What Google’s ZIP Code Targeting Means for Local Businesses

MIHMORANDUM NO. 97 | May 29th, 2008Reader Comments (19)

“Super Target” by Daniel Greene

ZIP Code Targeting: A Tipping Point for Local Search?

Greg Sterling wrote a quick blurb last week that inspired quite a bit of discussion on his own blog, including from yours truly. For my money, news hasn’t made a large enough ripple among the general SEO community (and even the general public), though, so I want to follow up with a more in-depth response of my own.

The Cliffs Notes version of Greg’s post is that for generic searches like “pizza,” Google is now asking users point blank what their ZIP code is above the results that they return for that search. I surmise that for users that log in with their Google account prior to searching, Google already knows their ZIP code and is able to even skip this step of asking.

Why is Google doing this?

1. Better Results

I truly do believe that Google is seeking to return the best results for the typical user, first and foremost. The average user simply doesn’t know how to search very well yet. They use one- and two-word phrases without any geo-modifiers (like pizza parlor), when they’re actually looking for something in their general neighborhood (pizza parlor in portland oregon).

In the client Adwords accounts that I manage, it’s typical to see ten times or more search volume for generic terms than for geo-targeted terms. Google probably sees this ZIP code modifier as a way to better gauge the intent of a searcher, and rightly so.

1a. Keep Searchers on Google

In concert with the “better results” theme, this goes back to a point I made last year in The REAL Problem with Local Search that Google doesn’t want to promote organic listings that just take searchers to another search engine. These results are poorer quality (with Google serving only as an intermediary). The sites that rank organically for generic terms are by-and-large national directories and search engines. Google would prefer to keep the potential ad revenue those searchers represent to themselves, a concept I discuss more in the “What Does This Mean?” section below.

2. Alternative Ad Targeting

Yes, geo-targeted Adwords campaigns help capture that traffic. But if you’re a local business, let’s say Oliveto’s Restaurant in the Rockridge neighborhood of Oakland, trying to reach your main audience, the “San Francisco-Oakland-San Jose” metro area is about the best you can do right now. Now that Google has a firm handle on the ZIP code of a user, you could advertise just in the 94611, 94618, 94610, 94608, 94704, and 94705 ZIP codes which are going to bring you 80%+ of your business. You’re no longer paying for wasted clicks from people in San Jose or Burlingame who are never going to drive an hour and a half in rush hour traffic just to go to dinner. Your ad budget stretches that much further, and is that much more successful in its ROI.

What Does It All Mean?

Bottom Line: We’re going to see even MORE 10-packs integrated into Universal search results.

Greg’s post focuses mainly on the Adwords targeting implications of this decision, but the organic implications are incredibly significant as well: LOCAL Search has just broken into the GENERIC space.

Take “lawyers” as an example. Without any geo-modifiers, I get the bureau of labor statistics, Wikipedia (of course) and then more search engines like Martindale-Hubbell and Findlaw. But here’s what’s new: a 10-pack RIGHT IN THE MIDDLE OF THE SERP that has tried to figure out my ZIP code. Now, that 10-pack happens to be targeting the WRONG location for me, but there’s a nice little link that allows me to tell Google which ZIP code I actually want it to search (see below).

That search is a little different from “lawyers portland or.” Here we see a 10-pack in its more typical location, at the top of the SERP (I have a feeling the “lawyers” 10-pack will move to the top position fairly soon as well). There are still a smattering of other search engines for the geo-targeted search, but this time they’re things like SuperPages, CitySearch, and the specific Portland directory pages for Findlaw–dramatically higher-quality results. There are also four INDIVIDUAL LAW FIRMS that rank in the top 10 organic results, again, something they’d never have a chance to do for a generic term like “lawyers…”

…until now!

With the ZIP Code-Targeted 10-pack, Google is inflating the rankings of “Mom and Pop” for GENERIC terms and taking serious clicks away from competitors like SuperPages, Citysearch, and Yelp (and industry specific sites like Findlaw and Martindale-Hubbell).

Back to the “Why is Google doing this?” section, I’d like to add a hypothetical #3. Knowing the ZIP code pushes nationwide organically-ranked websites into Pay-Per-Click if they want to appear above the fold, and recover even a fraction of the traffic they once had before the 10-pack was introduced. I spoke about this hypothesis in the aforementioned “Real Problem with Local Search / Why Google REALLY Introduced Universal.” But now this effect is even more pronounced, given the 10x multiplier associated with generic terms vs. geo-targeted terms.

I’d also like to briefly reply to an insightful comment left by Sebastian Provencher on Greg’s post related to the 10-pack. I’ve LONG bemoaned the dominance of the centroid as a ranking factor in Local search. Google’s ZIP code “fix” has the potential to alleviate this weakness in its Local algorithm by creating a more relevant centroid for each searcher.

