The panel agreed that the local search market is enormous and getting larger. Somewhere between 20-35% of all web search is seeking geographically relevant results, and every panelist said they expect that percentage of local queries to increase with user sophistication, better search technology and deeper local content.

Paul Levine, General Manager, Yahoo! Get Local said that 5% of all searches through the main Yahoo! search box included explicitly local terms such as a city, area or neighborhood. Additionally, they've identified that 15-30% of all searches wanted a local result, but didn't include a local search term. Paul gave the example that a user searching for "auto repair" probably wanted local auto repair shops instead of the sites on the history of auto repair.

Gerry Campbell, Executive Director, Search and Navigation, America Online agreed saying that AOL's experience completely mirrored Yahoo's in terms of the percentages of implicit and explicit local search.

Tony Mamone, VP Listing Services, LookSmart added that they've see local search almost double in the last 18 months and they expect it to continue increasing.

The panel then focused on the challenge of building quality local content to better satisfy local search queries.

Yahoo's Levine said a major obstacle was that 80-90% of local businesses don't have a web presence. To compensate, Yahoo! has experienced a leap in consumer satisfaction by integrating Yahoo! Yellow Pages results into their main web search results. He said that this hybrid approach has boosted click-through rates on local search significantly. He expects this trend to continue.

He also said that Yahoo! doesn't consider the main search box to be the best place to start a local search. He indicated that Yahoo would probably release an extension of the main search box that would be better suited to resolve local queries.

LookSmart's Mamone made a good point stating that an arbitrage situation currently exists in locally relevant pay-per-click. The average price per lead via paid search is in the range of 20-40 cents. However, local leads are significantly more valuable, and are currently undervalued by the marketplace. The volume of local leads is relatively low, but each lead delivers far more value that the cost to the advertiser.

The panel then focused on strategies to reach the 10 million small to medium enterprises (SMEs) in the US. Less than 250,000 currently purchase paid search placement.

AOL's Campbell said that they believe a much simpler range of search products is necessary to reach unsophisticated local advertisers. He expects to see ad products that mirror traditional Yellow Pages advertising. An advertiser would pay a fixed price for a number of months instead of trying to micro-manage keyword auctions.

Levine discussed Yahoo's successful relationships with SBC and Bell South's Yellow Pages sales forces. The YP publishers bundle Yahoo! IYP inventory with the IYP products of RealPages.com or SmartPages.com. He made the comment that there was plenty of margin to go around for resellers to afford to partner with Yahoo!

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