The 411 on Local Search

By Jennifer Schiff | Posted December 20, 2005

If you're reading this article, you're probably one of the millions of people who spends most — or a good chunk — of the day on the computer. When you need information about a hotel, car rental or even medical advice, chances are you're typing some keywords into a search engine. However, when you need to find something in your own backyard, particularly an offline service business — such as a plumber, a restaurant, an accountant or a florist — the Internet has generally fallen short. But the power of local search is growing fast, and if you're not advertising your business with search engines, rest assured that your competitor around the corner is.

According to various research studies, 111 million people execute 46 billion Internet searches annually, way outpacing traditional Yellow Pages searches, and 25 percent of those searches are local in nature. Moreover, that local search piece of the big Internet pie is said to be worth $100 billion for the companies that can figure out how to properly exploit it. MSN tried years ago with Sidewalk, now part of Citysearch. Smartpages.com merged with Realpages.com to become Yellowpages.com, which competes with Verizon's Superpages.com, which recently celebrated its 10th anniversary and claims to be "the nation's most advanced online yellow pages, complete with shopping comparisons, coupons, maps and more than 18 million national and local listings."

Of course, not to be outdone by a bunch of yellow pages suppliers, all the major search engines — Google, Yahoo, and MSN — have set up special local search functions. And there are new players on the scene, like the recently launched TrueLocal.com, which advertises itself as "a Yellow Pages with brains," and currently indexes over 13 million — mostly offline — local businesses and 50 million local Web pages.

Getting and Keeping Eyeballs
As JupiterResearch Senior Analyst Gary Stein explains, "local search has been around for a while, but until recently it did not make more sense than picking up the Yellow Pages or the local newspaper or talking to friends, because it wasn't complete or accurate or compelling enough. Now it's starting to make sense to consumers. And if it makes sense to consumers, it makes sense for companies to invest, and it makes sense for advertisers to start advertising."

As far as feeding demand, the biggest challenge with local search, says Stein, is the cost of traffic, or "how much money these local search engines are going to spend to bring people in to use their search engine. Local directories have to find a way to get people to come to their sites in a way that costs less than the revenue they take in," Stein explains. "That's why Yahoo and Google are so well positioned, and after them Yellowpages.com and the traditional directory groups, because they already have relationships with local merchants."

Creating a New Paradigm
Competing against the well-funded "big boys," however, has not deterred TrueLocal. "Our mission is to drive online searchers to offline businesses," says TrueLocal President, Jake Baillie. "We know that a lot of people prefer to shop locally if they can, and we want to get eyeballs on the local stores that are out there."

To do this, TrueLocal has amassed an impressive amount of rich data, with 13 million mostly offline U.S. businesses in its base files and then another 50 million Web pages indexed.

"If your business has a phone number, we're going to pick you up," states Baillie, whose worker bees are also constantly trawling the Internet for new URLs linked to local businesses.

"It costs nothing to be listed in our organic database," he continues. "As a matter of fact, besides all of our crawling efforts, anybody who gives me a business card gets put into the database if they are a physical business."

To advertise the site — and get both consumers and offline businesses to use it and advertise on it — Baillie and his team constantly go to vertical-specific trade shows and chat up local business owners. "I'm a big believer in guerilla marketing. We're really trying to get feet-on-the-street advertising," he says.

And, like the major search engines, TrueLocal sells advertising, for as low as a dollar a month per zip code. "It's auction based," says Baillie.

If you are a plumber in 60603 and want to get a preferred listing on TrueLocal in your zip code, you would enter a minimum bid of a dollar per month. Not a bad deal considering that TrueLocal will supply detailed information about your business as well as driving directions and even a special 800 number, so you can track calls that your ads generate. It also supplies the kind of tracking information that traditional Web analytics companies provide, to help you determine if your advertising is effective.

The goal, says Baillie, is to make local search attractive, easy and affordable for offline businesses — and make a profit doing it.