Hope you enjoyed reading & I’d love to hear everyone else’s thoughts about this development, which I think heralds a kind of “tipping point” for Local, in the comments.

19 Responses to “What Google’s ZIP Code Targeting Means for Local Businesses”

  1. MiriamEllis says at

    David –
    First, let me say, I just love the way your blog posts are scanning in your new redesign. I really like the large type. It’s so…legible.

    This is a very cool and interesting change in Universal, and my guess is that Google has identified an index of generic terms that are being typed in with local intent but without geo modifiers. Pizza, lawyer, florist, etc.

    I love seeing Mom & Pops getting the action over aggregate sites, of course.

    There is one area in which I feel the zip code ID box will be unhelpful and I think it’s an important one. Local results are especially important to travelers. Coming to a vacation spot, it’s natural to use Google to find out where to get pizza, where various services are, etc. However, how many travelers are actually going to know the zip code of their vacation destination? I have no idea of what the zip codes are in any place I’ve ever visited, so I think the zip code box ignores the special predicament of this group of users.

    I’ve always wished I had time to do some kind of a study to see what percentage of Google Local data users are on vacation. My hunch is that the number would be large, as vacation seems like the perfect environment for needing local data.

    I’m interested to think of what zip code search might do the centroid, as you mention above, David. Hmmm…we shall see!
    Miriam

  2. David Mihm says at

    Thanks for the compliment on my design revision, Miriam. It is based on something I heard Brian Clark of Copyblogger talk about at PubCon last year, which I think I’ve mentioned to you before, but I just didn’t get a chance to implement that until this Spring.

    As for travel & zip codes, I think you’re absolutely right, it’s not a match made in heaven. But one of the nice things about clicking on the “change location” link that comes up is that the search box prompts you to enter a city and state OR a zip code. So if you know you’re looking for hotels in Portland even though you are in San Francisco, you could say Portland OR instead of 97209.

  3. Dave Oremland says at

    The funny thing is, when I do a search for pizza and a couple of other queries that might generate a zip code box….I’m not seeing it all.
    Of interest I find a similar phenomena with users searching for the generic industry term by an enormous quantity greater than those that use geo modifiers. I have a site with both significant local advertising for those generic term, and a site representing a local business with the #1 ranking in Y. The traffic off of ppc and off of Yahoo is astonishing for a business that is entirely local.

    PPC advertising on behalf of local advertisers is significant especially for the generic industry terms. Might not creation of a zip code choice cut back on clicks on the advertisers in that category and hamper Google ad revenues?

    Dave

  4. David Mihm says at

    Dave, I’m no longer seeing the phenomenon either. I have a feeling Google piloted it for awhile, collected some data, and is now back in the laboratory seeing what the next phase of this initiative is going to look like. I believe this is the same procedure they followed when they first introduced the 10-pack last November, and then released it for good in January.

    Personally, I doubt that ZIP code ad targeting will remove advertisers from the generic industry pool. After all there are plenty of companies now who advertise generically for broad-match industry terms with geo-modifiers anyway…I don’t see Google shutting out those advertisers for ZIP-targeted searchers…but we shall see!

  5. Neil Street says at

    Dave:
    Thanks for pointing out this important change. I agree with your original comment, that it has gone largely undiscussed in the broader SEO community. And I think it is a big move. (BTW it is working again today — for the word ‘pizza,’ for ‘lawyer’, ‘plumber’, ‘cardiologist,’ but not for ‘caterer’ ). If you are the kind of business that Google is focusing on here — what you might call 100% local — it is crucial that you get your act together and get your business in this zip-code based ten-pack. I think many consumers are going to love this feature from Google, and many of the businesses that show up there are going to reap the benefits.

    One thing that is very interesting to me is how Google determines which type of business to include. I have a client who makes custom hardwood flooring, and his business is mostly local, but much more regional than a few zipcodes. He sells across three states. If businesses like his were to be included in the zipcode listing, it might actually hurt his business, because it artificially shrinks the universe to a single zip code (assuming he only shows for the zipcode of his business address). Interesting times for local!

  6. David Mihm says at

    Neil, I agree that your client is now in a difficult position — without getting an office in all the major areas he services.

    However, in general, I have a feeling that Google will be getting better about sniffing out what kinds of searches should be more dependent on geography (grocery stores, e.g.) and what kinds of searches should be less dependent on it (wedding photographers). It’s certainly not there yet, though.

