Why Vertical Local Search Sites Will Succeed

What’s the local search industry learning from traditional offline media? Look back as little as 25 years ago, there were half as many newspapers and magazines in circulation as there are today. Now publishers can better target consumers by creating niche publications that appeal to specialized advertisers.

This expansion makes sense. After all, “Running Times” magazine readers are an appealing target audience for such advertisers as Nike and Reebok.

With that in mind, will local search as a consumer and advertising medium eventually follow the path of traditional offline media? Interestingly enough, it’s already happening, with more niche sites appearing, as well as an increased emphasis on locally targeted content.

Because it’s almost impossible to compete with large, horizontal players, like the mighty search engines and Internet yellow pages (IYPs), and their large sales forces, it makes more sense to create niche or regional plays.

For example, just three years ago sites like Monster, HotJobs, and CareerBuilder had the lion’s share of the job-search market. According to recent comScore numbers, these three sites now make up less than 50 percent of the market share. Many of the broad-based sites have seen moderate growth, compared to specialized sites like Dice, which markets to the tech segment and recently saw its traffic jump 34 percent.

Now the fastest-growing names in online recruitment are increasingly specialized job sites. Advertisers will typically gravitate to more targeted audiences. In this case, advertisers can find better-qualified candidates than what broad-based sites can offer.

This trend holds true for niche local search sites as well. As I noted previously, local search sites have exploded. There are so many, it’s almost impossible to measure them. And there’s no slowing down. Many newcomers to local search are either taking a regional or vertical approach.

For the most part, vertical sites are nothing new. After all, vertical aggregators like Expedia.com and LendingTree.com are formidable brands that serve advertisers and consumers very well.

However, new local search sites that take a regional or vertical approach are finding success in competing with their larger counterparts. Increasingly, these smaller local sites are competing with the same techniques a local consumer-electronics store deploys to compete with Best Buy.

These smaller sites can compete in two primary areas: local advertising sales and the ability to generate and build local content, which in turn helps drive organic traffic within the search engines.

In return, more local content will help with local advertising. Local search sites should be well equipped to reach local advertisers, given that theirs sales force has local knowledge and the ability to help local businesses understand online advertising.

But as the smaller sites emerge, the existing giants aren’t sitting idle.

Within this past year, many IYP sites have been building out their local content and creating unique city guides that include movie listings, weather forecasts, and directories of local businesses that provide free Wi-Fi access.

Case in point: Superpages displays local information more prominently on its Web site. Previously, local information was contained in Superpages’ City Pages link near the page’s bottom. This signifies a shift from being an advertiser-driven product to being both an advertising and consumer product. The more local content, the better for the consumer and the advertiser and the better the ability to drive more relevant organic traffic.

Such large sites are no longer the obvious winners for offering local search or other niche content, however. It’s becoming increasingly clear that small sites with strong ties to a local community can take advantage of powerful new local content models fueling a new generation of compelling Web businesses. Over the coming years, I look forward to seeing search engines, IYPs, and smaller niche players continue to innovate and build out the content local users need.

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