Enticing Local Businesses
ReachLocal.com, an Encino, Calif.-based company, has taken a different approach to the challenge of local search. Instead of setting up its own search engine, ReachLocal decided to be the preeminent Internet marketing platform for local businesses looking to get noticed online.

"We're looking at local companies that want to grow their businesses," says ReachLocal Founder and CEO, Zorik Gordon. "And right now, 15 to 20 percent of consumers, maybe more, are looking for businesses online. So as a smart businessperson, why would you pay more for less? That's what you are getting advertising in offline media [like the Yellow Pages and local newspapers]. Why not follow your consumers where they are looking for you?"

To Gordon and ReachLocal, it's a simple supply and demand issue: a lot of demand, not enough supply.

"There are two problems to be solved in this space," explains Gordon. "One is to perfect the end product for the consumer, which is the search appliance. Google and Yahoo understood that they were getting a lot of searches that were very local in nature, and it required a specific, dedicated version of a search box. So they did Yahoo Local and Google Local and MSN Local — everybody's done local.

"But the second piece, the one that we're solving, is what is the right product for the advertiser, not the consumer? So we're more on the supply side. They [the various search engines and online directories] are trying to perfect the demand, which is consumer demand. We're trying to get the advertisers. And what the advertisers want is one single Internet buy. If you utilize our platform, we will market you across the Internet."

In other words, you, the offline business, create one ad with ReachLocal's help and then ReachLocal places it on all the major search engines and in the Internet yellow pages directories targeted to your specific geographic region. You tell ReachLocal which products and/or services you want to promote, and ReachLocal generates the best keywords for your search engine marketing. ReachLocal also can build you a Web page or site where it will post coupons or specials, and it provides tracked phone numbers and e-mail links so that all activity can be tied back to your ReachLocal campaign. The cost is based on your advertising budget and performance.

Online Advertising Works
For Kempton Coady, the president and co-owner of Sōna MedSpa of Burlington, Mass., a franchise that opened its doors just over a year ago outside of Boston, ReachLocal has been a boon.

"It's given us very nice results," says Coady, who has since cut way back on his print and Yellow Pages advertising. "I think we get 100 or so leads per month. And they're always very good leads. People send us e-mail addresses, telephone numbers, sometimes their regular addresses [via a form that's included on the ReachLocal-generated Web page], which allows us to respond.

"I don't know exactly how they do it, but they get you prominence on the Web immediately," adds Coady. "It's like you've walked into a mall and your store is the first thing people see. That's what you want on the Internet."

The Next Big Thing
While he sees a lot of promise in local search, JupiterResearch's Stein still thinks there's room for improvement. You're not going to convince the local Italian restaurant that's been taking out a full-page ad on the back of the Yellow Pages to change its spending habits overnight, believes Stein. Ditto the local plumber, contractor or accountant.

Still he sees a lot of potential in new pay-per-call technology being spearheaded by a company called Ingenio out of California. Unlike traditional pay-per-click advertising, Ingenio's Pay Per Call system does not require the advertising business to have its own Web presence — and has connected more than two million buyers and sellers to date. The technology has clearly caught on, with ReachLocal and others offering pay per call, figuring that most local, offline businesses would rather get a phone call than a click, especially if they don't have a Web presence.

Local search also shows huge potential with cell-phone-wielding business travelers, who often have to rely on expensive 411 calls to find what they need locally.

"The phone companies charge people $1.50 or more for a 411 call," notes Stein. "So there's an excellent opportunity for someone else to come in, whether it's Google with its deep pockets or somebody else, just saying, 'we're just going to charge advertisers. We're not going to charge consumers.' These are business-oriented transactions for the most part. Most 411 calls are not for people, they're for businesses of some kind. There are all sorts of opportunities bubbling up."

Jennifer Lonoff Schiff writes about business and technology and contributes regularly to SmallBusinessComputing.com.

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