• by Ross Fadner , March 17, 2004

Google on Wednesday launched its highly anticipated local search application for consumers looking for information about goods and services in their neighborhoods. Missing, however, was any mention of advertising, a key growth driver in local search marketing.

Sukhinder Singh, general manager, local search, Google, Inc. told MediaDailyNews that no Adwords ads launched today, but they will be incorporated into local search results in the future. Local search is purported to be the next hottest revenue driver in the search marketing category.

Local search, which had been in test mode, became operational on Wednesday on the Google search engine. Consumers who type in local information such as zip code, city, or town names--in addition to whatever they are searching for--will now see any results that match that local data at the top of the page. In addition, a compass will appear next to some results, bringing users to a map of the specified region. The map points consumers to the exact location for the result selected.

Google's local search announcement comes less than a week after Yahoo! unveiled SmartView, a local search service of its own. Singh says that Google's algorithm for generating local search results is unique in that it combines Web data with structure data, including company names, phone numbers, and addresses. As a result, search queries by geographic location are much more likely to yield businesses' contact information near the top of the main natural results page.

Of Google's ability to generate local search results, Greg Sterling, program director, digital directories-interactive local media at The Kelsey Group, says: "This is obviously a significant improvement, a strong entry into the local search space that will need to be refined over time."

Sterling says that comparing Google's Local Search with Yahoo!'s SmartView is not an apples-to-apples comparison. SmartView uses a visual map interface, for example, leading users to their desired destination by establishing the area they are searching for first, and then allowing them to refine their search by category. "SmartView has a great user interface," says Sterling, "but it's not totally comprehensive." He further notes that Yahoo! has the added task of retraining people to think of maps differently--as a starting point for a search, rather than as an end point for a search query, which is Google's approach.

SmartView already displays sponsored links by Overture, as well as sponsored map listings, an added revenue-driver Google would not be able to incorporate. For example, as a sponsor, the icon of the Holiday Inn hotel chain is displayed at the bottom of the SmartView map. Clicking on the icon displays all the Holiday Inn locations in the specified region. Sterling says that due to the limited inventory on the SmartView window, this could potentially become a bid market for Yahoo!

Sterling adds that SmartView is only one piece of Yahoo!'s local search strategy, which he says it will try to aggregate "in a number of different ways." He says that SmartView is for nonlinear, visual types, and Google's three-column approach is for more linear types. "One thing you have to say about Google is that they're going into local search with the dominant position," Sterling observes. "They have such a critical mass that they can build awareness for their new product very fast."

Consumer demand and advertiser demand will drive local search. "Advertising will hypothetically be more prominent on the Google side," Sterling says, assuming that Google implements local search ads in the same format.

Regarding Google's linear interface versus Yahoo!'s nonlinear approach, Nate Elliott, Associate Analyst, Jupiter Research, says: "I like the idea of integrating a new system into a search engine interface that lots of people already use and already prefer." He says that Google gets the upper hand because people don't need to learn how to use something new to use their local search. He adds: "[Google] has done a fantastic job focusing on the consumer side, but it remains to be seen what happens now on the business side."

Personalization is the next step for both providers, Kelsey's Sterling says. He cites Google's recent acquisition of a personalized search startup, but adds that local search is far from refined at this point.