October 28, 2004, 12:00 AM

Search Local, Buy Local

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Another major national search company attracted to local searches is Google which began a beta test at local.google.com last March. Although Google is calling its service a beta test because it is attempting to gain consumer and advertiser feedback, the test is open to any consumers or advertisers who want to use it, McCarthy says.

Google is using the same AdWords system for its local searches that it uses for its global product shopping searches. AdWords uses a combination of search word relevance, how much an advertiser pays, and how popular a particular advertiser is with other consumers to prioritize the retailers who show up on its search results. The only difference in the local search is that the consumer`s and the retailer`s locations are also factored into the equation.

Pinpointing a location

Google learns the customer`s location in one of two ways. In same cases, customers will simply state where they are located, typing in, for example, "San Francisco cameras" as the search words.

Google can also get the consumer`s location from the IP address, that is, by looking at the server by which the consumer is accessing the Internet and determining the metropolitan area where the server is located. That would mean if a customer is traveling and wants to find local suppliers, Google will know that and tailor the results to the location where the customer is traveling, not her home town.

Google also allows advertisers to define what they consider "local" before they bid on potential customer referrals. "We give the retailers some flexibility in deciding how they want to define their market," McCarthy says. "A camera shop, for example, might want to bid on customers located within a 50-mile radius thinking consumers will drive a little bit to get a good deal. But a pizza shop might only want to bid on customers located a few miles away."

Besides Yahoo, one of the newest local searches is ShopLocal.com, developed by CrossMedia Services Inc., which is partly owned by three large daily newspaper chains: Gannet Co. Inc., Tribune Co. and Knight Ridder.

ShopLocal relies partly on the ability of the 145 newspaper web sites owned by the media conglomerates to bring consumers to the ShopLocal site. Once there, consumers can search for local retailers by typing in store name, brand name or special product names. They can then type in their city or ZIP code to find local providers.

Initially, CrossMedia began signing up mostly national retail chains that had local outlets. But more recently, CrossMedia has begun to integrate many of the local advertisers from the daily newspapers. That is expected to bring in a lot more of the smaller, locally-owned businesses that ShopLocal had hoped to attract, says David Hamel, chief marketing officer.

While some consumers who use ShopLocal are expected to shop online through retail connections, more commonly they will use the web site to identify businesses that they will call or visit. Many such businesses are expected to be service companies--such as plumbers or electricians--with whom it is impossible to do business via the Internet, Hamel says.

Hugely local

"We take people who are looking for products online and find them a store that has what they want and is near them," he says. "We are not an e-commerce site per se."

One company testing ShopLocal.com this fall is The Bombay Co. "This is the yellow pages taken to a whole new level with products and product attributes being searchable instead of just our company name and business type," says Matt Corey, vice president of marketing and e-commerce for Bombay Co. "So we`ll test this concept to see if it generates the ROI we require to move forward on a longer-term relationship. Right now we`re cautiously optimistic that the model will provide beneficial."

This isn`t the first time CrossMedia has brought information and services to consumers online; it also owns CareerBuilders.com, Cars.com and Apartments.com.

Another marketing company that was attracted to local search is FindWhat.com. It was motivated to increase its local search offerings by statistics that showed that 35% of general searches ended up being local in nature. And as the online marketing firm conducted additional consumer studies, it found more and more consumers say they want to identify local service providers, says Rick Szatkowski, senior vice president and general manager of FindWhat.com`s private-label network. New technology, particularly wireless systems, is also driving the trend toward local searches, Szatkowski says. He has noticed that as more consumers use small wireless devices in their daily lives, there is increased demand for these people to look up a local business while in their cars or out and about.

FindWhat is combining its local search functions with its new pay-per-call offering. Now instead of just paying the search provider for each sales lead received when a consumer clicks on a hyperlink, FindWhat.com allows companies to pay for leads they receive when customers call them on special 800 numbers. This feature allows businesses to be included in Internet searches, even when they don`t have web sites or don`t allow online purchases. As a result, it has allowed FindWhat to include more small businesses and those located in small towns in its retail lists.

Another driving feature, Szatkowski says, is the growing capacity for online sales companies to allow customers to return merchandise to their stores. This has caused a lot of consumers to give preference to online retailers, particularly those affiliated with large national chains, that have outlets nearby where they can return merchandise if necessary.

FindWhat allows consumers to type in their city or ZIP code along with a keyword indicating what they are looking for. The keyword can either be of a general product category--i.e. electronics or apparel--or a specific product sought--digital camera or shoes. Typically, the more specific the description typed in, the higher the conversion rate to sales, Szatkowski says.

FindWhat has 100,000 online businesses in its listing, but expects to greatly expand that with the new pay-per-call program. Additionally, the company has a deal with Verizon Information Services to incorporate many of the 1.5 million advertisers in Verizon`s online SuperPages.com into FindWhat`s data base.

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