What’s ‘The Problem with Local Search’?

Business 2.0’s Eric Schonfeld posts his thoughts and observations in reaction to a recent speech given by YellowBook’s CEO Joe Walsh. Schonfeld basically says, according to Walsh:

  • There isn’t sufficient local search volume to deliver enough traffic/leads to SMBs
  • Print directory usage isn’t declining (though it’s not growing)
  • Small businesses won’t self-provision ads and G, Y & M don’t have a sales force to push ads directly to them so their outlook is somewhat mixed in local

And away we go . . .

SMBs and self-service:

I wrote extensively about the self-service question previously here. Yes, the majority of SMBs are never going to self provision. (Separately, I’ve predicted that in about five years “simplification” will bring the self-service number up to 10% of the addressable SMB advertiser base.) But most SMBs won’t have to self-provision. There’s now an elaborate ecosystem of existing sales channels and new aggregators bringing SMBs online and into search results. (I’ve written about that at length here.) And we’re really in a fairly early stage of development for this network of sales channels – the “local search ecosystem.”

And all these players and channels are, literally or effectively, sales agents of Google, Yahoo! and Microsoft, which is where much of the traffic volume is today.

Print yellow pages usage not declining:

The print newspapers are under huge pressure from declining print subscriptions and general readership as well as a loss of advertisers in their traditional product. Over on the other side of town, Walsh says none of this is happening to the yellow pages. In fairness I’m reading a paraphrase of Walsh’s comments. But every time I hear this kind of statement it just rings false to me. But let’s assume that Walsh hasn’t seen usage erosion in the print directory.

There’s lots of empirical evidence that consumers are now using more sources of information to make purchase decisions. One reason is simply that there are more sources of information. In recent studies, the Internet is now present (I can show you the data) in one of the top influence positions in almost every purchase category. In other words, the influence of any single medium is now diminished and the Internet is an almost ubiquitous influence on consumer purchase behavior. One also has to remember that the Internet isn’t a monolith, but hundreds of sites when it comes to local.

Now on to the issue of demographics…I’m not going to make the facile, often heard remark that “nobody under 30 uses the print yellow pages.” But it is true that the “user base” of print yellow pages is generally older (and less affluent) than the broadband Internet population. And it is true that people under 30 are more inclined to use the Internet (and wireless) than those over 50. (The Pew Internet & American Life Project has very detailed audience segmentation data, which shows the complexity of the marketplace.)

Indeed, the media landscape is more complex and fragmented than it ever has been. But the bottom line here is that the printed yellow pages (if not losing usage in significant numbers) is, at a minimum, seeing diminished influence over consumer purchase decisions and having even less influence on certain populations of users, who represent the desirable segments of the market. Over time these trends will become even more pronounced.

So the idea that the Internet has has little or no adverse impact on print yellow pages usage is incredible — literally. (I believe it’s better to own up to those changes and talk about a multi-platform strategy, which apparently Walsh did to a degree.)

Local search volumes:

This is already a long post and I could make it much longer with this part of the discussion. (Here’s my equally long post from several months ago about the value of local search and corresponding search volumes – scroll for the volume discussion.) I’ve moved from the narrower definition of “local search,” which looks at “local search engine and Internet yellow pages usage and query volumes,” to a much broader one that redefines local search as “the influence of the Internet on offline purchase behavior.” I realize that my new definition in some ways “swallows the Internet” but it’s consistent with what’s actually going on in the marketplace.

People use the Internet for shopping and research and do most of their transactions in the “real world.” That’s almost 100% true for those involving service businesses, the yellow pages’ dominant advertiser base.

The narrow, historical understanding of local search, market fragmentation and the lack of visibility regarding the full cycle of consumer purchase behavior has obscured the true scope and influence of “local search.” For example, no single company has visibility on all the sources of even online information (let alone online and offline) a consumer may use in making a given purchase decision. And there’s no visibility (unless there’s phone tracking, a coupon or some other mechanism) regarding the online influence on offline buying. (Surveys and studies have been done on this, but still the data are limited.)

In terms of the user experience, there are data challenges (completeness, accuracy, recency) and many improvements that still can be made in the UI and presentation of information.

Having said all that, if we look back at the local search market, even a couple of years ago, we’ll see how rapidly it has developed. Even comScore, using the conservative definition of local search, puts local search users at almost 70% of the Internet population. And once better “passive” location awareness becomes more widespread we’ll see searches that are in fact local in their intention but not in their construction more clearly revealed.

I don’t want to simplify any of this; local is a much more complicated market than general search. But it’s also a lot healthier and further developed than the post “The Problem with Local Search” suggests.


