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 Here’s my now-outdated list: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.

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23 Responses to “Local Numbers: Setting the Record Straighter”

  1. Steven Brier Says:

    Thanks for the real clarity

  2. earlpearl Says:

    Greg:

    I admire and respect your efforts to quantify this total. From my site and business I can confirm some of your perspective. My business site focuses on the logical local geographic terms for the business (state/city/town/regional terms with business terms.

    On the other hand the site is currently ranked 4th, 1st, and 2nd for the number 1 industry term at G, Y, and MSN respectively. The site description and blurb identify the location of the business. Other sites at or near these rankings are typically chains w/ sites in multiple metropolitan regions.

    We get a lot of traffic for the industry terms. We get a lot of contacts from these terms with potential customers contacting us from around the nation.

    So many inquiries that are local in their nature yet they don’t appear that way from the search terms.

    Who can quantify that extraordinary number?

    Regardless we get a lot of

  3. Hitwise: Social + Local More Powerful « Screenwerk Says:

    [...] might spin the data a different way. I think, as I’ve said before, the interest is there and larger than most people recognize but the addition of community content to local sites makes for a more compelling and engaging [...]

  4. earlpearl Says:

    Greg: I reread your post. I think your math is off by a little: 1.7 billion times $0.12 is a little less than $2.48 billion. BUT there is a lot of advertising on so many other sources; IYP, local sites, vertical sites/topical sites, local newspaper sites, the small but effective advertising on craigs list, etc etc etc. Then there is site development and agency/sem charges for developing/optimizing sites.

    On top of that, and this is just anecdotal….once an area/business gets competitive advertising costs can get pretty expensive…..by factors that are many times that of the estimated $0.12/click via google (guess that means it would be lower at Y and MSN.

    Regardless. With so many estimates all over the field….it is an interesting exercise to try and quantify these totals.

  5. Greg Sterling Says:

    Thanks for the catch. Greg

  6. earlpearl Says:

    Greg:

    I was looking at differences in organic search and G Maps for algo differences and noticed something powerful with regard to potential expenditures, at least IMHO.

    G maps excludes IYP’s, verticals, and all sorts of non-specific business/service websites. It is a version of an IYP. It is vast. It is currently replete with errors. But it focuses exclusively on specific local businesses and services.

    G search is clearly the volume leader for all types of current local searches. I think most local businesses/websites would acknowledge that if they have optimized their sites.

    Placing G maps at the top of the search page pulls traffic from organic results and simultaneously negates the power of verticals and IYP’s.

    If visitor methods for search don’t change and most consumers stick with Google–G maps will ultimately suck out all the traffic and the $$$$ for local search.

    Dave

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  16. earlpearl Says:

    And just today, I referenced this article. I’ve always been fascinated by that 51% number with regard to so many searches having a local intent but not being counted as local.

    Here it is a year later and my ppc ads for generic business terms that run on a regional basis and specifically include the geography of my business are still among my best ads.

  17. Greg Sterling Says:

    Exactly. This is because people use the Internet as a research tool and are looking to convert offline.

  18. earlpearl Says:

    All so true. I can verify that w/ several businesses that have all experienced that for many years.

    btw, that research was so incredibly telling. Many people miss it. I’d bet that you could take 30 of the latest efforts to monetize local from an advertising/business perspective, add them up, aggregate their value in attracting local business revenues and their impact pales in comparison to the value and effect of this research. LOL

  19. earlpearl Says:

    Greg: A little anecdotal information on those local phrases without local modifiers as an update. The other day, Google reranked phrases for the #1 industry term in a business we operate. We have a business that has ranked #1 at Yahoo for most of the years that Y has had its own algo….and it has always drawn lots of traffic. A few days ago, Google shifted rankings and a ranking that had vacillated between 5-9 for the last couple of years went to #3 for the number 1 industry term.

    #3 isn’t #1 but it is above the fold and that makes a big difference. Traffic has zoomed for the phrase. We’ve advertised for the phrase in Google PPC on a local basis for a long time. PPC clicks are pretty steady….but boy oh boy the organic traffic has skyrocketed.

    The title of the site includes our geographic area. Its very self evident. I still expect we get visits from around the world that is irrelevant….but I’m hoping it increases the organic clicking visitors from our region.

    The “local” type phrases without local modifiers still generate lots of traffic. They don’t convert as well as longer tail, more specific phrases, but they are not to be ignored.

    At some point in the future….maybe better tools in the SE’s will move a visitor from a search phrase with local intent that doesn’t have the appropriate local modifiers, or maybe searchers will migrate to longer tail phrases with more specific intent. Until that time though it is very sweet to attract that crowd of searchers.

    Dave

  20. Greg Says:

    Not sure I got everything in your discussion. But interesting.

  21. Android and SEO/SEM? Dream on. Says:

    [...] Consider online search as it stands today.  Depending on whose definition you want to go by, somewhere between 10% and 50% of online searches have local intent.  For simplicity of this discussion, let’s say 25% of online search has local intent (I arrived at that percentage after mulling through a pile of data, and then coming across a great analysis of much of it by Greg Sterling). [...]

  22. David Says:

    Greg,

    Thank you for this post. The dat ayou have cited are mainly from 2006. Have you published anything from a later date that might significantly change the %?

    If so, where can I find it?
    And if not, how can I go about getting it please?

    You also finish your article by saying:

    “……that would mean “local search” (not counting the other categories above) should be worth at least $2+ billion today. But it’s not.”

    Do you mean it is more or less?

    Many thanks.

  23. Local Search: Safe Haven Against Google’s New Brand Algorithm? | Local SEO Guide Says:

    [...] is in there too) in as many local-oriented queries as possible.  If many searches are indeed local in intent then this only makes sense.  So in this brave new brand algo world the path forward for [...]

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