• by Shankar Gupta , February 25, 2005

AOL Wednesday debuted its own local search engine--available to both AOL subscribers and regular Web denizens--entering the fray with search giants Google and Yahoo!, who have recently beefed up their own local search offerings.

The new search site, Local.AOL.com, combines several of AOL's properties into one interface--MovieFone, MapQuest, AOL Yellow Pages, and CityGuide. According to Kelsey Group analyst Greg Sterling, this content is one of AOL's biggest strengths in an increasingly competitive local search market. "They're bringing together an impressive collection of local content, and they're grouping it behind this interface. It's a pretty comprehensive offering," he said. "This puts them in the top tier of local search. The challenge for them is to make users aware of search generally and local search specifically--their market share is not in the top three."

The Kelsey Group forecasts that the local search industry pulled in $162 million, with Internet Yellow Pages bringing in another $478 million. By 2009, the Kelsey Group predicts that the local search market will have grown to $3.4 billion--outpacing Internet Yellow Pages, which the group puts at a $1.3 billion industry.

AOL faces tough competitors--Google's local offering has the force of the Google name recognition behind it, and Yahoo! offers editorial content in its local searches similar to AOL's. "It's entering this next level of competition among engines for market share, and it's a much more challenging thing now," said Sterling. "It's a super-competitive market. They have to make members--and in their minds, a lot of non-members--aware of this capability."

According to Sterling, AOL has an uphill battle to fight in terms of promotion, and to succeed AOL needs to promote the services that it has over the other search players. For example, their partnership with ShopLocal.com adds a large amount of structured editorial content that Google and Yahoo! users don't have access to. "They've got a partnership with ShopLocal, so that information is available through AOL Local. But do I know that as a consumer? I don't think so," said Sterling. He added that AOL's job now is to educate consumers about its capabilities.