Last year at this time
there was really no such
thing as "local search."
Fast forward twelve months
and local is one of the
hottest topics in search.
Local search has recently
been the subject of a series
of articles by
SearchEngineWatch.com editor
Danny Sullivan. Search
localization is
simultaneously the focus of
aggressive attention and
effort at Google,
Yahoo!/Overture, AOL and
MSN, among others. All of
this leads to the
fundamental question: why
local?
Local Advertiser Volume and
Potential Revenue
The answer, as one might
expect, is revenue-or more
precisely, potential
revenue. When you add up the
number of all the paid
search advertisers in the
world right now, the total
is approximately 380,000.
Yet, there is substantial
overlap among the
advertisers of the different
paid search networks. (It's
rare a company that uses
Google but not Overture and
vice versa.) So, as a rough
estimate, the figure is
probably closer to 250,000
paid search advertisers on a
global basis.
By contrast, the U.S. alone
has about 10 million small-
and medium-sized enterprises
(SMEs), and there may be as
many as 30 million more such
businesses in developed
countries around the world.
In the U.S., most of those
SMEs, the bulk of which have
fewer than nine employees,
conduct the majority of
their business within 50
miles of their locations.
The Yellow Pages have built
an enormously profitable
industry servicing that
local market. In 2003, North
American print Yellow Pages
were worth roughly US$15.6
billion in annual revenues.
All of this is not to say
that the market for Yellow
Pages and local search are
one and the same. There are
serious, practical obstacles
that paid search must
address-the complexity of
keyword bidding, limited ad
inventory and the challenge
of sales-if the industry is
to more than superficially
penetrate the SME market.
Currently about 17 percent
of local SMEs that advertise
use paid search (40 percent
of small businesses do not
advertise). Further, The
Kelsey Group has estimated
that the current addressable
(not actual) market for
local paid search is between
US$1.16 and US$1.2 billion.
Overture contends that local
search revenues will be
about US$1 billion by 2008.
