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Yahoo Exec: Local Search Needs Simpler Pricing Options

JERSEY CITY, NJ — Yahoo’s top search advertising executive said widespread local search adoption by small businesses depends on the creation of simpler pricing models.

“To bring the masses online, we’re going to need multiple models, some of them simpler,” said Ted Meisel, a senior vice president at Yahoo and general manager of its Overture Services paid search unit, at The Kelsey Group’s local search conference here yesterday.

Overture’s Local Match ad service, like most paid search programs, operates as an auction in which advertisers bid on keywords. Local Match allows advertisers to target their listings to geographic areas.

Meisel said Overture would look to a variety of ways to get the 22 million U.S. small businesses in Local Match. In addition to its self-service program, Overture has signed up a handful of resellers to its Ambassador program that can provide more hands-on service for small businesses uninterested in the details of search advertising.

“Sponsored search is still too complicated,” he said. “That’s not going to create a mass-market product.”

Meisel said subscription services could play a role in appealing to small businesses, though Overture has no immediate plans to offer such a product for Local Match. He noted that a number of third parties offer these services, handling keyword bidding for small business clients that prefer to pay a flat monthly fee.

“We’re cognizant of the virtue of simplicity,” he said.

In an attempt to reach out to small businesses and offer a measure of simplicity, Google last week struck a deal with BellSouth for its RealPages.com’s search unit, RealSearch, to sell Google paid search ads through its 2,000-person local sales force. RealSearch plans to sell its small business customers buckets of leads while handling the keyword bidding for them.

Yahoo is hoping to establish a lead in the space over rival Google. Last month, it officially released its local search engine, Yahoo Local, after eight weeks of testing. Yahoo Local combines local business listings, Web search and maps. The company is backing up the launch with the first consumer advertising campaign for local search, featuring billboards, radio ads and interactive search kiosks in New York, Los Angeles and San Francisco.

“We wanted to remind our consumer base and the industry at large that we are the leaders in the local space,” said Jeff Weiner, Yahoo’s senior vice president for search and marketplace.

Google released a similar local search engine, Google Local, in March. Google Local, which also combines Web search with structured database information, is still in test mode. Google does integrate Google Local results in local searches from Google.com.

Weiner said search has an opportunity to carve into not only the $14 billion businesses spend on Yellow Pages advertising, but also the $100 billion spent on all local media.

“There’s an absolutely extraordinary opportunity there,” he said.

The Kelsey Group believes local search advertising could generate as much as $2.5 billion by 2008, depending on how successful Yahoo and Google are with their local search offerings. Jupiter Research is much more circumspect, pegging the local search market at $879 million in 2009.

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