Study: Search Driving Offline Conversions for Local Service Businesses

New research suggests that internet users are increasingly relying on search to find local service businesses, potentially taking mind-share away from traditional print yellow pages and classified advertising.

Nielsen//NetRatings and local search engine marketing firm WebVisible conducted a survey in August to determine whether and how U.S. consumers were using the Internet to find local service businesses. Using Nielsen's consumer panel, respondents were qualified in terms of whether they had used the Internet to find a local service provider and whether they had done so within the past 90 days.

There were 2,866 survey respondents overall, 70% of which had used the Internet to search for a local service business. Forty-six percent (1,319 respondents) had done so in the past 90 days. The survey emphasized the use of sponsored links as a part of this process.

The following discussion of the data pertains almost exclusively to the 46% of survey respondents who had conducted one or more searches online for a local service business within the past 90 days.

The missing geo-modifiers

One of the issues with local search is defining what constitutes a "local search" in the first place. It's not as obvious as one might think. In its definition of "local search" comScore has historically tracked traffic volumes on Internet yellow pages sites, mapping sites, selected "local search engines" and general search engines where queries have geographic modifiers. As inclusive as that definitions may sound, it's a fairly "conservative" approach that, in my view, fails to capture a broad range local search behavior where the query is ambiguous but there's a local intent behind it.

While I was still at The Kelsey Group we developed the first market estimate of local search volumes based on my conversations with search engines, together with empirical user research that sought to capture their intentions and behavior.

The estimate we developed was that about 20% of search engine traffic had a local intent. Others had higher estimates (Nielsen) or lower estimates (comScore). But this was a number we felt fairly strong about.

I subsequently asked Jim Larrison, then of comScore, to do a more in-depth analysis of user behavior from their data. I argued to Larrison, for example, that queries for lawyers (e.g., "divorce lawyer") are inherently local because they involve almost exclusive offline fulfillment and should thus be considered local searches even if there is a missing geo-modifier. Beyond lawyers, there are numerous other examples of "implicit local searches." What Larrison eventually determined, looking more deeply and broadly at actual user behavior, is that local intent was behind up to 40% of online search/"directional" lookups.

Now back to WebVisible's research, which appears to support the idea that a large percentage of searches with a local intent don't appear as such because they lack geographic modifiers. Here's what the research determined about respondents' local search query formulation:
  • 51% used a general service term to search ("dentist")

  • 49% used a general service term and regional term ("dentist in Cleveland")

  • 23% used a specific business name ("Dr. Bob's Dental")

  • 19% used a specific service term to search ("root canal")
(Respondents had the option of answering more than one)

Interestingly, younger respondents (18-24) were more likely to use a geographic modifier than older users in the sample. But overall 51% of the actual, local search behavior didn't carry a geo-modifier - that's striking.

It strongly argues that search engines should be serving locally targeted ads against commercial queries in almost all service categories where there's no local modifier because the probability is extremely high that the user is looking for a local business. In addition, geotargeted ads tend to perform better for the engine and the advertiser.

It takes three...

There's the old U.S. animated television commercial from the 1970s for "Tootsie Pop" in which a boy asks a wise old owl, "How many licks does it take to get to the center of a Tootsie Pop?" It would seem the answer given - three - equally applies to local search for services. According to the Nielsen-WebVisible research:

When searching for a local service online, respondents said they typically require three searches to find the information that they need.

It's not clear from the data, however, whether this was in a single sitting or successive occasions.

Phone the dominant contact method

Among the various ways of contacting local businesses, the telephone (as one might expect) emerged as the dominant way users contacted or would hypothetically contact a local service business:
  • 68% said they would most likely use the phone number on the website to contact a vendor

  • 16% said they would contact a vendor by email

  • 11% said they would most likely contact a vendor via an online form

  • 6% said they would visit a vendor in-person
This suggests that phone tracking should be used, if not already, to prove value to local search advertisers. It captures the dominant user method of making contact, which might otherwise be invisible to local businesses. It also argues indirectly in favor of pay per phone call.

Latent conversions

Among the 46% respondent group, most didn't convert immediately. Conversions or merchant contacts came after a second round of search behavior in which users looked up contact information again. This is consistent with other studies reflecting conversion latency in general search user behavior. Here's what the Nielsen-WebVisible data showed:
  • 35% of respondents saved the business' phone number

  • 27% searched a second time

  • 23% had bookmarked the service vendor's website

  • 5% used a phone book to find the service vendor

  • 11% did not contact the vendor a second time
There are some product implications here, as well as clear marketing takeaways. Sixty-two percent of respondents are going back to find the phone number in subsequent search sessions. The method by which users "saved" the local business phone number (in the top category) was not specified. Presumably it wasn't through the site itself but by doing something traditional like writing it down. This latency argues in favor of personalization, whether passive or conscious (i.e., "recent searches" or "my directory") to enable users to quickly and easily get back to their earlier search results.

These data also argue that businesses should buy their own names as paid search terms. This is because even though they may not want to pay in instances when users are looking specifically for them, they must nonetheless be visible when consumers seek them out. If a business fails to appear when a consumer performs a "white pages" search (for the business name) a competitor has an opportunity to intercept that consumer.

Search driving offline word-of-mouth

One of the most interesting findings of the Nielsen-WebVisible survey was that 54% of the respondents who'd conducted a local search within the past 90 days reported later referring a friend to a local business they discovered via search. Of the 54% making such a referral, this is how they did it:
  • 59% verbally recommended the business

  • 38% e-mailed a link to a friend

  • 3% wrote a favorable review on a consumer website

  • 1% other form of recommendation
One of the immediate takeaways for publishers is to be sure that listings can be easily shared with others. But what is really striking is that there's a powerful secondary benefit here: the local service business is generating positive word of mouth indirectly from online advertising. While on one level consumer satisfaction and good service always generate positive word of mouth, the idea that the actual cost of paid search, considered broadly, may actually be less per lead than it appears is worthy of further investigation.

Satisfaction levels high

Finally, among those who had conducted a search in the past 90 days:
  • 89% of respondents found search to be "somewhat effective" or "very effective" to find local services in their area

  • 8% were "neutral" about search's effectiveness

  • Only a tiny 3% said their experiences with local search were "somewhat ineffective" or "very ineffective"
These data are interesting for two reasons. We "in the industry" complain about the limitations of the available data (incompleteness and/or inaccuracy). There's also frequent discussion about how much room there is for improvement of the local search applications themselves. However on both counts, according to this research, consumers seem to be quite happy about their experiences despite the limitations of the current incarnations of local search.

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