7 Responses to “What’s ‘The Problem with Local Search’?”

  1. AhmedF Says:

    Two things I want to note:

    In the gaming world, there is a lot of noise about how Sony claims ‘units shipped’ – that number doesn’t reflect on the actual number of units ‘sold’. The same seems to be the issue with YP – I see more and more un-used decaying YP books than ever before. What is their definition of usage (and if it isn’t the # of books printed – what metric are they using to track this?)

    Secondly – local search behaviour. One problem that rarely gets discussed (I guess you need the data) is that people search online completely different than they do offline. And this stark contrast comes really into play with yellowpages/local search. If I wanted a sushi restaurant, I would look up ‘Japanese Restaurants’ in the yellow pages. Online, I go ahead and type ‘sushi restaurants’ People are a lot more specific online, and due to the speed of response, give up much more quickly. Sushi btw is the second most popular food-related search term after ‘pizza’.

    And continuing on the vein – people often end up at a yellowpages site, but look for completely non-yp related queries. Examples include (a quick quick sample): “physical features, cities south of rome, local history, current governor, major cities” Some examples of ‘where’ include non-specific regions and even borders (eg “border of wisconsin and minnesota”). This goes back to my point earlier about sushi – people are going to YP sites, and expecting a knowledgeable human to answer anything, not a way to find businesses.

    Tough and ugly 🙂

  2. No Fact Checking, No Date Checking . . . « Screenwerk Says:

    […] there’s just plain sloppiness. Yesterday, I fell into the latter category. In my post, “What’s ‘The Problem with Local Search’?” I was responding to what I assumed to be a new article and post. But it was pointed out to […]

  3. Local Search Ain't Perfect, So What | Local Biz Bits Says:

    […] day Erick Schonfeld posted The Problem with Local Search and Greg Sterling posted his comments What’s ‘The Problem with Local Search’? in his blog. Now Greg has commented before about “the problems”, as he mentions in his […]

  4. Gib Olander Says:

    Tough luck on the date, I read the Walsh related post and missed that back dating also. Information trapping is useful however sometimes those alerts and feeds may lead you/us astray. The real reason for my comment here is I like the phrase “passive” local search, I read the previous post where you mentioned it, however I’d like to see it defined or fleshed out a bit more. I think it’s a concept you have spoken about generally before, it’s an interesting idea which is important for the advertisers and analytic folks involved with the local search ecosystem to understand. As always thanks for sharing your idea’s.

  5. Richard Rosen Says:

    “There isn’t sufficient local search volume to deliver enough traffic/leads to SMBs”

    comScore estimates (or under estimates) that roughly 1 billion of 7 billion monthly U.S. searches are local (15 percent) and that 52 percent of local searches involve looking for a phone number or address. A significant number of these searches will result in a phone call – I estimate 100,000,000 calls per month. (I reviewed tens of millions of call records while Vice President of Business Development at CallSource and Jambo. Consumers overwhelmingly call when in need of a local product or service.) The problem with local search? A very significant percentage of calls to merchants listed in today’s local directories will be made to unqualified, out-of-business, or otherwise unresponsive merchants. There IS sufficient local search volume to deliver enough traffic/leads to SMBs. We just need to funnel search to relevant, lead seeking merchants. What if we tapped into a vast source of currently unmonetized consumer phone calls? Calls made to the majority of the 14 million merchants listed in the local database who never answer their phone (10% have disconnected #s). 100MM calls to 14MM merchants averages 7 calls per month – not enough to get Joe Walsh excited. 100MM calls to the 10% of the 14MM that are really relevant (1.4MM) is 70 calls per month. Fire up the pay-per-call engine and that’s $700 (at an average of $10 / call)

  6. Colin Carmichael Says:

    My Mom told me an interesting story about local search the other day. She was trying to find the phone number of the local airport shuttle service. She tried the internet first – and spent a half-hour searching without success. She then picked up her print YP and found the number in less than a minute. How is this possible? Branding. In particular, visual branding. Turns out she had actually looked at the correct listing online several times but not recognized it. She found the correct listing in the book because she “recognized the van” in the full-page ad.
    It seems to me that we’ve got to find a way to better replicate the tries-and-true display advertising model in online local search.

  7. Greg Sterling Says:

    That’s very interesting. Video is one way to do that online. There is geotargeted display advertising now; it’s just not on Google, Yahoo, et al — although Google is putting more brand logos on its map. See, e.g.: http://maps.google.com/maps?ie=UTF8&q=hotels&near=Seattle,+WA&fb=1&view=map&cd=1&hl=en

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