Is Google Becoming the New Ma Bell?

First off, some younger readers might not get the comparison. The colloquial term Ma Bell (“Mother Bell”) was used to refer to the conglomerate that held a complete monopoly over all telephone service in most areas of the United States. In effect, they were the utility that brought communication to U.S. consumers and businesses. Fast forward about 100 years and we see a similar “utility” emerging in Google as it moves further to embed its product set and services in the minds of both consumers and businesses.

Nowhere is this pattern more evident than in the realm of local search. With over 65 percent marketshare of search (according to comScore) and nearly $12 billion in annualized revenue from U.S. search (according to Google’s Q1 2010 Quarterly Earnings Summary); I think we can all agree that Google is a successful business. Interestingly though, all of this success has come from leveraging a relatively small base of advertisers, around 1 million U.S. advertisers (as of 2009). Considering there were over 29 million businesses in the U.S. in 2008 (according to SBA), it stands to reason that Google has an opportunity to dominate the local search marketplace.

Let’s consider the facts; one in five searches on Google is now explicitly location-specific. Recently, Google has taken some steps to enhance the local-search process on its site as well as the local content itself. Most notably, these steps include:

• The revamp of the Local Business Center – now called Google Places
• Google Maps allowing service-based businesses to target service areas
• The enhanced localization of Google Suggest

Local Business Center is now “Google Places”

Not long ago, Google’s Local Business Center (LBC) emerged with an exciting opportunity for businesses to claim their local listings and create a profile page called a Place Page. The LBC has been very successful with nearly 2 million business listings claimed in the U.S. and over 4 million business listings claimed worldwide. In April, Google announced the new name for the LBC – Google Places. According to Google, the name change is simply a way to better connect Place Pages with the tool that enables business owners to manage their presence on Google (i.e., Google Places).

Google Places will offer the same features as the LBC, plus a few more. New features include:

• Advertising with “Tags” – just $25 per month puts a clickable yellow tag on your Google and Google Maps listing that makes your business stand out in a crowd
• Free business photo shoots (currently available in select cities only)
• Customized QR Codes – unique bar codes that can be scanned with certain smartphones to take a consumer directly to the mobile version of the Place Page for that business
• Favorite Places window decals – mailed to select businesses with QR codes
• Service Areas (see below)

Google Places now Allows Service-Based Business Listings

Previously, business owners who wished to claim their business listing and create a Place Page for Google Maps were required to have a valid physical address. This fact alienated a host of businesses whose customers do not come to them; the business goes to the customer. Home-based and service-based business owners (e.g., plumbers, free-lance photographers, etc.) that did not wish to show a physical address simply had to accept the fact that they were not allowed to have a Place Page. Even if a service-based business did have an address to list, another challenge existed; gaining visibility outside of the town they were located in. The business may serve four towns or a 25-mile radius surrounding their location, but Google Maps would only serve their listing for searches within the home town.

In March 2010, Google got wise and introduced a new option in Google Places (formerly, the Local Business Center) that allows home-based and service-based businesses to not only create a page, but also to designate their service areas. Now, businesses that had avoided the Google Maps product set will have a chance to participate in local search.

Localized Google Suggest

In the case of applying best practices learned elsewhere; Local Google Suggest, which was introduced in 2009 – originally only tailored results for different countries or regions of the world. Google soon realized that there were differences in the way people searched – not only in different countries, but within different parts of the same country. In April 2010, Google released Localized Google Suggest in an effort to tailor search suggestions to different metropolitan areas within the U.S.

Here’s an example. When typing the word “pack” in Milwaukee, Google suggests search terms for the Green Bay Packers because, chances are, people from Milwaukee are Packers fans. Performing a search for the word “pack” in New York will most likely produce an entirely different set of Google suggestions.

Implications of These Localization Efforts

Google recognizes the increasing importance of local search for consumers. According to the 2009 TMPDM/comScore Local Search Usage Study, 63 percent of search engine users expect to find a business within 15 miles of their home when conducting a search. Google also recognizes the growth of local online ad spending. Piper Jaffray & Co., for example, predict a compound annual growth rate (CAGR) of 9 percent for local online ad dollars, compared with 4 percent for national online ad spending for the next five years.

All of Google’s recent moves signal that it is very serious about commanding the local search front in order to continue to expand its sphere of influence and grow revenue beyond its current offerings. Will Google obtain “utility” status in the minds of both consumers and businesses? That has yet to be seen, but based on how it has dominated traditional pay-for-performance search engine advertising, I would not want to bet against it.

This column was originally published on May 6, 2010.