Google's local efforts date back to late 2005, when it opened a
directory called the Local Business Center, renamed Google Places
last April. Some 6 million businesses worldwide have claimed Places
pages. But until recently, the company has struggled to come up
with compelling new services for users and advertisers. Its
Latitude location service is scarcely mentioned next to
Foursquare's. Google also reportedly offered $6 billion to buy
Groupon, only to be turned down in December.
Most of all, Google's AdWords search-ad system, which requires
businesses to choose and bid on ad-triggering keywords, is often
seen as too complex and time-consuming for most local businesses,
which are more accustomed to simple, fixed-price Yellow Pages ads.
"AdWords is like sitting in the cockpit of a 747 when you only know
how to ride a bike," said Catherine Hillen-Rulloda, owner of Avante
Gardens Florist in Anaheim, Calif.
Two ad formats rolled out last year are intended to remedy that.
The first was Tags, which for $25 a month lets merchants buy a
yellow pushpin on Google.com and on Google Maps highlighting their
location. Google said tens of thousands of businesses are using
them. Another product, launched nationally in late January, is
Boost. Advertisers fill out a short business description, list a
web page or free Google Place page listing, and set a budget as low
as $50 a month, and the system creates an ongoing, automated search
To sell these ad products, Google has taken another leaf out of
the Yellow Page publishers' playbook. Their local sales forces
still hold sway among many time-strapped small businesses that buy
an ad only because someone shows up at their door pushing them into
it. "The hard nut to crack is the mom-and-pop operations," said
Richard Holden, product management director for local ads. So last
year, in a marked departure from its self-serve ad systems, Google
hired several hundred sales people in Silicon Valley and elsewhere
to promote Boost and Tags. It's uncertain how many more feet on the
street Google will hire; reseller partners such as Yellow Pages
publishers ultimately may handle most of those sales.
For everything Google's doing, its rivals aren't standing still
either -- especially fellow digital natives. Yelp, which pitches
itself as the last place consumers stop before spending money at a
local business, attracts 45 million unique visitors a month to its
15 million reviews. It sells advertisers bundles of enhanced
listings pages and search ads for $300 to $1,000 a month.
Others are teaming up to fight Google. Last month, pay-per-call
ad startup Yext launched a $99-a-month program for small businesses
to place a yellow tag similar to Google Tags on a dozen
local-listings sites, including Citysearch, Yellowbook and
MapQuest. CityGrid Media, an IAC unit that owns listing and review
sites Citysearch, Insider Pages, and Urbanspoon promotes its
local-ad and content network as an alternative to Google's local
efforts. Facebook has introduced enhanced "Pages" for businesses
and other groups, location check-ins and deal offers in addition to
the locally targeted ads it has long offered.
Groupon has grown from an idea to more than $500 million in
revenue in less than two years, largely on deals offered by local
businesses. The big challenge Groupon and rivals such as
LivingSocial present to Google as well as media companies, said
Borrell Associates CEO Gordon Borrell, is that they're making
advertising itself less relevant: Businesses don't pay until they
notch a sale.