As CEO Heath Clarke explains it, Local.com occupies a space between the two largest groups involved in local online search, and enjoys an advantage over each.
First, there’s the Internet Yellow Pages (IYP) group. These have a legacy method of displaying advertisers’ listings that’s in line with their print origins, Clarke says; the unspoken assumption is that online listings may be cannibalizing some of that print business. Then there are the pure search players, the Googles and Yahoo!s of the world, that use some of the same data as the IYPs. These technology-driven pure search players have brought a lot of bells and whistles to local search, from new ad formats to tools such as maps and driving directions.
Local.com has a foot in both camps, so to speak. Its parent company Interchange produced first a downloadable product search application in 1999 and then a Web-based search engine. In 2003, the company developed a patented search technology it called Keyword DNA and built that into a new LocalDirect search and advertising platform that launched in 2004. LocalDirect was marketed mainly to regional newspaper sites and online directories.
“We looked at the performance of the online directories back in the day and found that their search technology was very poor,” Clarke says. “Failure rates were as high as 25%. So we set about finding a way to make the business listings that reside in a database more searchable.”
Google and the other ranking algorithms were no help here, since they depend on assessing the authority of inbound links to assign page ranks. Business listings don’t use links.
Instead, Interchange compiled a database of business listings that includes relevant information such as the generic products and services a business offers, competing businesses of the same type in a neighborhood, population densities in the markets the business serves, and even proximity to local landmarks. “We spin all that information together into what we call metadata files, and that’s what allows us to complete searches for ‘romantic restaurant near Golden Gate Bridge’,” Clarke says.
In 2005, right after going through an IPO, the company made a decision to develop its own search brand rather than license its platform to others. “We realized we needed to have our own brand,” Clarke says. “The online directories weren’t thinking strategically, and we didn’t think it was wise to place our future in the hands of companies that perhaps didn’t get local search as well as we did.” The company acquired the Local.com domain, and with the addition of some Web-crawling technology, Local.com went into beta launch in August of that year.
Local.com’s Web crawler looks specifically for data relevant to a local business search and thus throws out about 89% of the pages it spiders, Clarke says. Other data for those metafiles comes from list compilers and from the participating business owners themselves.
“The Keyword DNA component gives us an advantage over the Googles and Yahoo!s as they add information from their own Web indexes, and the Web crawler gives us an advantage over the online directories that don’t have that,” he says. “We believe that gives us some of the freshest content in local search, and the most relevant.”
And according to Clarke, those advantages will let the search engine make headway against its most direct competitors, the Internet Yellow Pages. “Ultimately, we’re not competing against Google and Yahoo! in local,” he says. “They’re going to do some interesting things, but they’re not really getting anywhere. Neither are the [IYP] directories. So we think we have a shot at being number one in the directory space. Right now, Superpages leads that market with about 17 million visitors a month. We have about 10 to 11 million visitors monthly, and we’ve been around for about a year and a half.”
A comScore study of IYP searches in the U.S. last July ranked Local.com as the fourth most-trafficked pure-play local search, behind Superpages, Whitepages and Citysearch. The study gave Local.com a 5.9% share of searches that returned business listings, about one-fifth the 23.9% share of market leader Yahoo!
Many of those names have signed deals to distribute various types of performance ads—banners, display and text search ads—on Local.com: coopetition at its most classic. Last year, Local.com focused on building that market share and on monetizing its pages through ad partnerships, distributing ads from Yahoo!, Business.com, Superpages.com, Yellowpages.com and Citysearch.
But in early April, Local.com starting offering local businesses a chance to update their profile information through a self-service link on the site, allowing merchants to update their business name, description and contact information. (Local Promote Premium offers enhanced profile features for about $40 a month—still less than most newspaper classified ads, as the company’s promotional material points out.) The thinking is that many small local businesses still don’t have a Web presence, and that giving them exposure in the Local.com index may impress them enough to get them to start marketing themselves online, including with Local.com.
To that end, the local engine has also introduced Local Verified, a marketing program that offers preferred placement in relevant Local.com search results for a flat annual fee of $249. Businesses will get to show a phone number, address, map and a detailed business description in a location at the top of their relevant business and geo categories. Listings will be highlighted with different colored fonts and can add tag lines to their ads. Clarke points out that that information will be checked to prevent fraud, and that the businesses advertising through Local Verified will have to be in good standing with the Better Business Bureau.
Local.com began promoting the new ad platform to local businesses via direct mail about two weeks ago; the campaign is still in its early quasi-test stage. “It’s an iterative process, so we’re testing different mail pieces in different markets,” Clarke says. “We’ve selected four different geographies and 10 business verticals, and we’re testing two mail pieces across those 40.”
Later on this year, he says, Local.com will start promoting Local Verified through telemarketing.
“We see the market breaking down into the sub-$500 per year advertiser and the $500-to-$2500 a year advertiser,” Clarke says. “We think that will break out according to verticals, so that a dry cleaner might spend $150 a year, but a plumber might spend $1000 a year.” Direct mail should draw the large volumes of lower-value local advertisers, but those with larger budgets may require the higher touch approach of telesales.