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Yahoo Pushes New Local Search Engine

After two months of testing, Yahoo officially released its local search engine during the weekend with a national consumer marketing blitz, as it tries to gain a lead on rival Google.

Yahoo Local combines Web search, maps, business listings and consumer reviews in a search engine connecting consumers with local information. Yahoo added several features since the beta launch in August, including more data sources, improved mapping capability and a search suggestion tool. Yahoo said it improved its relevance algorithm for the official release. Many of the business listings on Yahoo Local are culled from infoUSA.

Yahoo and Google have tabbed local search as a major area for investment. Google released a similar local search engine, Google Local, in March, which also combines Web search with structured database information. It is still in test mode.

Yahoo plans to drive use of its local search engine through prominent placement on its home page. It also plans to add Yahoo Local to its search toolbar.

To buttress awareness, Yahoo launched an eight-week marketing campaign. Yahoo Local is now a tab on the Yahoo home page, and Yahoo yesterday began a nationwide ad campaign to drive adoption and tout Yahoo Local as the source for all manner of local “finds.”

“Google will be forced to respond to this,” said Greg Sterling, a local search industry analyst with The Kelsey Group. “We may have the beginning of an arms race of sorts. This is the first big splash in consumer marketing that anybody's made in the local search space.”

Local search is forecast to grow substantially in the next five years, though analysts differ on the growth rate. The Kelsey Group thinks 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 conservative, pegging the local search market at $879 million in 2009.

The Yahoo Local marketing campaign includes radio spots, local newspaper advertising and billboards. Part of the campaign features interactive bus shelters in New York, Los Angeles and San Francisco, which let commuters do local searches on a 42-inch plasma screen and print them out.

“We have security guards in the evening,” said Terra Carmichael, a Yahoo spokeswoman.

The ad campaign highlights Yahoo Local's mapping feature and seeks to show Yahoo in the local environment. Radio ads in New York feature the “naked cowboy,” the scantily clad guitarist who performs in Times Square.

Yahoo is running online ads on its own network and on sites where users go for local information, such as movie review destination IMDB.com, Date.com and news sites. Yahoo also started an online promotion for searchers in 10 cities to win prizes from local merchants.

“The main objective is to build awareness of Yahoo Local as a new way to find local information,” said Ryan Rigoli, senior marketing manager for Yahoo Search.

According to Rigoli, 20 percent of Yahoo's search traffic is for local information. Sterling said The Kelsey Group has just completed research showing that consumer awareness of local search options has risen substantially.

“We're at a time when nobody owns this local space,” Sterling said, “and I think Yahoo has an opportunity to gain some traction with consumers who already use Yahoo.”

Google and Yahoo are also trying to lure advertisers.

Yahoo Local's results page has paid search ads from its Overture Services unit, which released an advertising platform, Local Match, in June. Local Match does not require advertisers to have a Web site, instead displaying a business information page with basic data such as store hours, address and phone number. A Verizon study in late 2002 estimated that 63 percent of small businesses do not have Web sites. Google offers geographic targeting options, though advertisers need Web sites to participate.

“In terms of ad dollars, the early adopters will be the national advertisers who are already in paid search,” said Niki Scevak, an analyst with Jupiter Research.

Overture hopes to reach local merchants through both online self-service and partnerships with so-called small-business aggregators. It has deals with HomeGain and ServiceMagic to sell Local Match listings. Dex Media, the publisher of directories for Qwest Communications, recently launched Dex Web Clicks, an online marketing services firm focused on small businesses. Dex Web Clicks plans to strip out some of the complexity by selling local businesses a guaranteed number of leads while it handles the bidding process for them.

Sterling said such partnerships are key to bringing search marketing to small businesses, which, for the most part, are not well versed in pay-per-click advertising.

“A few months ago it was really opaque about how we're going to get more of these local businesses into search,” he said. “This and related products are the model, at least in the short term.”

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