Google wants $10 billion local online ad spend
Using a locally “targeted” example of the quintessential “New York deli,” Sheryl Sandberg, VP Global Online Sales & Operations, portrayed Google’s local search arsenal at an investor Q & A in New York City:
If you did a search for “New York deli” when I joined Google four and a half years ago, the only thing you would have gotten from Google was the long list of probably the history of delis in New York, it wouldn’t have been relevant for you at all. If you did that same search today on our home page you’d get some nice local listings at the top. If you did that search on maps you’d get markers saying where delis were, you’d get local business ads, and you might even get a coupon to use at one of these delis.
Google is hungry for the advertising spend of New York City delis, San Francisco cafes, Chicago boutiques, Atlanta dry cleaners, Miami spas, Los Angeles hair salons…
Sandberg expressed enthusiasm for the “huge” and “highly monetizable” local opportunity:
At the tail end, we think the local opportunity is huge. Local has a very interesting property in that it is very highly monetizable. When you think about what people are looking for when they look for local information, it is almost always commercial in nature. You’re looking for a local product or service most of the time.
Google believes there are “lots of ways to define local,” and that it has the product line needed to service all of local merchants’ needs:
We now in our products have an ability to do locally targeted advertising so someone will pick a local area, geographically. We consider that a local ad because they are saying I only want to show my ad to users from New York City. That’s one example of local. Local could also be something that you inherently believe is a local product or service. Local is certainly demonstrated by our maps property, when people do a search on maps we are not just giving them information about businesses, but we are displaying where that business is, therefore we think location is obviously an important part.
Google may have the product side of the local advertising equation figured out, but it has a long way to go to turn millions of elusive local merchants on to the Google self-service AdWords auction machine.
Sandberg notes the challenge, and wants the opportunity:
As people do more local search on Google, we provide greater opportunity for local advertisers. In that area we think the market is widely under penetrated, it sounds surprising to a lot of us, but even in the United States, arguably the most developed market in the world for ecommerce less than 50% of businesses even have a Web site, or let alone advertisers, so we think there is tremendous opportunity to bring those people online and bring them into our advertising product.
In “Google targets $100 billion Yellow Pages industry?” I discuss how Google’s self-serve ad sales model has not succeeded in penetrating the local advertising market:
The strength of a traditional Yellow Pages publisher is its vast sales force network of “feet on the street” calling upon local small businesses. A “feet on the street” sales strategy does not come cheap, but it is often what is necessary to reach, and acquire, local merchant accounts. While Google’s advertiser self-provisioning system is cost-effective, it has not been overwhelmingly adopted by the millions of small businesses in the U.S.
Verizon SuperPages.com partnered with Google earlier this year to marry its “sales channel opportunities with Google's vast advertising network.
The marriage has apparently not been consummated, however. Sandberg on percentage of Google search advertising revenues that is local:
We don’t release specific numbers, local advertising is part of our revenue certainly but we think it is a much smaller part than we think it could be in the future.