Yahoo Goes LocalYahoo Goes Local

Yahoo this week released a beta version of Yahoo Local, an expansion and refinement of the local search capabilities it has been pushing since March. Integrating the company's search technology with Yellow Pages, map data, and user-generated reviews, the service aims improve the local search experience and to serve those looking for online alternatives to phone book business listings.

"We've been in the local space since our inception," says Paul Levine, general manager of Yahoo Local, pointing to the company's map technology as an example of its longstanding local commitment. Yahoo, he says, is the market leader in local online searches, with some 20 million unique users.

It's a market that's getting more crowded. Following Yahoo's introduction of new local map technology called SmartView on March 9, Google announced eight days later that it had integrated local search technology, called Google Local, into Google.com search results. On March 26, search and directory service company InfoSpace Inc. said that it would acquire Switchboard Inc., a local online advertising and Internet Yellow Pages provider, in an effort to bolster its local search and directory offerings. Verizon Communications Inc. has been operating its own online directory service under the SuperPages.com brand since July 2000, following the merger of Bell Atlantic and GTE. It has been syndicating its directory data to MSN since May 2001.

"It's exciting because local search is a big area of online activity," says Levine. "It's also pretty exciting financially."

That excitement may have something to do with findings from a February survey by directory research firm the Kelsey Group and shopping search engine BizRate.com that "local commercial searches--those seeking merchants 'near my home or work'--represent 25.1% of all searches being performed by online buyers, more than double the amount previously estimated by analysts." Moreover, the Kelsey Group notes that the Yellow Pages industry, which generates $15 billion annually in ad sales in the United States, is migrating from print to the Internet. The research firm predicts online Yellow Pages searches will grow 25% annually and will account for more than 30% of all Yellow Pages searches by 2006.

"Right now, there aren't a lot of regional advertisers online," says Kevin Lee, CEO of search engine marketing firm Did-It.com. He expects that will change as local search offerings become more compelling, and that local search can be very lucrative in certain vertical markets. He cites the example of lawyers, who may pay from $5 to $15 per click for local online ads because of the potential revenue a new customer represents. A typical local business might pay pennies per click.

"This shows how strongly Yahoo feels about this," says Chris Winfield, CEO of 10E20, another search-engine marketing firm. He gives Yahoo's offering high marks and contends that Google will have to work hard to catch up, noting that Yahoo's substantial database of user address data gives the company an edge in personalized local services. Google knows far less about its users--at least until they ante up their personal information for Gmail accounts.