LOCAL SEARCH COMES OF AGE

Internet.com - December 18, 2006 –

ShopLocal, a multi-channel shopping resource, recently reported an 84-percent increase over the previous year in consumer use of the Internet for local shopping for the three-day period ending the day after Thanksgiving. Although these Web surfers planned on making their purchases offline, they were using local directories, community sites, and local search engines to find the best deals, check out reviews, and search for online promotions, sales, and specials at neighborhood stores and businesses. Acknowledging this trend, eMarketer expects local online advertising to jump 53 percent, to $2 billion in 2007.

Welcome to the brave new world of online local search. Consumers can not only find and map local businesses, but leave and read comments, find out about sales and in-store promotions, print coupons, and compare prices of goods and services — and merchants can maximize their local advertising budgets by targeting prospective customers with a search-engine optimized Web page, blogs and newsletters, and online promotions aimed at a particular demographic. It's a win-win situation for everyone, except maybe traditional print advertising vehicles like the Yellow Pages and newspapers.

Double-Digit Growth for Local Search
According to a 2006 JupiterResearch report entitled "Local Advertising: Blending Categories to Compete Effectively," local online advertising is expected to grow 11 percent through 2010. However, the report hints that that number could be a lot higher should there be "major innovations" in local online directories — some of which may already be occurring.

While the report notes that in 2004 consumers were five to eight times more likely to use print Yellow Pages than the online version, it states that the percentage has decreased over the past two years. This is due in large part to growing competition from a number of locally focused online directories and merchants' growing comfort advertising on these sites.

And it's not just the three major search engines, online business directories such as SuperPages, and Citysearch, that are competing for your local advertising dollars and consumer eyeballs. It's new community sites, including Judy's Book and Yelp, multi-channel sites, such as ShopLocal, and network sites, such as MerchantCircle, that are challenging the status quo and gaining traction and customers.

Community Sites: Yelp and Judy's Book
"Definitely, the search engines are creating an extremely important local search service, both for consumers and marketers," says Sapna Satagopan, associate analyst, JupiterResearch. But the big news in local search the past six months, she says, are community sites with customer-generated content, like Judy's Book and Yelp.com, which allow users to provide feedback and reviews of local businesses.

"If I am looking for a salon in San Francisco, Yelp provides me with very valuable results," both in terms of what salons are out there and what people are saying about those salons, says Satagopan.

Founded by two former PayPal employees in July 2004, Yelp bills itself as "the ultimate city guide that taps into the community's voice and reveals honest and current insights on local businesses and services on everything from martinis to mechanics."

Local merchants interested in advertising on Yelp can choose from two different programs, pay for performance and exclusive sponsorship of The Weekly Yelp, Yelp's online newsletter.

Like Yelp, Judy's Book is "a people-powered shopping community [where] smart shoppers [go] to find and share the best deals, products and businesses — on the Web and [in] their neighborhood." Advertising on the site requires a minimum ad purchase of $1,000 but the site promises "high-impact campaigns designed to reach a targeted audience through a variety of placements."

Multi-Channel Local Advertising: ShopLocal
ShopLocal, whose partners include the Gannett Co., Inc., and the Tribune Company, takes a slightly different approach to local search. Through the ShopLocal network, which consists of ShopLocal.com and over 200 leading media, search and shopping Web sites, the company aims to provide local advertisers with targeted access to consumers who are looking to save time, effort and money online and off.

"ShopLocal is a Web site that is designed to help facilitate online research and in-store buying for both big box retailers as well as small independent retailers," explains Brad Jaehn, director of product management at ShopLocal.

For smaller offline businesses wanting to establish an online presence, ShopLocal.com offers MyStore, a search-engine optimized virtual storefront where using a simple wizard businesses can list general information, products and descriptions, and include photos, maps and more. The company also offers print tie-ins through its media partners and services like SmartCircular, SmartCatalog and SmartMedia where retailers can distribute sales and promotional content either via ShopLocal's site or their own Web sites.

"The perceived complexity of Internet advertising [which the JupiterResearch report lists as one of the reasons why local merchants have been afraid to do it] versus the actual complexity of Internet advertising are not the same thing," says Jaehn. And he believes that the multi-channel approach will be very attractive to local merchants because "you get the measurability of the Internet and the comfort of offline products" all in one easy-to-use place.

MerchantCircle: Optimizing and Managing Local Search
Founded in 2005 but officially launched in June 2006, MerchantCircle describes itself as "an online network for local business that provides merchants the advertising tools to build coupons, blogs, post pictures, write newsletters and link to other businesses to attract new customers." To date, more than 60,000 vendors have joined MerchantCircle — and the site contains about 14 million business listings.

"We're targeting everyone from restaurants to clothing stores to gardeners and contractors — anyone who has a desire to establish an online presence or tell other people about their business," explains Walt Duflock, MerchantCircle's director of marketing. "And we're giving it to them for free."

Web shop owners can also subscribe to MerchantCircle and pay $30 to $100 a month to get additional online placements and services.

"What we've done is we've optimized all of our pages for search engines, so that in many cases even if our merchants have Web pages of their own, their MerchantCircle page [which the merchant creates him or herself] actually shows up above that, because they've got links to other merchants on there, which tells Google this is a credible site," says Duflock.

"I think the ability for local merchants to put advertising and marketing content together [online] and let us distribute that to multiple sites is going to save them a lot of time and hopefully bring them more customers," he says, "because we're able to get them found in the right places." In addition, MerchantCircle aggregates all of the user-generated content from sites like Yelp and Superpages.com onto the merchant's site. "And being able to see all of the commentary from users in one place and be able to manage that is a big idea," says Duflock.

The Future Is Local
Every month it seems there is a new — or existing — player or service offering local merchants more online bang for their local advertising buck.

"The innovation has barely begun," notes the JupiterResearch report, with "Yahoo!, MSN, and Google… still developing their local advertising services, and pay-for-performance companies… just beginning to crack the market."

With its accountability, targeted demographics, ability to post and monitor content, cool marketing tools such as blogs and newsletters, and increasing ease of use, local online search directories and services will continue to chip away at traditional local advertising and provide local merchants new and better options for driving traffic to their stores.

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