The Local Search Follies


It's officially a gold rush, with everyone now stampeding to mine the allegedly huge dollars to be found in the local search market. Let's not be bothered with whether or not what's being sold is what the market needs -- that would spoil all the fun.

Google and Yahoo now have beta versions of their answers to local search open for inspection. My quick review: they're better than I would have expected, but a long way from what's needed. AskJeeves has partnered with CitySearch so that its local restaurant and nightclub listings will appear prominently in applicable search results. In the yellow pages area, FindWhat has announced that Canada' s Yellow Pages Group will be grafting FindWhat pay per click auction technology onto its site, perhaps more evidence of a mini-trend in this area. Every other yellow pages publisher is out with their own local search initiatives, all fervently hoping that local retailers will deliver the online riches that have eluded them to date.

As Janice McCallum of Shore Communications points out, local newspapers are the group best positioned to benefit from local search, but they continue to sit around as more nimble competitors rip the guts out of their businesses. Just as newspapers saw their classified advertising business decimated, local search may ultimately start to cut into newspaper display advertising, which might finally spur them into some sort of coherent reaction. Newspapers have always jealously watched the yellow page business. Indeed, most major newspapers have at one time or another owned yellow pages publishing companies, only to divest them after concluding they just didn't "get" the directory business. Now with the Internet, there actually would be some great synergies between newspapers and yellow pages, but newspapers still feel burned by their earlier yellow pages experiences.

So who's going to win in the local search game? Here are my predictions:

I agree with Janice McCallum that newspapers are the best positioned to be the winners in local search, but they've got to overcome their own inertia, previous bad experiences with directory publishing, fighting a multi-front war over their classified advertising, and the surprising continued strength of the print yellow pages business, which limits their openings. I just don't see newspapers pulling it off, especially since they need to overcome the biggest obstacle of them all: themselves.

As to the big search engines, I personally believe the cracks are starting to show as they push to be all things to all people. The future of search -- yes you heard it here first -- is two-tier searching, where the big general search engines hand off certain types of searches to specialist search engines/directories/yellow pages.

Local yellow pages publishers have always dreamt of being national yellow pages publishers. The Web let them indulge that dream, and indulge they did. Of course, while these publishers raced to build out national content, they never built out their regional sales forces. Is it any surprise they aren't drowning in ads? For several years, I've been urging yellow pages publishers to play to their local strengths. I'm currently estimating it will take 2-4 years for them to get up enough courage to try, and then they'll be contenders.

Long-shot possibilities? Think about Comcast, or even AOL, both of whom have unique capabilities to target content geographically, and a still significant "home page advantage." Stretch your imagination a little further and you might come up with InterActive Corporation, a powerhouse in local listings with holdings such as Citysearch, TripAdvisor, Evite, ServiceMaster, but seemingly more interested (for now) in the rich transaction revenues generated by its Ticketmaster, Hotels.com and Expedia units.

Bottom line: local search will happen, and it will be big, but it's going to be a big, sloppy, crazy competitive mess for 2-4 years before yellow pages publishers realize they should focus on selling ads where they actually have salesforces. Then we'll have our winner.

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