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All search is local.
That twist on the famous political rule of thumb soon will become reality
for search, the fastest-growing online marketing activity. Estimates
claim that 40 percent of all search queries are for local services or
products and 92 percent of local searches convert offline.
"[But] there's really no one player that's nailed local search,"
Dana Todd, principal of interactive marketing agency SiteLab, said last
month at Ad:tech05 San Francisco.
Search engine marketing has grown from a tiny spend in 1999 to $5 billion
forecast for this year and nearly $9 billion by 2009, JupiterResearch
claims. Search accounts for 36 percent of U.S. online advertising and
will grow 24 percent yearly in the next five years.
Fueling such growth is the pay-per-click model where advertisers pay
the search engine for each time a consumer clicks on the rented keyword.
Yet this model may not suit small businesses and entrepreneurs, including
doctors, lawyers, caterers, Realtors, plumbers and corner stores.
Kelsey Group research shows the number of companies using pay-per-click
advertising is about 350,000 versus 7 million listed in the yellow pages
and 13 million that don't own an e-commerce-enabled site but advertise
locally.
These small firms or entrepreneurs "don't own or operate transactional
Web sites, but advertise locally," a new paper from pay-per-call
search technology provider Ingenio Inc. said. "The question then
becomes: how does the industry grow the paid search advertiser base?"
U.S. businesses spend $90 billion yearly on local advertising, according
to Kelsey. But only a fraction of that amount, which is hard to break
out separately with accuracy, is spent on local performance-based search
marketing.
About $10 billion last year was spent on Internet advertising and marketing,
including e-mail, banners, affiliate marketing and search. However,
most of the spenders had something to sell online. But most businesses
nationwide are providers of local services.
The U.S. Chamber of Commerce estimates the nation's 23 million small
businesses represent more than 99 percent of all employers, account
for more than 50 percent of all private-sector workers and generate
three out of four jobs. Small companies account for one-third of all
American exports and more than half of the U.S. GDP.
Ingenio's pitch for pay-per-call advertising could become an alternative
to, or even complement, the pay-per-click model. What most local, service-based
businesses have in common is the telephone. A survey from Ingenio and
JupiterResearch showed that most vertically aligned businesses prefer
phone leads over Web site clicks by a 2:1 ratio. The respondents, it
seems, would pay as much as five to 15 times more for a phone call than
a click to a site.
Using Ingenio's system, the highest-bidding advertiser in a specific
category is shown at the top of the search listings. The ad shows basic
business information and a toll-free number unique to the advertiser-publisher
pairing. Advertisers pay only when they get a live phone lead.
"As paid search advertising continues to mature, the emergence
of new models only means more marketing options for the advertiser,"
Ingenio said in its local-search analysis. "The one-size-fits-all
mentality won't work. In some cases a particular advertiser might opt
for clicks, another for calls and even another might choose to leverage
both."
Industry players like Google, Yahoo Search and Ask Jeeves are focused
on national advertisers. But that may change with the number of innovations
in development. And they may have no choice but to focus on local advertising,
not with Amazon's A9.com search engine operating.
The Internet retailer in September launched A9 with a mandate to innovate
search, which it did. The site has taken 26 million pictures of shops,
streets and storefronts in 15 cities with details of the establishments
included.
"It's a new way of searching -- you can search visually,"
Barnaby Dorfman, vice president of search at A9, said at Ad:tech05 San
Francisco.
Match A9's ability with Amazon's influence. Nearly 48 million consumers
spent more than $7 billion last year through the Amazon interface. Also,
850,000 people sold something last year through the Amazon platform.
"People come to Amazon just for one thing: They are there to spend
money," Dorfman said.
The Yellow Pages Association sees a natural fit for what its members
do with local search online. A study conducted for the association by
comScore Networks claims that Internet yellow pages offer a more efficient
local marketing opportunity. The study examined local search behavior
in financial services, healthcare, home services, automotive products
and services and restaurant dining. It had three key findings:
· Web search engines accounted for 66 percent of consumers searching
for local information while Internet yellow pages had a 34 percent share.
But consumers using online yellow pages found local information faster:
an average of 4.6 clicks versus 7.6 clicks for search engine users.
· Local searchers who use Internet yellow pages spend 4 percent
to 22 percent more per buyer than local search engine users in the automotive,
health and beauty, home and garden and general services categories.
Internet yellow pages users spend 4 percent to 17 percent more per buyer
for offline purchases in the drugstore, automotive, restaurants and
home and garden categories than local search engine consumers.
· Internet yellow pages users are an attractive demographic market
for advertisers. They are 71 percent more likely than the average online
user to have an annual income surpassing $100,000. They are also likelier
to have a broadband Internet connection.
Given its legacy offline, local search online is the yellow pages' market
to lose. But Internet-only players are tweaking their algorithms and
tailoring offerings to local markets.
"Slowly over this year, you'll see everyone carve local search
out of national search," Zorik Gordon, president/CEO of ReachLocal.com,
said at Ad:tech05 San Francisco.
ReachLocal's Internet marketing platform uses search engines to help
local businesses advertise online. Gordon stressed that small business
behavior must be taken into account for local search advertising to
become more appealing.
Local advertisers, he said, value a call more than a click. Local businesses
are uncomfortable with the self-service nature of search advertising.
And it is too complex for this audience. They would rather cut a check
and have someone do the rest of the work.
"These businesses need to be sold," Gordon said. "They
will not buy."
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