Google and Overture Hunt for Local Results, Revenue

Internet search leaders Overture and Google both are testing services that deliver local results as they seek to bolster the already burgeoning market for Web searches.

Earlier this month, Pasadena, California-based Overture became the first major search engine to begin testing a service that incorporates the geographic location of the user when delivering search results. Rival Google, based in Mountain View, California, has unveiled a beta version of its own service that will incorporate the searcher’s address or ZIP code to return hometown results.

With the search market estimated to surpass US$14 billion in five years, the big search engines might be trying to differentiate themselves from newcomers — such as Microsoft’s MSN search engine — that are seeking to get a piece of the search pie.

“The large vendors are starting to come around to the fact that search is the new banner ad,” Yankee Group senior analyst Rob Lancaster told TechNewsWorld. “It’s the way to make money on the Internet.”

Looking Locally

Lancaster said that while location does not matter with some searches, such as those involving e-commerce, it does play a role when search engines such as Overture or Google are used like the Yellow Pages.

“If you’re looking for a pizza parlor, it’s that much more useful if it’s in your ZIP code,” he said.

Overture spokesperson Jennifer Stephens, who told TechNewsWorld that the company expects to launch its local product after testing within the next several months, said a lot of people search locally and the service will provide them with better results.

Hints on Home

Google, which began testing its search-by-location service with users this week, said the “experiment” involves analysis of a Web page’s content to find hints or “signals” that indicate its geographic origin.

By combining that information with its existing search technology, the local search delivers results that match the geographic area entered by users, who can type address, city, state or ZIP code information in a box alongside search terms.

Google has not signaled when it might officially launch the service, but said on its site the service has “a way to go.” It is also unclear whether the location-based service would be incorporated into Google’s standard search engine or used as an option.

Paid Placement Push

Yankee’s Lancaster said the local searches might prove to be a significant source of revenue as local companies purchase keywords in the paid-placement model.

“Local vendors have the ability to advertise through search engines pretty cost effectively,” he said.

Stephens indicated local advertising would represent an additional $1 billion on top of paid placement advertising — expected to reach $8 billion by 2008 — and said Overture sees local results as a good opportunity to expand its product offering for both users and advertisers.

Room for a Race

While Lancaster referred to the buzz generated by large technology players (such as Microsoft) entering the search segment, he said localized searches are likely to put established search engines in head-to-head competition for localized search services.

Still, Lancaster said that given the large number of small businesses — which are most likely to take advantage of local advertising opportunities — there is room for both Overture and Google.

“I think any time the money is on the table and they have identified through market research that there are local advertising dollars to be gained, it’s going to be a race,” he said. “Still, there is a huge percentage of businesses considered small business, which obviously opens up the market to more than one vendor.”

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