Local Search Part Two- The Future of Internet Yellow Pages and Search

In the U.S. there are an estimated 10 million small businesses yet only 250,000 are currently participating in paid search. The question at hand is why so few and is there a way for search providers to tap into this seemingly huge market opportunity.

In order to understand the “why?” question, you must realize that many small businesses are localized. To them, online advertising has not made a whole lot of sense. “Why advertise to the entire globe when I only service the residents of Colorado Springs?” In order for the small business owner to understand the benefits of online advertising, who’s going to educate and sell to them?

These are the key dilemmas presently facing the key personnel in interactive local media. It’s not so much that there aren’t ways right now to target locally online, but reaching out to and educating the advertisers has proved challenging. For years, the traditional yellow page publishers have used local street reps to sell space in their books, but those same reps can’t necessarily be counted on to up-sell interactive. Search engines like Yahoo!, Google, Terra Lycos and LookSmart don’t even have street salesforces, and one has to wonder how much effort they’d want to put in for $500 ad buys.

The options for search engines seem to be to either partner with existing Internet yellow pages (IYPs) to take advantage of both their salesforces and their extensive existing local listings or to buy an existing salesforce and build their own localized listings database.

Then there is the question of how will the online local ad buy actually be structured? Buying ads on Google, with its self-service interface and cost-per-click model, is a very different kind of buy than those offered by the IYPs, which gives the advertiser little day-to-day control over their campaign, the length of commitment and their spend. Yet for the small business owner used to buying traditional yellow page ads, the whole notion of cost-per-click and running one’s own campaign can be extremely daunting. Does the future hold a compromise solution, one that blends CPC, CPM and/or fixed price placements?

What will the future localized online search product be exactly? Will it be a pure search query result such as we discussed in Part 1 of this article? Will it be an IYP that delivers quality results? Or will it be a blend of the two, where search engine listings also link to related IYP listings and vice-versa?

The Advertiser’s Perspective - “Search is the New Email”

Patrick Marshall, Vice President of Verizon Communications, described the search box as “the ubiquitous platform of online interaction.” If you believe the statistics released by Jupiter Research, local search will be the next big thing: 63% of online users research products and services locally; 60% search for local information; 46% use online directories; and 70% of shoppers do their research online but shop in their local retail stores. Yahoo has revealed that 30% of the searches currently performed through their sites are for local information. As Marshall put it, “Search is cool again.”

According to research done by the Wahlstrom Group, it appears the recently implemented Do Not Call List has helped IYP providers. National advertisers, looking for alternative methods to reach their audience, are now re-visiting the opportunities presented by localized interactive media. The trick, says the Wahlstrom Group, however, is that these ads must garner strong performances, because if the ads don’t work, the door is closed to the interactive publishers for 1 - 2 years. It’s still about the ROI.

IYP providers, therefore, really need to work to refine all aspects of advertising, from the types of placements sold, to pricing models, to the method of delivering listings. And while national advertisers are already ready to buy or are buying, the local advertiser is not there yet.

Even those local small businesses already advertising online seem not to have a total grasp or understanding of the media. Some don’t know how to track or measure the impact of their listings, most don’t seem to know how to optimize their campaigns, and certainly none really have the time (or the desire) to manage it. All they know is that it works and they’re happy with it.

One interesting point raised by a small business panelist is that in their mind, paid & unpaid search engine listings have an edge over yellow pages when it comes to “the alphabetical issue” — listings in yellow pages and online directories are in alphabetical order, which doesn’t help if your business name doesn’t fit into the beginning of the alphabet. Besides, unlike yellow page and IYP listings search engine listings are in order of relevancy, which is perceived as a big plus for the searcher.

As panelist David Galvan, Director of Business Development for Yahoo! Get Local pointed out, “Relevant local search products are going to become a competitive differentiator for search engines.” Added panelist Dean Poinerow, President & CEO of Switchboard, an Internet directory, “IYPs can integrate paid search for advertisers differently than can editorial sites because they have an audience that’s looking to buy.”

Are Partnerships in the Cards?

Capitalizing on this “ready to buy” mindset is the force driving all of the players in the local search industry. Both sides – Internet yellow pages and search engines – readily acknowledge that neither has all the answers and can probably not develop them well alone. Partnerships already exist, and more seem to be cropping up weekly: Yahoo! partners with large local yellow page providers like Bell South and SBC; Google has partnered with Switchboard. Most panelists felt that IYP and search engines will converge at some point.

Of course, with these partnerships comes questions like, who will own the customer relationship? Whose results are displayed first? Who, if anyone, will suffer in the long run? Most IYPs do not publically acknowledge that they see search engines as a threat. “It’s more of an opportunity” they all echoed over and over again, though some acknowledge that certain verticals are in danger of losing ground to the search engines, particularly those in print yellow pages.

It will be interesting to see how the recent developments in localized search ultimately affect the marketplace.

WebAdvantage.net’s Survey Results

Small Business Usage of Yellow Pages vs. Search Engine

* 82% of respondents do NOT currently advertise in the yellow pages

* Of those who do, if they track their ad performance at all, nearly 100% track by asking the caller how s/he found them.

* 57% do NOT advertise with paid search engine listings

* 59% said they WOULD if they could geographically target the ads

* Of the small businesses who advertise in both yellow pages and search engines, 37% say that search engines out-perform yellow pages, but…59% are not sure.

* Only 69% said they know the difference between paid search engine listings and unpaid search engine results.

Related posts:

1. Localized Search - Searching by Geography
2. Google and Switchboard Strike AdSense Deal
3. Paid For Search Engine Advertising
4. Overture and MSN Extend Search Deal

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