Local Search Revenue May Disappoint Online Giants
Serious changes need to be made to local paid search if it is expected to generate the revenue growth craved by search engines, according to a leading American industry analyst.
According to Nate Elliot, Jupiter Research analyst, local search doesn’t look like it can provide the growth Google and Yahoo are looking for. However, they continue to pay it so much attention because they know search advertising has started to mature and they need to generate another revenue income to compensate.
There’s two key factors keeping the local search market from taking off, said Elliott. Firstly, consumers aren’t actually using the web to find local businesses because so much of the data needed is missing from the search engines – in fact, the searchers probably know more about their local area than what the search engine results could tell them.
In a survey, only 4% of web users said that local search attracts them to a search engine, ranking it among the least-demanded search engine features. Elliott said: “Neither Google Local nor Yahoo Local can find more than one bike shop within a mile of my house. I know for a fact there are at least four.”
Secondly, the biggest local advertisers aren’t online because these businesses don’t know how to advertise online.
Yellow Pages, which currently controls a big part of the offline advertising spend, is dominated by physicians, restaurants and automotive repair and according to Elliott, these businesses don’t want click-throughs or online leads, they want phone calls and foot traffic. Elliott said: “Until search engines can deliver offline, local search marketing doesn’t appear very attractive to these advertisers.”
Speaking of what the search engines can do to make the market grow more quickly, Elliott said: “They must make lots of changes. They have to build the local databases so I can find all the bike shops in my neighbourhood and they must find a way to drive offline leads to local advertisers.”
The search marketing industry, which grew by 65% last year, is starting to mature and the huge growth seen over the past few years is starting to slow down, resulting in a forecast for this year of 34% and further predictions over the next few years up until 2009, set as low as 11%.
Jupiter Research www.jupiterresearch.com
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