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Google+ Local to Replace Places as Google Makes a Play for More Mobile Ad Dollars

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As Google vies to maintain their dominance of the online advertising market, they made a play today for a bigger chunk of the mobile ads pie. Google Places have been swallowed up by Google+ Local Pages, merging all business listings into one to be used across search, Maps, mobile, and Google+.

Users can access enhanced local listings via a new Local tab in the left sidebar of Google+, by performing searches on the fly on their mobile (currently supporting Android, iOS coming soon), in Google searches, and through Maps.

One notable addition: Zagat’s reviews are incorporated, taking the place of Google’s five-star rating system. Google purchased Zagat’s last year and working the review system into Google+ Local has taken down the paywall, making the service free for all users.

Here’s how it works, demonstrated in a video released by Google this morning:

The new format will be rolling out to all users “in the weeks and months ahead,” Google VP Engineering Jen Fitzpatrick wrote in the blog post announcing the change. Business owners are still able to manage their information through Google Places for Business, though now the listing will surface through a number of Google services.

Mobile Ads “One of Biggest, Fastest Growing Areas at Google” - Marissa Mayer

Google’s VP of Product Management, Marissa Mayer, appeared on CBS This Morning and shared Google’s motivation for the change. Ads on mobile devices make up "one of the biggest and fastest growing new areas for us at Google ... but it's very early,” said Mayer. “When you look at mobile usage, one of the most remarkable things about Google maps is that more than 50 percentage of the usage of Google maps comes from phones.”

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Projections from BIA Kelsey show that mobile ad revenue could reach almost $8 billion by 2016, with local accounting for almost two-thirds of all mobile ad dollars.

Google recently reported $10.65 billion in Q1 2012 revenue, marking a new quarterly earnings record and a 24 percent increase over Q1 2011. In their October earnings call, CEO Larry Page revealed that Google’s revenue run rate in mobile had reached $2.5 billion, up 150 percent over the year prior.

Mobile Use, Paid Search Spend, Ad Clicks All on the Rise

It’s no wonder businesses are flocking to mobile; the click-through rate on mobile ads is 72 percent higher than on desktops. Consumers are already there, searching for information on the go. Pew Research reports that over the 2011 holiday season, 52 percent of adult mobile subscribers used their devices in some way while shopping in brick and mortar stores .

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Smart mobile devices are expected to account for 25 percent of all paid search ad clicks in Google’s substantial network by the end of this year, according to Marin Software. For their part, Adobe estimates that U.S. marketers are spending about 8 percent of their total search budget on mobile ads, with tablets alone accounting for 4.25 percent. In a recent report, they said they expect mobile and tablet advertising will continue to appeal to marketers, given their “disproportionately” low CPCs.

Google+ Local a Huge Opportunity for Increased Advertising Revenue

So what is at stake for Google? This January, they reported $37.9 billion in 2011 revenue; 96 percent of their earnings come from advertising. As increasingly transient consumers shop and compare from their handsets, Google is capitalizing on the massive opportunity afforded by their position in search to cement their place as the social shopping destination of choice (and the ad revenue afforded the company in that position).

“...there's just this huge opportunity around mobile, because your mobile device understands location to provide you great information, to provide great advertisements and context for users there." Mayer told CBS This Morning. Clearly, Google is going to need to hold off Facebook and others in the mobile ads arena. They currently control over 44 percent of the global online advertising market and Google+ Local is one great, big step in keeping it that way.


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