LUX

del Wallstreet Journal

Google, Yahoo Tweak Their 'Local Services'
In a Bid to Attract Consumers
By RIVA RICHMOND
April 27, 2006

Internet titans Google Inc. and Yahoo Inc. are no longer content to help people navigate the Web. They are bent on helping them navigate real life, too.

The search giants are rushing to add more consumer information about nearby businesses to their so-called local services -- Yahoo Local (http://local.yahoo.com) and Google Maps (http://maps.google.com), which was previously named Google Local.

Google is focused on vacuuming up local tips from elsewhere on the Web. Surfers should expect to see more tidbits pulled from its listing service, Google Base, and comparison-shopping engine, Froogle.

Yahoo, meanwhile, is constructing virtual town squares, where users can share local knowledge about the best bars, the most reliable plumbers or nice places to take a walk.

By enhancing the local resources, both companies hope to build hubs of consumer activity that, in turn, will be magnets for advertisers, including the millions of small businesses at the heart of the $100 billion-plus U.S. local-advertising market. Many of those businesses have never advertised online, but the search companies hope to change that by developing new formats and better advertiser tools.

"People live their lives and conduct business in the real world, and this is what the search engines are trying to respond to -- both on the consumer side and the advertiser side," says Greg Sterling, principal analyst at consulting firm Sterling Market Intelligence. "They're trying to make themselves more valuable to users, get more traffic and monetize that traffic."

By adding a city name or U.S. ZIP code to a keyword search query, users of Google Maps and Yahoo Local often can obtain more information than conventional print yellow pages deliver, including hours of operation, reviews and related Web addresses. The local services also can plot business locations on area maps and offer driving directions.

Yellow-pages publishers don't consider the local Internet services to be a threat. "We don't compete with local search. We are in many partnerships" with Google and Yahoo, said Yellow Pages Association spokesman Christopher G. Bacey. He also pointed out that major yellow-pages players have their own online versions where users can search listings.

Yahoo Local and its related Yahoo Maps site had 26.7 million U.S. visitors in March (excluding duplicate visitors to the sites) and Google Maps had 19.1 million visitors during the month, according to measurement firm comScore Networks Inc. Next in line in March were Shoplocal.com with seven million visitors, Microsoft Corp.'s MSN Local Search with 3.6 million and IAC/InterActiveCorp.'s Ask Local with 186,000. While growing, those numbers are still relatively small considering the 171.4 million-strong U.S. online audience.

Marketers say low visitor numbers make setting up local ad campaigns unappealing, at least for large advertisers. Since advertisers on the main engines can target users based on location, there is little incentive to set up special local campaigns, says Matt Kain, senior vice president at 24/7 Real Media Inc. Marketers do see potential, and agree traffic will rise and advertisers will follow, particularly small ones.

To woo advertisers, the Internet companies are developing innovative ad formats. In late March, Google introduced pay-per-click ads inside the balloons that pop up on its maps. Yahoo has long let marketers sponsor a map, which allows users to click to see all the sponsor's area locations.

Providing depth of information on local businesses remains a mammoth task, however. In the U.S. alone, there are an estimated 23 million small businesses in an endless array of categories. While the engines have entries for many of these businesses, thanks to commercial databases they license, the richness of information users are seeking in local searches is still somewhat lacking.

Google says it is focused on gathering more content, such as reviews and tidbits from blogs, and weaving it into the service. For instance, a search for bookstores in a Brooklyn, N.Y., neighborhood produces a list of several and pinpoints their locations on a map. In the balloon that appears on the map is a link to six user reviews pulled from IAC's Citysearch, InsiderPages and Nymetro.com.

"Having that depth of information is the challenging part, because that is how people decide between" businesses, says John Hanke, director of Maps and Earth at Google. Harvesting information from many sources is "where we can be distinctive."

Mr. Sterling, the consultant, expects to see Google Maps results increasingly reflect information from Google Base and Froogle, too. Froogle already uses local information to help consumers find nearby stores that carry items they're shopping for, and Mr. Hanke says Froogle data could be integrated into Google Maps.

Yahoo, which has been offering local search longer than Google, is trying to be distinctive by infusing information from consumers into its Local pages and adding features to encourage exploration. For instance, Yahoo Local starts users on a "city page" for their area that highlights events from the company's recently acquired Upcoming.com unit as well as businesses recommended by Yahoo users.

"The best is still yet to come in terms of exciting features for consumers," says Paul Levine, general manager for Yahoo Local. "A lot of the innovation you will see will be around this community and community-submitted content," he says -- suggesting that city pages eventually will highlight everything from homes for sale to soccer games' starting times. "The product will feel more human and be more personal."

Write to Riva Richmond at riva.richmond@dowjones.com