Local Search: Where’s the Love?

Local search sometimes seems like Rodney Dangerfield: It can’t get no respect. This has most recently been evident in the category’s omission from Mashable’s Open Web Awards, and from the program of the upcoming South by Southwest conference.

But there have also been glimmers of hope for local, if you watch closely enough. At the Kelsey Group’s Interactive Local Media Conference last month, local online advertising took center stage. And at SES Chicago last week, local was given lots of airtime in sessions about search marketing, online video, and shopping search.

A key theme at both shows was something that’s been on everyone’s mind lately: the economy. Though overall ad spending is falling, economic factors could bode well for online local search as small to medium-sized business (SMB) advertisers demand more measurability and concrete ROI.

There have been many fence sitters in the SMB segment for online marketing and search. That’s the nature of the beast — deep-rooted habits and busy SMB schedules have been powerful retention factors for traditional media companies that subsist on local ad dollars.

But could tough times push many of these SMBs over the fence, to finally check out this SEM thing that everyone’s been talking about? There are arguments for and against this.

Local Motion

Online video is one area that could have an impact. User demand has exploded (according to recent comScore data) and many advertisers, large and small, are seeing cost-effective online video as a substitute for television advertising (one of the biggest victims).

Combine that with universal search and the opportunity to increase rankings by embedding video in local business listings or landing pages. Here, the traditional strengths of video (entertaining, informative, colorful, etc.) marry the direct response and targeting capabilities of the Internet — especially when joined with information-rich Internet yellow pages or city guide listings.

For small businesses, this will also be driven by economics as digital production and distribution bring video within their grasp for the first time. This will open up the market considerably and drive local online video from a $10.9 million market in 2007 to $1.5 billion in 2012, as projected by the Kelsey Group.

Putting it another way, video’s falling barriers could make it as popular and necessary for small business marketing as Web sites have become today (about half of the 15 million U.S. storefronts).

“We look at Web site penetration as a model for what could happen with [local” video,” said TurnHere VP of Corporate Finance and Business Development, Jared Simon at SES. “Back around ’96 we saw Web sites pick up as a must-have thing. I don’t know when we’re going to see the inflection point with video, but we believe it will follow the same path.”

Local’s Turning Point

Most of all, mobile will put local on the map (bad pun). As I’ve harped on in past columns, the mobile industry’s quickly evolving standards will give local search the boost it needs. This was the subject of many of SES conversations last week.

This will play out as sexier and user-friendly devices (and falling prices) continue to bring smart phones closer to mainstream territory. Equally important is the door continuing to swing open for third-party innovation in the mobile environment through devices like the iPhone and G1 (also see Palm’s Software Store announced this week).

The iPhone only makes up about 1 percent of worldwide mobile devices, but its sales are quickly rising and we’ll see its adoption spike in 2009. This will happen as prices continue to drop and the iconic device is sold in all Wal-Mart locations (no kidding).

Meanwhile, copycat devices will continue to flood the market and compete on price, making iPhone-like search features a commodity and a mass market phenomenon. I’m making the call (bad pun #2) that we’ll see such a device for under $100 in 2009.

Moving Target

Bottom line: because local search is so conducive to the immediacy and geographic relevance that is inherent in mobile search, a great deal of the application-level innovation driven by all of the above will focus on local search.

Think of it this way: In the online world, about 20 percent of searches have local intent, said Yahoo Local’s Director of Strategy and Business Development, Atif Rafiq at SES Chicago. But in the mobile world, my hypothesis is that local will represent a much larger stake of overall search activity and user intent.

But that doesn’t necessarily mean that advertising dollars are there (yet). The combination of a recession and an “experimental” ad medium means growth in 2009 should be flat. But as things rebound, mobile data consumption will independently grow closer to the levels that will begin to attract advertisers in greater numbers.

Given the demand for more measurability and ROI, application development will include ad models that are conducive to the immediacy and direct response nature of mobile. This will include lots of voice search applications, click-to-call ad models, and mobile shopping search with directly measurable calls to action like mobile coupons.

The ultimate killer app in mobile local search has yet to be developed. We’ll see lots of experimentation and false starts before market standards emerge. But one thing I’m fairly sure of: local search will ride mobile’s coattails in the explosion of application-level innovation that we’ll see over the next 24 months.

This innovation, combined with search volume increases, will attract more small and large advertisers that wish to target locally across the 3.3 billion worldwide mobile devices (Google already has its eye on this prize). Then maybe local will get some love.

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