Local Numbers: Setting the Record Straighter

Lately I’ve seen the number $31 billion thrown around as the value of the local market and various, differing references to the percentages of searches that are local. For example, Brian Wool’s ClickZ article this morning says, “An estimated 30 percent of all online searches are local.”

How Much Is the Local Market Worth?

The $31 billion figure comes from a Donna Bogatin post in December. That number is a combination of the estimated $15 billion spent in print yellow pages in the US and the Newspaper Association of America’s estimate of the value of print classified advertising, roughly $18 billion.

However, the local advertising market is worth considerably more than that “all in.” Universal McCann’s Robert Coen has estimated that local TV + yellow pages + newspapers + local radio + other local (outdoor, direct mail, etc.) is worth $101 billion and change.

Right now, spending in what we might call “local search” is worth between $1.2 and $1.5 billion (this excludes online newspapers, local verticals, classifieds, multi-channel retail, video, etc.). That’s a tiny fraction of the potential market and doesn’t reflect consumer usage or demand for local content online.

I’ve written many times about why I think local is ultimately much bigger than how people think about it today. It’s Internet-influenced local shopping, jobs, cars, real estate, dating, classifieds, maps, search, mobile, and online newspapers. Here’s my now-outdated list:

• Total US Internet audience: 172 million (comScore, May 2006)
• “Local Search” (search + IYP sites): 109 million uniques (comScore, July 2006)
• Jobs: 49.8 million uniques (comScore, February 2006)
• Cars: 42 million uniques (excludes OEM sites; comscore, April 2006)
• Real Estate: 42 million monthly uniques (comScore, April 2006)
• “Classifieds” sites: 37.4 million uniques (e.g., comScore, July 2006)
• Newspaper sites: 55 million uniques (Nielsen//NetRatings, February 2006)
• Mapping sites: 65.1 million uniques (comScore, March 2006)
• Travel: 41 million uniques (top 10 sites only; Nielsen//NetRatings, August 2006)
• Personals/Dating: 31.6 million uniques (comScore, January 2006)
• Shopping (shop online, buy offline): 80.8 million uniques (Dieringer Research Group, 2005)

How Much Search Is Local?

In July, 2006 comScore estimated that 13% of searches are local. Previously at the Kelsey Group, Neal Polachek and I calculated (based on consumer survey data) that about 20% of search queries had a local intent.

For one of the Kelsey shows I programmed I asked comScore SVP Jim Larrison (now at Adify) to do a “deeper dive” on their data and try and get at the “real” numbers. Here’s an excerpt from my Kelsey post following his presentation at the show:

We’ve estimated that Local Search is about 20 percent of overall search user behavior. Others have put out different numbers. comScore uses an admittedly “conservative” methodology in calculating Local Search — the company counts searches that happen on local domains (e.g., Local.Yahoo.com, Mapquest) and searches that happen with geographic modifiers of one sort or another (e.g., ZIP, city name). By that methodology, Larrison said that local was about 13% of search now. But we have long believed there is a great deal more search that has a local intent but is hard to quantify because it’s ambiguous (e.g., “probate attorney” w/o a geo-modifier) and not being captured by the “explicit” way of looking at local. Larrison generally agrees, and I asked him to do a deeper dive on the question. Briefly, in his excellent presentation, he said that when you look closely at the user behavior (he gave a number of concrete examples), the real number is much closer to 35 percent or even 40 percent of search that is really trying to capture information that is in one way or another local — offline fulfillment/services, offline shopping, classifieds-oriented searches and so on.

In a related vein, local SEM firm WebVisible found (in joint research with Nielsen) that among users who had looked for a local service business online in the past 90 days, 51% used a general term to search (e.g., “dentist”) without a local modifier. This would not be captured in comScore’s methodology of counting local search volumes, nor would it be visible as a local search to the engines — except they could use IP targeting to serve local ads against it.

While the precise numbers may be next-to-impossible to figure out, because they involve getting inside consumer “intent,” we can say that a meaningful percentage (put it safely at 25%) of search user behavior is ultimately about getting local/offline information. That would mean in the US about 1.7 billion monthly search queries (out of 6.9 billion) have a local intent.

If all those searches were monetized at a click rate of say $.12 per query (a conservative estimate of what Google makes on average per search), that would mean “local search” (not counting the other categories above) should be worth at least $2+ billion today. But it’s not.