• by Shankar Gupta , February 18, 2005

Two recent studies contend that consumers rely more on business directories--both online and off--than on search engines or newspapers, when seeking local merchants, according to the Yellow Pages Association.

The studies, which were performed by the Opinion Research Corporation, each surveyed separate sets of about 1,000 respondents via telephone from Nov. 18-21, 2004. The first survey found that 55 percent of respondents say they primarily use Yellow Pages--either in print or online--to search for a local business first, compared to 12 percent who use search engines and 17 percent who turn to newspapers. The second survey, dealing with residents moving to a new area, found that 44 percent of respondents use either the online or print Yellow Pages to find local businesses. The study defines online "Yellow Pages" as any site that is a member of the 126-year-old Yellow Pages Association, which includes sites like Verizon's SuperPages.com and Bluebook, Inc.'s BlueBook.com, which offers community information such as local government and hospital numbers.

But some analysts say that with Google and Yahoo! taking increasingly aggressive measures promoting their own local search features, online business directories could face stiff competition from search engines.

"The Internet Yellow Pages publishers are pretty clear that they're in a pretty competitive environment," said Kelsey Group analyst Greg Sterling. "The usage of Internet Yellow Pages will be entirely contingent upon how the product evolves."

To maintain current brand recognition and market share, Sterling said, the Internet Yellow Pages will have to struggle to keep up with the innovations that big-name search engines are adding to their local search functions. "There are a lot of product rollouts coming out in the search world," Sterling said. "The IYP [Internet Yellow Pages] are not able to compete at that level of product level development. What they have to focus on is those features that consumers really want and find value in."

To beef up online business directories' Internet offerings, Sterling suggested a slew of product improvements--some similar to what are offered on various local search engines' sites, and others that haven't yet been incorporated into major local search engines.

"Ratings and reviews are going to be increasingly important--more content, and more information to be able to evaluate a business. Historically, the information that's been available on local business online has been very thin," Sterling said. "Consumers are going to expect more content from their searches."

In addition to ratings, Sterling suggested photos--like A9's innovative "Block View" product, which lets users "walk down the block" by scrolling down pictures of storefronts and houses--as well as user customization and toolbar software.

Sterling also stressed the importance of ease of use of a competitive local Web search. "I think that they have to have the sort of ease of use search functionality that is offered on sites like Google and Yahoo!," he said. "Natural language search that yields search results--that's a must."

If the Internet Yellow Pages fail to keep up with the fast-paced innovations that Google and Yahoo! can offer in their local search packages, Sterling said, the Yellow Pages' brand advantage could erode. But, he said, the Yellow Pages still have a chance of retaining their edge "if they keep in mind where the Internet market is going."