Google local search has directory execs turning yellow

Have we just seen the beginning of the great local search war? Quite possibly. Last week Google brought out a new iPhone application. And if doesn’t have the team at the Yellow Pages checking their pants for traces of leakage, I don’t know what will. The application is called the Google mobile app, and it has major implications for anyone playing in the search directory market (yes… that means you Yellow Pages). A two minute demo of the awesome new application in action can be seen below.

Looks pretty darn cool huh…? To this point most people have focused on the voice recognition software, and in particular the accuracy of the voice driven search queries. Despite reports that the application struggles to recognise international accents, I’ve found the application gives me accurate results roughly 75% of the time for basic one & two word queries. Perhaps I’m not as Aussie as I thought I was…

But what I find a whole lot more exciting about the tool is the fact that for the first time, Google is delivering truly accurate local search results. My favourite feature of the iPhone is the GPS tracking. In fact, my recent holiday to Tasmania was guided solely by my iPhone. No maps necessary. The new application uses the iPhone’s GPS tracking to pinpoint your location, and serve results matched to that area. Cool! It works best when you’re looking for local services such as restaurants, cinemas and my personal favourite… the pub. Which could be where a whole lot of Yellow Pages execs may find themselves spending a lot more time soon. Because Google just cracked their local advertising market.

Google says to small business – ‘How you doin’?’

There’s no doubt that Google’s algorithm does a great job returning accurate search results at a broad level. A generic search for the word ‘supermarket’ returns the biggest brands in the industry. However, what Google hasn’t done well historically is tell me who my local supermarkets are and where I can find them. True geographic relevance is a problem they never quite mastered (although the integration of Google maps into search results did initiate a step in the right direction).

As a result, Google’s advertising platform was rarely relevant for small business. Many small businesses are restricted by geographic boundaries, particularly service based industries. A hairdresser in Melbourne simply can’t service a customer in Sydney. The inability to localise search results effectively ruled many businesses out of advertising within Google. Instead, most stuck with traditional directories like the Yellow Pages because they applied a more effective local search process. Until now…

The new application seems to resolve Google’s local search dilemma. The iPhone’s GPS tracking allows a user’s location to be accurately pin pointed. Google’s mobile app does the rest. No matter where I am, results are localised for that region. Of course, this type of search was possible with the iPhone previously via Google Maps. But I doubt many people were aware of it. Introducing it to the search engine brings the capability into the mainstream.

The obvious next step for Google is to expand the advertising platform beyond keyword targeting to also include location targeting (notwithstanding Google’s current attempt at geo-targeting which sucks pretty badly). Location targeting would allow a Melbourne based hairdresser to set up ads that only appear to people located within a 10km radius of the salon. That’s pretty damn powerful. And the end result…

Google advertising suddenly becomes a whole lot more relevant for small business. And Yellow Pages advertising becomes more and more unnecessary (and irrelevant). Who still pays for placement these days anyway for goodness sakes…?!?!

Getting the local search revenue model right

While we’re talking about pay for placement vs pay-per-click advertising, it’s worth pondering just how Google will monetise local ads. My experience in local search is quite different from standard search, and I expect it will be typical of most people. The key difference is intent.

When I’m searching on my laptop, information gathering is my primary intent. I’m generally trying to learn more about a particular topic. Which means that when I get to Google’s search results, I need to click through to achieve my goal. Google’s results simply don’t give me enough information. Thus the pay-per-click model works perfectly.

However, my experience with local search is quite different. When I’m out and about, I rarely engage in traditional Google searches (unless I’m on the train). Instead, I use Google for simple searches. My intent is to locate, not to learn. Mobile searches are generally for the purpose of finding local services such as car washes, restaurants and yes… the pub.

The interesting thing is that Google’s mobile application provides truly awesome local search results. Perhaps a little too good. I’m given the address, phone number and a link to generate directions. But in most cases I suspect I’ll need little more than the address. You see the problem? I don’t need to click. I’m not after more information. My intent was to locate. Which means the pay-per-click model isn’t likely to generate the maximum revenue for Google.

Is a pay-per-call model coming?

The solution to Google’s dilemma may be in a premium priced pay-per-call model. One of the cool features of Google’s local search is that users can call local businesses directly from the search results. All they need to do is click on the phone number. It seems logical to me that a phone call (driven by local search) is worth a hell of a lot more than a click from a generic Google search. The purchase intent is significantly higher. Therefore, the value of the lead is higher as well.

The wash up

Of course, this is just the beginning of the local search wars. A whole lot of water has to pass under the bridge before Google truly sends the Yellow Pages out of business. Smart phones such as the iPhone need to reach critical mass in terms of adoption. Google needs to find a way to integrate sponsored ads into iPhone search (that small screen doesn’t particularly lend itself well to two columns). And of course, a specific localised version of Adwords needs to be developed with geo-targeting capabilities.

But one thing is for sure. Google has signaled their intentions. And they are local. If I were a Yellow Pages exec right now, I suspect my pants would be turning a shade of yellow themselves…

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