Local Search and Advertising Opportunity

NYTimes reports on the potential of small businesses in the online advertising market:

The dearth of local search advertising is likely to change soon, Internet advertising analysts said. According to a report released last week by eMarketer, a technology research firm, online search advertising revenues in the United States will reach $2.5 billion this year and $3 billion next, and local search advertising will capture at least 15 percent of that market.

Neal Polachek, an analyst at the Kelsey Group, said that although Google and Overture have sophisticated paid search functions, they do not hold a firm advantage over their online Yellow Pages competitors in local search advertising because they all face the same challenges. First, the search sites need a significant number of monthly visitors. Second, they need technological expertise. Third, they need effective ways to gather information on the roughly 15 million small businesses in the United States. And finally, they need sales agents to reach those business owners.

While Google and Overture have the Web traffic, they may lack the ability to attract small business owners, Mr. Polachek said, because they require most advertisers to create their own search ads and monitor their placement. Verizon, SBC and other Yellow Pages publishers have millions of small advertisers already buying their services – and have sales forces to help those businesses with their online advertising – but their Web divisions lack the online traffic of the search giants.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.