After years of fits and starts, Google's latest push
into local online advertising suddenly looks serious -- and even professed
internet novices like Barbara Oliver are noticing.
The owner of an eponymous boutique jeweler, Ms. Oliver
depends on advertising to drive people to her hard-to-find third-floor shop in
Williamsville, N.Y., near Buffalo. Not satisfied with TV and other advertising
on which she spent $40,000 last year, she hired a consultant who bought $50 a
month worth of Google search ads targeted to an 80-mile radius around Buffalo
and set up a web page in the Google Places local directory service. That netted
her enough new business that she has slashed her other ad spending by 40%.
"Now I'm getting more people who say they found me on Google," Ms.
Oliver said.
Google aims to reach many of the millions of other
businesses like Ms. Oliver's that want to attract potential customers nearby.
After failing to crack radio and print advertising several years ago and still
struggling in TV ads, Google views local online advertising -- both by national
brands and by smaller businesses such as restaurants and plumbers -- as a juicy
target. "It's a big focus for me this year," said Susan Wojcicki,
Google's senior VP-product management and the search giant's top ad products
executive. "It's a huge opportunity where we can do things we haven't done
before."
Google in recent months has unleashed a flurry of new
local services and ad formats and expanded others. In an especially noticeable
change to its search results, last October it tweaked its search engine to make
local businesses and listings, including Google Places, much more prominent in
response to a likely local-oriented query. The same month, Google moved Marissa
Mayer, its high-profile VP-search products and user experience, to VP-consumer
products, where her main job will be developing new geographic and local
services.
"The core piece is really making the local
business work," said Ms. Mayer. Google's overriding goal in local
advertising, she said, is to anticipate what people might want -- a nearby
restaurant, theater, or mechanic depending on their location, search history
and other data -- before they actually know it. "Can we help a user find
something useful to them without their specifically asking in a search
query?" she asked.
If it can, that could pay off on the ad side. The
online piece of the venerable $91 billion local business, whose sales channels
include everything from Yellow Pages and newspaper ads to Google search ads and
online directories such as CitySearch, will grow 18% this year, to $15.9
billion, according to market researcher Borrell Associates. That's more than
online advertising overall, forecast for 14% growth.
The reason is simple: For all the fancy behavioral
targeting based on your clickstream or purchase history, one prosaic data point
may work best to attract potential customers: where you are. Advertisers quite
often know the answer to that today, thanks to a raft of relatively recent
developments, among them an explosion in net-connected mobile phones with
Global Positioning System capabilities and social networks such as Facebook and
Foursquare where people reveal their locations.
Google's interest in local advertising is partly
defensive. New marketing methods and channels, from social network Facebook to
daily-deal service Groupon to review site Yelp offer merchants and service
providers simpler and sometimes cheaper alternatives to Google's search ads.
Borrell expects search-ad spending by small- and medium-sized businesses to
fall by 10% by 2015 as a result. Facebook, in particular, just became the
most-popular marketing channel for local businesses, with 70% using it vs. 66%
that use Google's search ads, according to a recent survey of 8,500 businesses
by small-business social network MerchantCircle.
Boutique jewelry owner Barbara
Oliver relies on Google search ads to promote her shop.
Google's local efforts date back to late 2005, when it
opened a directory called the Local Business Center, renamed Google Places last
April. Some 6 million businesses worldwide have claimed Places pages. But until
recently, the company has struggled to come up with compelling new services for
users and advertisers. Its Latitude location service is scarcely mentioned next
to Foursquare's. Google also reportedly offered $6 billion to buy Groupon, only
to be turned down in December.
Most of all, Google's AdWords search-ad system, which
requires businesses to choose and bid on ad-triggering keywords, is often seen
as too complex and time-consuming for most local businesses, which are more accustomed
to simple, fixed-price Yellow Pages ads. "AdWords is like sitting in the
cockpit of a 747 when you only know how to ride a bike," said Catherine
Hillen-Rulloda, owner of Avante Gardens Florist in Anaheim, Calif.
Two ad formats rolled out last year are intended to
remedy that. The first was Tags, which for $25 a month lets merchants buy a
yellow pushpin on Google.com and on Google Maps highlighting their location.
Google said tens of thousands of businesses are using them. Another product,
launched nationally in late January, is Boost. Advertisers fill out a short
business description, list a web page or free Google Place page listing, and
set a budget as low as $50 a month, and the system creates an ongoing,
automated search campaign.
To sell these ad products, Google has taken another
leaf out of the Yellow Page publishers' playbook. Their local sales forces
still hold sway among many time-strapped small businesses that buy an ad only
because someone shows up at their door pushing them into it. "The hard nut
to crack is the mom-and-pop operations," said Richard Holden, product
management director for local ads. So last year, in a marked departure from its
self-serve ad systems, Google hired several hundred sales people in Silicon
Valley and elsewhere to promote Boost and Tags. It's uncertain how many more
feet on the street Google will hire; reseller partners such as Yellow Pages
publishers ultimately may handle most of those sales.
For everything Google's doing, its rivals aren't
standing still either -- especially fellow digital natives. Yelp, which pitches
itself as the last place consumers stop before spending money at a local
business, attracts 45 million unique visitors a month to its 15 million
reviews. It sells advertisers bundles of enhanced listings pages and search ads
for $300 to $1,000 a month.
Others are teaming up to fight Google. Last month,
pay-per-call ad startup Yext launched a $99-a-month program for small
businesses to place a yellow tag similar to Google Tags on a dozen local-listings
sites, including Citysearch, Yellowbook and MapQuest. CityGrid Media, an IAC
unit that owns listing and review sites Citysearch, Insider Pages, and
Urbanspoon promotes its local-ad and content network as an alternative to
Google's local efforts. Facebook has introduced enhanced "Pages" for
businesses and other groups, location check-ins and deal offers in addition to
the locally targeted ads it has long offered.
Groupon has
grown from an idea to more than $500 million in revenue in less than two years,
largely on deals offered by local businesses. The big challenge Groupon and
rivals such as LivingSocial present to Google as well as media companies, said
Borrell Associates CEO Gordon Borrell, is that they're making advertising
itself less relevant: Businesses don't pay until they notch a sale.
@adage