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MIHMORANDUM
No. 543
October 9th, 2009


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My Thoughts on Google Local Listing Ads

As I mentioned in yesterday’s SMX East recap, Google announced a new ad format–Local Listing Ads–on Monday afternoon.  Both Greg Sterling and Mike Blumenthal have written fairly in-depth summaries of what the ads entail but I’ll try to lay out the highlights below:

  • Only businesses with claimed LBC listings are eligible to participate.
  • The landing page MUST be the business’s LBC URL or its Place Page.
  • The ads are tied to ONE category selected as part of the claiming process.  No keyword research on the part of the SMB is required.
  • Up to four LLA’s will appear either above or beside the real estate reserved for Local results in Universal (more on this below).  These will be rotated, though Google would not get into specifics on the interaction between pricing and demand/saturation in a given market.
  • Some form of support (likely email) WILL be available to SMB’s who purchase these ads.
  • The product is currently in Beta in San Francisco and San Diego ONLY.  At the moment, this is only an experiment Google has no definitive plans or timetable on if or when this might roll out elsewhere.

(Some of these questions Mike and I posed directly to a Google representative; answers are here. Google’s official pages on this product are here.)

Impact on the Local Search Space

Local Listing Ads are in large part analogous to Yahoo’s Enhanced and Featured Listing products.  They’re both easy to sign up for and feature easy-to-understand benefits and pricing.  The differentiator is that Google’s ads are going to be shown as part of Universal, and to my knowledge, none of Yahoo’s premium Local products integrate into a sponsored listing above Yahoo’s 3-packs (yet, at least).

Even though this product is in Beta in only two markets, Google is certainly thinking about the impact these ads will have on their SERP interface, making a dramatic change from the 10-pack yesterday to the Lucky Pack (7 listings) for a wide array of keywords.  This change not only makes click-through more likely from the new Lucky Pack, but allows for a little more space above. 

I wouldn’t be surprised to see traditional Adwords advertisers shuffled mostly to the right-hand side of the page to make room for LLA’s at the top, as in searches like this one.  Even in searches like this one where traditional Adwords advertisers remain on top, the blue pushpin icons are sure to have a significant positive impact on clickthrough for the businesses advertising with LLA’s, taking traffic away from traditional Adwords.

Already dealt a body blow by the 10-pack, Internet Yellow Pages who tried to cope with the loss of traffic by buying more Adwords are now going to find it even more difficult to compete.  If the Yellow Pages companies want to stay in business, they simply have to acknowledge that the real value that sales reps can provide is as web marketing advisors, rather than salespeople for a proprietary product.  The sooner they start helping SMB’s leverage ALL of the ad products out there, including this one, the faster they’ll recover revenue streams.  I readily admit that some of the distribution deals that the IYPs have made recently, particularly Yellowpages.com with Bing, could work out great, though, and I’d love to see more of those kinds of partnerships happen.

They will still be sledding uphill, though.  I’ve long thought that this kind of product could be wildly successful–the Adwords Starter Edition was a noble effort but even that was too complicated.  But in general, I’ll repeat a quote from that previous post:

Web advertising is a commodity and shouldn’t require any relationships beyond a good customer service department to answer questions with sign-up.”

To that end, Google simply must get into customer service or else it’s going to end up with a lot of unhappy SMB’s and a big PR black eye.  I’m not sure that Google has properly thought through the intricacies of this product yet–particularly how they’re going to satsify demand in markets with hundreds or even tens of advertisers; get ready for a ton of emails from SMB owners wondering “Why isn’t my ad showing up”–but that’s why they’re in Beta. 

If these Beta tests are successful, though, I see this as a long-term play to encourage SMB’s to dip their toe into web advertising, which should open up a HUGE new long-tail revenue stream for Mountain View.  Overall, this is the most exciting innovation in the Local Search space I’ve seen this year.