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No. 43
October 25th, 2007

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The REAL Problem with Local Search

(or, “Why Google REALLY introduced Universal”)

The closing/aggressive-sale-mode announcement about Judy’s Book yesterday made a number of waves around the SEO community as a bellwether for the state Local search. Like many dot-com startups, I think Judy’s Book may have fallen victim to being a bit ahead of its time. If you’ve never visited, it is (was?) a phenomenal-looking site, with a really intuitive interface, and a strikingly useful data set.

Judy’s Book - R.I.P.

Greg Sterling over at Screenwerk, whose story on Judy’s Book is the first link in this post, runs down a great list of Local Search statistics in a related post at SearchEngineLand:

Internet ad spending will reach $62 billion and surpass all other media by 2011; local online spending will reach $19.2 billion. Local search is projected to be $4.1 billion. Veronis Suhler Stevenson, August 2007

Local search is the second most popular online activity after e-mail.
Piper Jaffray (2007)

60% of all local business searches now happen online (33% happen in print yellow pages) and 82% of the people using local search sites follow up their research with offline action.
TMP Directional Marketing-comScore, August 2007

Out of the 130 million monthly unique users of Yahoo last year, 116 million of them came to Yahoo with local intent.
Hilary Schneider, Executive Vice President, Global Partnership Solutions, Yahoo!

The Internet will influence a trillion dollars in offline/local retail spending by 2010/11.
JupiterResearch, Forrester Research, 2007

Nearly all of the Local Search Marketing experts agree that the problem with Local Search is that “It’s too fragmented and too complex.” (If you’re interested in reading some of these opinions, Greg Sterling is your absolute best source, but tons of other people have written and spoken about how fractured the Local Search market is.)

Local probably is more fractured than some other verticals within the search industry. But no one seems to complain about the fragmentation of e-commerce, for example, with all of the affiliate marketing strategies, let alone selling items directly on Amazon, eBay, Froogle, etc…

It is true, though, that small businesses are too busy running their own business to even know about half of the players in the Local field. Most of my clients to date had heard of Craigslist. But only ONE had heard of Yelp (and she’d never used it!). CitySearch and the Internet Yellow Pages were completely off their radar screens. Judy’s Book? Kudzu? Yeah, right.

Even if they’d heard of them, what small business owner has time (or money) to attend things like SES or SMX Lo/Mo, where they could actually LEARN a bit about how to use these sites to their advantage? The newly-announced Universal Business Listing should help alleviate some of that fragmentation, but how long will it take for the UBL to actually catch on with small business owners?

But guess what: every small business owner in the country has heard of Google, Yahoo, and Microsoft.

And before we get wrapped up in the latest Local entrant to secure a few million dollars in VC funding, let’s not forget that BY FAR the biggest players in Local Search are STILL the search engines. As a small business, if you’re doing well in these three engines (well, really if you’re doing well in the first TWO of them), you probably already have more business than you can handle.

The REAL problem with Local Search isn’t fragmentation.

Beyond the Big Three, there are an incredibly limited number of quality sites to go for local business information: Craigslist, Yelp, CitySearch, Judy’s Book, and a few of the online YellowPages. Whether or not these sites will succeed as profitable business models is an entirely different question. But they are certainly well-organized enough, and certainly get enough traffic to be major players for the foreseeable future. The economics of Local Search will, sooner or later, sort themselves out–the new entrants that don’t have some sort of core differentiator will be left by the wayside in the months and years to come.


And a greater variety of PPC offerings and banner ads simply isn’t going to improve matters, because small businesses can’t afford online advertising on a permanent (or even semi-permanent) basis, anyway, on more than one or two sites.

According to a recent Kelton Research study, 70% of Americans experience “search engine fatigue.” Taken in tandem with Yahoo’s statistic of 116 million out of 130 million users searching with Local intent (cited earlier in this post), it’s safe to say that an incredibly high percentage of searchers that AREN’T SEEING THE LOCAL RESULTS THEY WANT TO SEE.

The search engines know this, and I suspect it’s a major reason they’ve radically altered the look of a typical “product/service + city + ST” search result.

The new “Universal” layout is proof that engines WANT local businesses at the top of their results. With a few solid reviews (or even ONE solid review), and a geographic location close to the center of town (a MAJOR flaw in Google’s current Local algorithm, IMHO), a business that doesn’t even have a website can effectively be Google’s #1 organic listing, just like Plumbing Works below. “Mom & Pops” now DOMINATE the de facto top three results in a Local SERP. I still don’t think Google (or Yahoo, or MSN) is pulling the RIGHT Mom & Pops, but it’s a step in the right direction.

Eugene Plumber SERP

The number of “traditional” organic listings has been chopped by 30%, from 10 to 7 (at least on Google). And if the findings of Gord Hotchkiss’ image thumbnail studies can be extended a bit into Local, I’d imagine that area map at the top left-hand side of the page is bright red on an eye-tracking heat overlay.

Experientially, I’d say that prior to the introduction of Universal, a standard locally-targeted SERP contained maybe 35-40% Mom & Pop listings. The remaining 60-65% were taken up either by national players with local or regional stores (but leveraging PR7 or PR8 domains), nationwide referral services (leveraging PR5 or PR6 domains), or OTHER Local listing services (such as Craigslist, Superpages, etc.).

Which leads to the SECOND reason that the engines’ Local algorithms now get top billing in a standard Local SERP:

The more “mom ‘n pops” are featured, the more the bigger players are forced to buy Adwords to compete.

The engines are not stupid. They KNOW that the big marketing dollars come in from the Fortune 500 chains with regional or local brick-and-mortar stores. Mom & Pop will never be able to compete in the $5.00/click world of PPC, yet users EXPECT to see local stores they recognize in their search results.

