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Search goes local
Google launches a beta site and Yahoo! adds a layer to its maps. Why is everyone loco for local?
March 24, 2004: 1:22 PM EST
By Eric Hellweg, CNN/Money contributing columnist

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SAN FRANCISCO (CNN/Money) - A sage once noted that "all politics is local." More and more Internet search companies are taking that wisdom to heart and offering their users the ability to search not only across the Web, but in just a local area as well.

In their continuing quest for growth markets, companies such as Yahoo! and Google (can Microsoft's MSN be far behind?) recently debuted localized search features.

Google's local.google.com, which was beta launched on March 17, is a straightforward, austere local-listings search page where users can type in search terms alongside a city and state or zip code.

Yahoo's SmartView, launched March 9, adds even more local business information to the maps that result from location-based searches. A user can view a map after searching for "antiques, Cambridge, Mass.," and that map will now show the locations of the nearest restaurants, gas stations, and other businesses.

These latest moves pit the search firms against the Internet offerings of localized directory companies, such as SBC's SmartPages, Verizon's SuperPages, and the privately held YellowPages.com.

"We're all going at local search," says SuperPages's Dana Benton Russell. "It's a hot commodity right now."

A growing market

Indeed it is. Local business advertising in the offline Yellow Pages is still an enormous market, estimated by some to be worth $22 billion per year. But consumers are increasingly turning from the book to the Internet. SuperPages saw 32.7 percent revenue growth from 2002 to 2003.

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What's more, a recent survey by the Kelsey Group and BizRate.com found that a quarter of all commercial searches were local in nature, and 44 percent of the survey's 5,500 respondents said that the number of local searches they were conducting had increased from a year ago. Sixty-four percent said they prefer search engines over the offline Yellow Pages.

Those are difficult data points to ignore, and for companies such as Yahoo! to keep their status as growth stocks, they need to seek out new markets.

However, offering users local search is a complex undertaking. Populating the databases with local information is not all that difficult, with companies such as Acxiom providing public listings. But getting local businesses to buy into Google's AdWords program is a whole other issue.

Russell likes to point out that, as a division of Verizon, SuperPages has more than 2,100 salespeople on the street.

Dane Madsen, CEO of YellowPages.com, says his company's advantage is "we can pick up the phone and call a small business and say we're the online Yellow Pages and they'll understand who we are. Trying to explain to a [small business] in Salina, Kan., what a Google AdWords program is isn't as easy."

Sukhinder Singh, general manager for local search at Google, says it's too early for the company to disclose its sales team's plans for approaching small businesses across the country.

But, she says, "it all starts with training users to do local search. Once you create adoption and awareness on how to conduct local queries on Google, we'll see pickup, adoption, and awareness with local advertisers."

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Still, with their enormous sales forces and brand/task association, the online versions of the Yellow Pages start out with an advantage. As such, investors shouldn't look for any significant near-term revenue boost to Yahoo! or Google (when it finally goes public and we can see its revenues). Google isn't currently running AdWords on the new site, but says it will in the future.

But as these firms -- and others like them -- hone their local offerings and tailor their sales approaches to small businesses in the United States, look for them to start siphoning revenues away from other online local-search companies such as Switchboard and from big telecoms with online Yellow Page services.


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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.