When Absolute Adventures started advertising online, CEO Carissa Zenorini found that her search engine ads were working a little too well. Her three-employee San Francisco company organizes outdoor activities and corporate events, and most of its customers come from California's Bay Area. Yet Web surfers from Ohio, Florida, and beyond would sometimes click on her company's ads. "We didn't want people looking for adventure in Texas to click on our ads, because each click costs us money," says Zenorini.
So in August, 2004, Zenorini signed up for Yahoo! Local Sponsored Search, which lets you target ads to a specific state, city, or even neighborhood. Now her ad pops up only when someone within 75 miles of San Francisco searches using the keywords she has chosen. She pays 10 cents to 99 cents per click, spending a total of about $3,000 a year.
The local approach is working. Absolute Adventure's revenues doubled, to $400,000, in the 12 months ended in August, 2005. "Online advertising is the single most important contributing factor to our success," says Zenorini. "We ask every client how they found us, and apart from repeat business, about 97% found us online."
A growing number of small businesses are using local search. A November, 2005, survey by Boston's Yankee Group found that more than 30% of businesses with 20 to 99 employees and 40% of those with 2 to 19 staffers were using local search engine advertising. Those numbers are expected to increase substantially this year. "Definitely more businesses, particularly service businesses, are using local search," says Sanjeev Aggarwal, senior analyst at Yankee Group. "They know people aren't looking in the Yellow Pages." About 55% of consumers used a search engine to find information about a local business last year, up from 47% in 2003, according to Kelsey Group, a Princeton (N.J.) research company specializing in electronic media.
Ensuring that you don't pay for clicks from out-of-area Web surfers isn't the only benefit offered by local search. Like other search engine advertising, the local variety lets you track your account closely to find out which keywords are most successful at drawing customers and how much you're spending each day. For companies with tight marketing budgets, those are no small advantages.
Local search isn't right for every business. "For some, there may not be much need," says Joe Wilcox, an analyst at Jupitermedia (JUPM) in Darien, Conn. "A landscaper gets plenty of business without going near the Internet." To create a successful online ad campaign, you'll have to devote some time to choosing keywords and monitoring your account. But for any business looking for a way to reach customers nearby, the effort may be worth it.
THE LOGISTICS are similar no matter which search engine you choose. You can sign up with Yahoo (YHOO) at searchmarketing.yahoo.com/local or with Google (GOOG) at adwords.google.com/select/. (At press time, MSN's (MSFT) program was still in the pilot phase, but businesses could apply for it by visiting www.advertising.msn.com/) With Yahoo, you select a target area by entering your address and the zone around it -- in Zenorini's case, 75 miles -- that you wish to target. Google advertisers select a region or city, or define an area on an onscreen map. Then it's on to selecting keywords, bidding on them, and writing ad copy, usually a headline and short blurb.
Because your ad's presence is triggered by keywords, choosing the right ones is crucial. Keywords are priced according to a bidding system, with the highest bidders' ads appearing at the top of the search results page. Your bid is the maximum amount you are willing to pay each time someone clicks on your ad. Most keywords run well under a dollar, although hotly contested words such as "real estate" and "dating" are more expensive (see table). Because the number of searches varies daily, you'll also need to set a limit on how much you're willing to spend. Once that limit is reached, your ad won't appear again that day.
All the search engines suggest bids that will land your ad high on the results page. Of course, you'll be taking the company's word for the going rate, but Greg Sterling, an analyst with the Kelsey Group, says he has heard no complaints about price inflation: "What I've seen is that they are giving you an honest reflection of the marketplace."
Zenorini's keyword selection has been a matter of trial and error. She set a maximum bid of 99 cents but then had to give up words such as "dating," since that bid wasn't high enough to place her ad on the first page of the search results. She's had better luck with "corporate team building." Although that keyword recently had a high bid of $5.23, Zenorini's 99 cents usually gets her ad on the first results page.
Tim McEachern, associate broker with Gabel Real Estate, a 15-person company that sells houses in Berkshire County, Mass., and Columbia County, N.Y., analyzed his account daily when he first began buying keywords on Yahoo and Google's local search programs.
His goal was to zero in on phrases affluent Manhattanites might use to search for second homes in his area. "Real estate" was far too expensive, but the more narrowly focused "Columbia County real estate" has worked so well that McEachern will pay up to $2 for it. In all, his company spends about $25,000, a quarter of its annual marketing budget, on online keyword advertising focused on the region. McEachern buys about 75% of his keywords on Google and the rest on Yahoo. He usually has reports on his account e-mailed to him every two weeks. "But if we try something unique, a campaign around a specific house, I will track it daily," he says.
If you don't have the time or desire to monitor ads yourself, some Web hosting companies, such as Vista.com and Interland.com, will handle local search for you. Bell South has arrangements with both Google and Yahoo for its Yellow Pages customers.
Another option: Use a search engine marketing company, which can handle keyword selection and bidding and monitor traffic. While Sterling says many don't cater to businesses with small marketing budgets, two that do are ReachLocal.com and LocalLaunch.com. They'll charge a percentage of your monthly marketing budget to figure out keywords and bids, but that may be a small price to pay for bringing more customers to your door.
By Ron Miller