  7. Sarah says at

    David,
    I own a “Mom and Pop” business and my attempts to get or site in the top of the “10-pack” (sometimes it is a 3-pack) has gotten me no where. I have changed my registered profile several times and modifed my website … … Really, I am just wondering how does google determine who is on top?
    Thanks-Sarah
    Anderson Williamson Insurance Agency
    Xenia, OH

  8. David Mihm says at

    Sarah, I recommend reading some of my other posts about local search ranking factors and citations:

    http://www.davidmihm.com/local-search-ranking-factors.shtml

    http://www.davidmihm.com/blog/general-marketing/local-seo-citation-is-new-link/

    http://www.davidmihm.com/blog/general-marketing/the-bcs-for-local-seo/

  9. Shig says at

    Sarah – I see that you’re showing up there now :-)

    David – thank you so much for this and the local search ranking factors article. I have just one client right now who is local search focused. The number of local business clients can certainly grow significantly, but unfortunately their often small budgets can be hard to work with.

  10. David Mihm says at

    I agree, Shig, it can sometimes be tough to work with smaller businesses because of their budgets. But the ROI can often be greater, and more immediate, for small businesses than for larger companies.

    I think NetSol and Intuit (via Homestead) are supposed to be launching some major small business SEO initiatives in the next couple of months. Given both companies’ “sterling” record of customer service, that can only increase the # of clients who are driven to independents and small agencies like ours.

  11. David Rodecker says at

    Three cheers for local businesses!
    More exposure + a big affirmation.
    At ePilot and local.com we learned that users liked their queries interpreted for local results– as measured by higher click-thru rates. Three years later, Google has finally closed a major gap in the user experience… This is definitely a sign that local search is a fundamental experience for the searcher.

    http://subscribedlinks.blogspot.com/2008/07/google-everything-is-local-search.html

    My only request– please move it up! Being #4 all the time isn’t the most intelligent choice.

    Best regards,
    David Rodecker
    Founder & CTO, RelevantAds
    “getting local business online”

  12. Webster says at

    Another aspect of local search that can be helpful when used with Zip code targeting is marketing tools like the PRIZM NE Segmentation System: http://www.claritas.com/MyBestSegments/Default.jsp?ID=20&SubID=&pageName=ZIP%2BCode%2BLook-up on the Nielsen/Claritas website that allows you to look up what specific market segments live in certain zip codes so when you are running an ad campaign geared specifically to those segments you’ll already have a good idea of what their income is, what they like to buy, where they shop, eat and hang out etc….great tool. It’s also good to get set up with a Local Search company like http://localsearchappeal.com/ or the many other sites out there that provide small business with the tools and techniques they’ll need to hit the ground running with their local search campaign.

    Great article, nice work.

  13. Lea C says at

    Yes, I knew this was coming when I watched Google change their search engine for the map listings. As an organic SEO it was frustrating at first, but now a tool. I see that other local ad sites are using the geo targeting as their advantage … of course Yahoo had to follow suit. It’s just awesome. Thanks for the article.

  14. ziare says at

    local search is the future of web search.users will be more addicted to google

  15. Gorgi says at

    First of all want to thank you to all of you guys giving such a good comments here and this is really good for people that are starting with Local Results to optimize their business. Any way now days everything is just profit so same with google. They will push all the things to go in the way of paid listing but they must keep and Organic results a little bit more filtered and a quality sites to be shown. Their major project is for everybody that want to get local results like you said pizza google works with the IP address locators. If you go on google and type web design or pizza it will show you results for your area and a little bit around. They want all the search terms to be on local groups and to be in a bigger phareses.If you want to go to vacations somewhere google will push you to type longer pharese with location entered so you can get quality results.

  16. Jack says at

    I am the owner of an electrical service business. We help home owners and businesses with small or large electrical needs. I am currently listed number one in the map section in thc city my business is listed in. Most of my internet calls come from other older areas of town as the area my office is located has newer homes and businesses. I would like to list my business in the map section in all the cities around the area. I have heard many different views on this subject. Most say you can only list your business in the city your office is located in. Others say all you have to do is list an address and Google doesn’t have a problem with it. I have noticed some businesses do just that. They list their business as having an address in the middle of a street or field in the area they want to be listed. I can’t believe this is the right way to get listed in other areas. Will Goggle punish businesses for this blatant false advertising of the location of their business??? Is it possible to list my business honestly in the map in all areas? I am concerned about Google narrowing the search parameters to only businesses with local zip codes. My work takes me where ever someone needs my services. This is true with any service company I have ever worked for. We as service providers rely on customers getting a hold of us no matter where they are in our service area. This new localization will hurt my business if I keep the same address and zip code. I will have to relocate my office to the zip code where most of my work comes from in order to keep getting calls 0r contribute more to a PPC as there will be more competition. Great for Google and not so great for my business.

    Thank you for the great article.

  17. Mike says at

    great article! most of my online business does come from people in and around our zip code right now.

  18. david says at

    same here. as a local contractor, most or nearly all of our business is dependent on local customers

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    Very interesting,thank you
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