Wednesday, February 16, 2005

Local search is hard

John Battelle posts on competing in the local search and yellow pages market:
    I asked [Peter Negulescu (VP, SFGate)] why SFGate isn't an aggressive player in the local online advertising market ... He chided me for my ignorance regarding the 800-pound gorilla of local markets -- the Yellow Pages. "They have like 6-700 local sales people in every major region," he told me. "They visit every merchant in town." In other words, the Chronicle can never compete.
This is the problem with local search. There's millions of itty bitty little merchants, all appearing and disappearing rapidly. It's hard to get accurate information on them. It's expensive to manage the advertising accounts for them. Local search is hard to do right.

John is optimistic that local merchants would come to Yahoo or Google's website to self-manage their information and advertising, but I doubt you could get anything like the coverage you need with a self-service model. Many of these merchants don't even have a web site. They aren't tech savvy.

The Yellow Pages has uses hundreds of sales people because it has to. They need to physically send salespeople out to talk to each merchant. Getting complete coverage requires a massive, expensive sales force. That's why local search is hard.

See also "Down on local search".


Ali Diab said...

Greg, many people said the same thing about Web advertising several years ago, and then along came Overture which democratized Web advertising using a self-serve interface. I don't think anyone in the industry would dispute that a channel provides additional penetration in the current market, but the impetus for a product like Yahoo!'s Local Listings product ( is precisely the same as Overture's was 5 years ago -- namely, to address the emerging trend of self-serve local content submission and marketing that is already taking place online today, and is certain to increase dramatically over the coming few years.

Greg Linden said...

Hi, Ali. Great to hear from you!

You're right that there's a lot of power in a self-service interface usable by small business. But local search faces a problem that Overture and AdWords don't have. Local search needs complete coverage of local businesses.

Local search won't be useful if it only contains the fraction of merchants who choose to participate.

Ali Diab said...
This comment has been removed by a blog administrator.
Ali Diab said...

Thanks Greg. It's great to see your engagement on this topic.

Of the estimated 20+ million local businesses in the U.S., less than 25% currently advertise in any form of Yellow Pages, be it online or print. So, that can hardly be considered comprehensive!

If the past is any indicator of the future, the number of local businesses that choose to self-publish their information online will grow exponentially over the coming few years. Which makes a self-serve local content submission tool, like Yahoo! Local Listings, absolutely essential in achieving comprehensiveness in Local search.

Greg Linden said...

Ali, you argue your case passionately and convincingly as always.

I have to say that I'm not comfortable with how you're trying to define the problem here. I don't think the problem is to get a percentage of small businesses as advertisers. I think the problem is to have authoritative, accurate, and comprehensive information on all local merchants.

But, obviously, you're much closer to the problem than I. It's good to hear that you're optimistic about the feasibility of an inexpensive, self-service model.

Ali Diab said...

LOL, thanks!

I think you might be misunderstanding me. Getting local businesses to self-publish at mass scale using self-serve tools is the key issue. Whether they choose to then pay an additional fee to promote their business in some way is really independent of that fact.

The Yahoo! Local Lisitng product enables local businesses to both freely self-publication as well as promote their businesses for a small fee.