Study: IYPs at a Competitive Disadvantage in Local Search

Internet Yellow Pages providers have fallen behind in the battle for the local search audience and will need to partner broadly to remain competitive in 2005, according to a study by Forrester Analyst Charlene Li.

The findings are based on a qualitative comparison of Internet Yellow Pages providers against local search services in terms of both breadth of content and ease-of-use. Li found, although the number of U.S. households using IYPs once a week increased six percent to 47 percent in 2004, such providers are outperformed by services like Yahoo Local.

Li cites one local search as an example. When trying to find a map of Las Vegas showing the locations of all Indian restaurants in the area, it required 5 clicks on SuperPages, but only two clicks on Yahoo Local to produce a similar page of results.

“We looked at Internet Yellow Pages providers and determined they are not in as good of a position to compete with local search providers,” Li said. “If phone companies don’t improve their user experience, they will start losing market share.”

The competition they can expect will only grow fiercer as local search providers like Yahoo and Google make their services more accessible to search audiences, Li warned.

“One of the things we will start seeing is local search results included in general searches, and that is very hard to compete with if you are an IYP,” Li said.

Li offers four basic suggestions to IYP providers to upgrade their services and ramp up competitiveness in the local search market. First, they must offer better local content, such as more detailed business profiles.

Second, they should follow AOL’s strategy of partnering partner for both local search technology and content. AOL has partnered with FAST search engine to power its algorithmic local search results; Ingenio for pay per call technology; and Digital Cities for user reviews.

Third, Li advises IYPs develop new products and services for local businesses, branding themselves as a local search engine marketing provider. To be effective, they should collaborate with existing SEMs in the most lucrative verticals, while rolling out pay-per-call services for offline businesses and geo-targeting capabilities.

Finally, IYPs should make aggressive moves to dominate local sales by creating an advertising network that would allow for national buys and partnering with search engines, as seen in Bell South’s partnership with Google, she suggests.

“No one player can win in local search on their own,” Li said. “Even Google and Yahoo can’t do it all. Local search and IYPs clearly are merging into the same area and will be fighting over the same audience. But even though they compete, they also don’t. To their advantage they need to try to find ways to cooperate.”