They ALSO know users don’t want to sort through Google’s search results only to be directed five OTHER companies’ OWN Local search results (like Yelp, InsiderPages, CitySearch, or sadly, Judy’s Book). It’s simply not in the engines’ own interest to take people away from their OWN PPC ads and into someone else’s set. That’s lost revenue, and a poor user experience to boot.

So take heart, Local Business Owners of the World. Despite the current confusing, fragmented world of online marketing, things WILL get easier. The demise of Judy’s Book is just one indication that even quality Local sites are falling by the wayside–you’ll have fewer options to worry about in the near future.

And most importantly, although they’re only at sea level, you have many friends in the Internet’s highest places–Mountain View, Sunnyvale, and Redmond–who want your business to succeed online, albeit not for entirely altruistic reasons.

  • David!
    What a super article! I read it through once and then skimmed over it a second time to reflect on the many points you are making here.

    I agree with you completely that the majority of the sites returning local information are just awful…crammed with ads, oddly organized. Really, they make Google Maps looks terrific.

    “Local search is the second most popular online activity after e-mail.
    Piper Jaffray (2007)”

    This is some quote! And I like your take on this that Google WANTS local SERPs using up a chunk of organic/Universal search because of the increase in ad spend this then requires from the big guys who can afford it. Really, a very astute observation.

    It is funny, isn’t it, when your pool of clients is primarily small business owners, how you read the majority of SE news from a different slant than the one intended by most of the authors on the major sites?

    -So, everyone is getting smacked down for the link buying. But not your clients who could never have afforded to buy links in the first place.

    -So, Judy’s Book is history. Unfortunate, but then it’s one less thing for the small business owner to worry about, in a way.

    -So, Social Media sites are the new King, but your clients are still trying to understand what blogging is about, and anyway, they’ve yet to build a good SM site for pottery makers.

    You know how it goes, David. It’s just a different angle, I suppose, but it colors everything I read. However, this article of yours speaks right to the small business owner and I absolutely enjoyed it!

  • Excellent article and very much to the point. As for how long it will take for UniversalBusinessListing.Org to catch on, the signs are very good. We are having a great response from the Yellow Pages Certified Marketing Representatives and we are announcing a special launch program for them shortly. Also we are signing up SEOs daily – all by word of mouth. The response from the Directories and Search Engines has been positive too. Everybody gets it, sees the need and appreciates the price and the fact that it reduces listing spam and…that the data is held in escrow by an industry oversight group, not to be sold ever.
    – Chris Travers, UniversalBusinessListing.Org

  • Excellent article. I agree, much to the point.

  • How did Plumbing Works get that top spot? Might be a dumb question, but I’ll never know if I don’t ask. Is it based off a Google map query, yellow page listing, or a miraculous working of the Google Gods? Thanks David!

  • Greg,

    The listing for Plumbing Works appears to be gathered from a IYP listing on That’s where the review is; the company is also listed on Both of those are sources that G’s Local/Maps algorithm is known to pull from.

  • That is a great article and a great read. In my experience and humble opinion it is currently very accurate. Search dominates the opportunities for local businesses and services. Google Maps and Yahoo Local are very critical. Dominating their simpler algos in maps variations is very valuable for a local business. Your analysis is quite astute.

    Of interest I read somewhere recently (I forgot the reference) that local spend per click might be 3 times the spend for similar national terms. In the last year I’ve tripled my local bid at adwords to stay on top. We know we have more resources for this than competitors and we have begun to see them settle for 2nd and 3rd place. Clearly the big nationals, as you suggested, can spend more on ppc than locals. Big chains swallow up the most expensive real estate and can pay the freight, thereby pushing local businesses to less expensive and less desirable locations.

    Your inferences that the engines may emphasize the mom and pops in their versions of maps is interesting. It would level the information available to users and drive big spenders into ppc. How utterly interesting.

    I’ve got to read more of your comments. This piece is brilliant.


  • Thanks for stopping by, Dave. I’m not at all surprised that your PPC spending has tripled in the last year; I’ve seen similar effects for the couple of clients that I do paid search consulting for.

  • Tom Graber

    Ask someone under 30 what a phone book is and 90% will say it is some relic people used to use to find phone numbers and businesses. They NEVER pick one up, EVERYTHING is computer or phone search.

  • Appreciate your work David. You have some strong insights.

  • David,
    We are just starting to research local SEO. Thanks very much for the info you are putting out.
    It’s really helping us “little guys”.
    Dr. C

  • Smithhart

    That is most likely the very best article that ever cross my reference. I don’t see why anyone ought to disagree. It might be too easy #for them# to comprehend…anyway nice work i’m coming again here for Extra Great Stuff!!

  • David,
    That is the best display of Google Places info I have seen yet. This far exceeds everything else I have researched and read for a local business owner to benefit from search marketing. I have been reading and reading and researching and researching the net since the beginning of 2010. I have been subscribing to ezines and follow up marketing sites like Seo moz. I have read online marketing books about google, blogging and seo. I have read several books on Google adwords and other ppc applications. My business is listed locally on google places for several keyword phrases. I also have participated and am listed in many local social media sites and directory listing sites like Yelp, Twitter, Citysearch, Judy’s Book, Manta, Yellow Pages etc. etc. The impact of each has been interesting. Google places and Yahoo Local are the only ones that have animpact on my business. On the same note it appears local seo is clearly dominated by Google Places. Recently Google has seemed to have changed the algo’s on Google Places listings. It also appears that Google Places is intermittently dominating the SERP’s by like 70%. I was wondering if you have any insight on this and also about the Google “My Maps” application and how that plays out in ranking for Google Places.