Local search heats up as vendors boost offerings

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Over the next few months, Yahoo’s Overture will make a move that will change the pay-per-click industry: The company will officially launch its as-yet-unnamed local pay-per-click program.

Overture’s local product has been in the testing phase for several months now. The new service is designed for national advertisers that want to drive traffic into local storefronts and for small businesses that don’t have the means or the expertise to compete against the big guys in a pay-per-performance auction.

The company joins Google, which already offers local search as well as regionally targeted ads, and more traditional location-based search engines such as, which already has a strong foothold in the local marketplace.

Looking locally

Recent research conducted by research firm the Kelsey Group and found 25.1% of all searches performed by online buyers were local. More than 44% of the same respondents said they are performing more local searches now than they were a year ago.

"We’re definitely seeing a shift of how people are looking for information," said Greg Sterling, program director of Kelsey Group’s interactive local media program.

The quality of searches should improve with the new offerings and beefed-up versions of current offerings. For example, Overture’s product will help bring small businesses that don’t have Web sites into search results by creating an information page for them.

Those businesses, as well as those that have Web sites, will be able to bid on keywords—with a twist. They can choose a specific target ZIP code or radius surrounding a ZIP code, said Geoff Stevens, Overture’s general manager-local. When end users come to an Overture-driven search engine, they’ll be prompted to enter a city, state or ZIP code, which will help refine the search and deliver the local ads.

The framework addresses the issue of being priced out of the pay-per-click market, Stevens said. The local product simplifies the process and helps small mom-and-pops compete effectively, he said.

In contrast, Google has two local offerings: Search by Location, which launched in September on Google Labs, and a beta version of a regional targeted version of its AdWords product, which launched in October. Google’s regional AdWords program differs from Overture’s because it’s based on Internet Protocol (IP) technology. The service, which maps IP addresses to the 210 Designated Marketing Areas in the U.S., lets advertisers target ads to up to five regions per campaign. Search engine users don’t know they’re being locally targeted because the ad generation is done on the back end.

Standards will change

Analysts said the offerings may help level the playing field but that advertisers will have to change the way they measure a campaign’s success.

"At a local level there’s a limited amount of volume," Sterling said. "The expectations have to be realistic. The ROI should be adjusted. It’s cheaper to buy the local ad, and it should deliver a very, very qualified lead for marketing," he said. "They just have to be clear that they aren’t going to see a gigantic click-through rate."

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