As an online search vertical, local is still hot. In fact, search providers having been turning the flame up for about a year now. Among the big players, the name of the game is add-ons: Yahoo! has added a slew of user-generated reviews and recommendations. Google announced in January that its Google Local service would be available to Blackberry users and later launched a beta toolbar that lets users keep a local search button on their browsers at all times. And of course everybody’s mapping; last December, MSN even began adding an angled bird’s-eye view to major metro maps that makes the buildings look more like recognizable landmarks and less like blocks in a Tetris game.
Throw in the Internet Yellow Pages like YellowPages.com and SuperPages, and you’ve got some very large gladiators in the local arena. With forces like that arrayed against them, how are smaller, unaffiliated local search providers supposed to do business?
One way is to try to reach potential advertisers that the big guys may be overlooking. TrueLocal’s president Jake Baillie says his company competes by going to every vertical trade show and exposition they can find, snagging business cards and spreading the local search gospel to merchants who may have thought online advertising can’t do anything for them.
“We go to conventions for the American Dental Association and the National Restaurant Association,” he says. “At the last NRA show, we were the only search engine standing there- right next to a booth showing player pianos and across from one selling wood chips.” Trade shows are also attractive because they usually number a lot of college kids and grad students in their fields—a chance for TrueLocal, which launched in November 2005, to do some viral marketing to valuable prospective users.
TrueLocal charges nothing to include companies in its indexed database, which now consists of about 50 million Web pages and 13 million businesses, mostly offline. The company acquires this data through the guerilla methods above, as well as crawling the Web and accessing other data services. It purchased Geosign Data Services and has integrated their local records into its index. The company also gets revenue from selling those data services to other local search providers, including Switchboard, AOL, SuperPages and Amazon’s A9.
Advertisers who want more than just a bare-bones mention can bid on monthly featured listings within a single ZIP code, with bids starting at $1 plus a $4 listing fee. The monthly time limit for the four featured slots in each category encourages small business owners to take a chance and see what a more prominent display can get them, Baillie says. And limiting bidding within ZIP codes keeps the positional ads relevant to users; a large national chain like a Best Buy can’t buy slots in relevant categories unless they have a store within that ZIP code.
Since TrueLocal doesn’t earn pay-per-click revenue from the ads, advertisers don’t need to be concerned about click fraud and can budget more efficiently: no cost surprises from having 200 people click on their ads in a month when they were expecting 20.
TrueLocal also offers some attractive extras that can draw first-time advertisers while helping the engine stay competitive. For example, while SuperPages and others are offering pay-per-call services, and even Google is inching closer to the feature, TrueLocal offers free local call tracking numbers and 1-800 numbers that its featured advertisers can use to check on the volume of calls from their ads. The company also keeps track of driving directions requests to an advertiser’s business, as an activity indicator. It also makes use of brand logos and graphics in some categories where those can be helpful to searchers, such as fast food and lodging.
“Our mission is to drive online searchers to offline businesses,” Baillie says. “Expedia may have millions of dollars in online marketing, but it doesn’t have a storefront. So a local travel agent might like the fact that within our engine, they don’t have to compete with Expedia’s messages. And those people who are looking for a travel agent in the 60603 ZIP are automatically qualified.”
User cool alert: Thanks to a link to a weather database, the skies of the small town vignette in the TrueLocal header changes to match the climate in whatever ZIP you’re searching.
The company is in the middle of some deals to let content Web sites such as newspapers add TrueLocal search under their own brand. It’s also developing ways to add outside content that will echo user-generated reviews but perhaps be more valuable—for example, listing waits for tee times at local golf courses. Ontario-based TrueLocal also expects to roll its services out to Canadian businesses this year for the first time.
Features like that lead Baillie to say that his company can hold off the big powers’ incursions into local search and draw both advertisers and users. “I would love to beat Google,” he says. “But I always remember that [IAC] bought Ask Jeeves for $1.8 billion dollars, and they only had 5% of the traffic on the Internet. That tells me 5% of the traffic is worth a lot.”
Another small player in the local search field, ReachLocal, is doing an end run around the difficulties of competing with the big brand names. Instead of launching its own local search site and going head-to-head with Google, it’s streamlining the process by which small businesses can get themselves listed on those big directories. ReachLocal sells into both Google and Yahoo, as well as the IYP SuperPages.com and Web ad networks such as Advertising.com.
ReachLocal’s business aim is to make search marketing simple for the numbers of small businesses who may never have built a Web page. “Two years ago, lots of these people had heard of Google and Yahoo!, but hadn’t thought of including them as part of their business marketing,” says Michael Kline, co-founder and COO of ReachLocal. “And Google and Yahoo! themselves had not targeted local business for advertising. Google had barely launched regional targeting.”
But in the last twelve months, the options for local online advertising have multiplied. “Small businesses are never going to cope with that complexity on their own,” Kline says. “They want someone to advise them how much to budget, where to spend that money, and to give them a central place with a single log-in to monitor their results.”
ReachLocal offers a turnkey search ad platform that helps small and local business create and manage pay-per-action search campaigns. A business owner can create a single ad and set a budget for a saerch camapaign. ReachLocal will generate the list of keywords that belong in that campaign and the geo-targeted search networks the business should be advertising in. If the advertiser doesn’t have a Web site, ReachLocal will create an update-able offer page; if they already operate one, ReachLocal will create a proxied version so advertisers can separate out the customers who found them via their search campaigns.
Advertisers can check on their campaigns across all the channels, from Google to SuperPages, using a single Web-based dashboard. They also get full reporting on phone calls, e-mail contacts, and coupon registrations. Costs are correlated to the size of their ad budgets but usually involve a small performance-based premium on every click, call, sign-up or coupon redemption.
It’s not only stand-alone businesses that can benefit from ReachLocal’s centralized search-ad services. In January the company signed a deal that will make the company’s ad platform available to 20,000 FTD florists in the U.S. and Canada. According to the deal, whose financial terms were not released, FTD will implement all its local search through ReachLocal. The company has also struck reseller deals with ad agencies TMP Directional Marketing and SMG Directory Marketing to offer their clients local search ad capabilities.
Kline admits that ReachLocal is riding on the success– and the considerable infrastructure investment– of the big search engines. And that approach will probably keep ReachLocal from the market-capitalization heights that Google has reached.
“Obviously, you don’t get Google-like margins if you don’t build what they built,” he says. “But we find we’ve been able to provide such thorough ROI-driven reporting back to our advertisers that we can charge a margin on top of the click cost and still make a decent living.”