Google Introduces Local Ad Options
Advertisers in Google's AdWords program now can choose to display their ads only to searchers at a city level or within a radius around their business address. Google already lets U.S. advertisers target ads to 210 market areas. It will now offer targeting to thousands of cities.
Google rolled out the new options in seven international markets: Canada and six European countries. Google did not previously offer targeting in international markets other than at the country level.
With the customized targeting option, advertisers choose the distance around their business to display their ads. The minimum radius is 20 miles. Another option is to set longitude and latitude points.
Locally targeted ads will not have a separate auction from national ads. Both local and national listings will be returned to searchers, based on Google's usual relevancy formula of bid price times click-through rate. Google will show the local-targeted listings on its own site and some partner sites, such as Ask Jeeves, EarthLink and BellSouth. Google search partner AOL will not use the locally targeted ads, a Google spokesman said.
Google also said it soon will begin to display three paid listings on its Google Local search engine. The results will appear at the top of the results page.
Google Local combines directory listings and Web search. The local search engine is available at local.google.com, and searchers are taken to Google Local if they click on a compass icon returned at the top of the results page for local-information-related searches on Google.
Sukhinder Singh, Google's general manager of local search, said advertisers now could run separate creative for different regions. For example, a national pizzeria could offer a coupon as part of its listing's call to action in an underperforming local market.
"Our belief is that opening up more local-targeting options leads to new click opportunities for advertisers," Singh said. "It allows advertisers to step online in a more targeted fashion."
Google and main rival Yahoo have mirrored each other's moves in local search. Last month, Google gave more prominence to its fledgling local search engine, Google Local, just a week after Yahoo released SmartView, a tool on Yahoo Maps that gives users access to local information in 55 categories.
Yahoo unit Overture Services plans shortly to unveil a local advertising option that also will let businesses set a radius for their listings. Overture plans a service for showing basic business information for small advertisers without a Web site.
Singh said Google Local relied on its Web search and directory listings to find those businesses. A Verizon study in late 2002 estimated that 63 percent of small businesses do not have Web sites.
"It gives advertisers a lot more choices and options and will be attractive to current AdWords advertisers, and we'll have to wait and see if it attracts new advertisers," said Greg Sterling, a local search analyst with The Kelsey Group. "It doesn't address the product-simplification issues and the local-sales issues."
Kelsey and other analysts have said the challenges to expanding local search advertising to a significant number of the 23 million U.S. small businesses are to make the bidding process easier for small businesses and find a way to reach them with a local sales force.
The Kelsey Group has estimated that the local search market could reach as high as $2.5 billion in 2008, depending on how successful Google and Yahoo are in deploying local search opportunities. The researcher thinks that 10 percent of all searches are for local commercial information.
Along with the new targeting options, Singh said Google now would determine a searcher's location based on both Internet protocol address of the searcher and geographic keywords. This will do away with the need for advertisers to bid on geographically modified keywords.
Yahoo has a leg up on Google by holding the registration information, including location, of 141 million users.
Google uses technology provided by Digital Envoy to determine a Web searcher's location based on IP address. Digital Envoy recently slapped Google with a lawsuit, alleging that it overstepped the bounds of its licensing contract by applying the technology to its advertising program.
Singh said Google was within its licensing rights to use the technology, for which Google pays $8,000 per month, according to court documents.
Google has experimented with local search since September, when it quietly released Search by Location in its Google Labs section dedicated to developing new search applications. Google Local is still classified as a beta application, like Google News and Froogle, its product search engine.