Local | Google: Maps & Local | Local Search Column | Search Engines: Maps & Local Search Engines | Yahoo: Maps & Local

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About The Author: is the senior media analyst, podcast show host, and vlogger for ReelSEO.com – an online magazine dedicated to video news and marketing strategies with video for everyone. Grant’s regular coverage for ReelSEO includes video in SEO, social media optimization (SMO), legal issues, and web video production.

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