When will local search take off?

Offline locally targeted advertising spend exceeds more than $100 billion in the US alone, so will online search reach the same potential? Research conducted in the US has asked a number of leading experts for their opinions.

Borrell Associates uses a broad definition of local online advertising and included in its definition is geotargeted display ads and classifieds, local paid search, local video and locally targeted email advertising. It predicts the figure will be $7.7 billion this year and will rise to $9.3 billion in the US by 2010.

Jupiter Research includes paid search, locally targeted display advertising and classifieds and believes that classifieds will dominate (61%) local spending through the forecast period and estimates geotargeted paid search advertising will reach $8 billion in the US by 2011.

eMarketer's projections are more conservative than any of the other firms with US forecasts of $4.9 billion by 2010.

The Kelsey Group forecasts that the figure could reach $11.1 billion by 2011 globally.

Although the figures do vary, the figures for local search could grow significantly but it is also highly fragmented and arguably getting more so all the time as new consumer sites launch at a regular pace - each one has to be supported by geotargeted and typically small businesses ads. But scaling and cost effectively acquiring those small business advertisers is a tremendous challenge.

Yet behind the scenes an entire ecosystem is emerging to simplify online marketing and make it more accessible for local businesses. Apparently Yellow Pages publishers, newspapers, web hosts and others are now selling SEM and SEO clicks to local businesses.

This tends to indicate that within a year or two it will be relatively straightforward for any small business to buy geotargted ads online. That said, getting their attention will remain something of a challenge.

The local market has enormous revenue potential but the complexity of local search far exceeds that of national online advertising or general paid search.

M.P

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