Localization, Unique Data Sets & the Future of Search

Oct 30th

Local is Huge

Google's US ad revenue is roughly 15 billion & the size of the US Yellow Pages market is roughly 14 billion. Most of that money is still in print, but that shift is only accelerating with Google's push into local.

Further, cell phones are location aware, can incorporate location into search suggest, and on the last quarterly conference call Google's Jonathan Rosenberg highlighted that mobile ads were already a billion Dollar market for Google.

Google has been working on localization for years, and as a top priority. When asked "Anything you’ve focused on more recently than freshness?" Amit Singal stated:

Localization. We were not local enough in multiple countries, especially in countries where there are multiple languages or in countries whose language is the same as the majority country.

So in Austria, where they speak German, they were getting many more German results because the German Web is bigger, the German linkage is bigger. Or in the U.K., they were getting American results, or in India or New Zealand. So we built a team around it and we have made great strides in localization. And we have had a lot of success internationally.

The Big Shift

I have been saving some notes on the push toward local for a while now, and with Google's launch of the new localized search results it is about time to do an overview. First here is Google's official announcement, and some great reviews from many top blogs.

Some of the localized results not only appear for things like Chicago pizza but also for single word searches in some cases, like pizza or flowers.

Promoting local businesses via the new formats has many strategic business benefits for Google

  • assuming they track user interactions, then eventually the relevancy is better for the end users
  • allows local businesses to begin to see more value from search, so they are more likely to invest into a search strategy
  • creates a direct relationship with business owners which can later be leveraged (in the past Google has marketed AdWords coupons to Google Analytics users)
  • if a nationwide brand can't dominate everywhere just because they are the brand, it means that they will have to pony up on the AdWords front if they want to keep 100% exposure
  • if Google manages to put more diversity into the local results then they can put more weight on domain authority on the global results (for instance, they have: looked at query chains, recommended brands in the search results, shown many results from the lead brand on a branded search query, listed the official site for searches for a brand + a location where that brand has no office, etc.)
  • it puts eye candy in the right rail that can make searchers more inclined to look over there
  • it makes SEO more complex & expensive
  • it allows Google to begin monetizing the organic results (rather than hiding them)
  • it puts in place an infrastructure which can be used in other markets outside of local

Data Data Data

Off the start it is hard to know what to make of this unless one draws historical parallels. At first one might be inclined to say the yellow page directories are screwed, but the transition could be a bit more subtle. The important thing to remember is that now that the results are in place, Google can test and collect data.

More data sources is typically better than better algorithms, and Google has highlighted that one of their richest sources of data is through tracking searcher behavior on their own websites.

Pardon Me, While I Steal Your Lunch

There are 2 strong ways to build a competitive advantage on the data front:

  • make your data better
  • starve competing business models to make them worse

Off the start yellow page sites might get a fair shake, but ultimately the direction they are headed in is being increasingly squeezed. In a mobile connected world with Google owning 97% search marketshare, while offering localized search auto-complete, ads that map to physical locations, and creating a mobile coupon offers network, the yellow page companies are a man without a country. Or perhaps a country without a plot of land. ;)

They are so desperate that they are cross licensing amongst leading competitors. But that just turns their data into more of a commodity.

Last December I cringed when I read David Swanson, the CEO of R.H. Donnelley, state: "People relate to us as a product company -- the yellow-pages -- but we don't get paid by people who use the yellow-pages, we get paid by small businesses for helping them create ad messages, build websites, and show up in search engine results. ... Most of the time today, you are not even realizing that you are interacting with us."

After seeing their high level of churn & reading the above comment, at that point I felt someone should have sent him the memo about the fate of thin affiliates on AdWords. Not to worry, truth would come out in time. ;)

Making things worse, not only is local heavily integrated into core search, with search suggest being localized, but Google is also dialing for Dollars offering flat rate map ads (with a free trial) and is testing fully automated flat rate local automated AdWords ads again.

Basic Economics

How does a business maximize yield? Externalize costs & internalize profits. Pretty straightforward. To do this effectively, Google wants to cut out as many middle men out of the game as possible. This means Google might decide to feed off your data while driving no traffic to your business, but rather driving you into bankruptcy.

Ultimately, what is being commoditized? Labor. More specifically:

  • the affiliate who took the risk to connect keywords and products
  • the labor that went into collecting & verifying local data
  • the labor that went into creating the editorial content on the web graph and the links which search engines rely on as their backbone.
  • the labor that went into manually creating local AdWords accounts, tracking their results, & optimizing them (which Google tracks & uses as the basis for their automated campaigns)
  • the labor that went into structuring content with the likes of micro-formats
  • the labor that went into policing and formatting user reviews
  • many other pieces of labor that the above labor ties into

Of course Google squirms out of any complaints by highlighting the seedy ends of the market and/or by highlighting how they only use such data "in aggregate" ... but if you are the one losing your job & having your labor used against you, "the aggregate" still blows as an excuse.

But if Google drives a business they are relying on into bankruptcy, won't that make their own search results worse?

Nope.

For 2 big reasons:

  • you are only judged on your *relative* performance against existing competitors
  • after Google drives some other players out of the marketplace and/or makes their data sets less complete, the end result is Google having the direct relationships with the advertisers and the most complete data set

The reason many Google changes come with limited monetization off the start is so that people won't question their motives.

Basically I think they look at it this way: "We don't care if we kill off a signal of relevancy because we will always be able to create more. If we poison the well for everyone else while giving ourselves a unique competitive advantage it is a double win. It is just like the murky gray area book deal which makes start up innovation prohibitively expensive while locking in a lasting competitive advantage for Google."

You would never hear Google state that sort of stuff publicly, but when you look at their private internal slides you see those sorts of thoughts are part of their strategy.

What is Spam?

The real Google guidelines should read something like this:

Fundamentally, the way to think about Google's perception of spam is that if Google can offer a similar quality service without much cost & without much effort then your site is spam.

Google doesn't come right out and say that (for anti-trust reasons), but they have mentioned the problem of search results in search results. And their remote rater documents did state this:

After typing a query, the search engine user sees a result page. You can think of the results on the result page as a list. Sometimes, the best results for "queries that ask for a list" are the best individual examples from that list. The page of search results itself is a nice list for the user.

...But This is Only Local...

After reading the above some SEOs might have a sigh of relief thinking "well at least this is only local."

To me that mindset is folly though.

Think back to the unveiling of Universal search. At first it was a limited beta test with some news sites, then Google bought Youtube, and then the search landscape changed...everyone wanted videos and all the other stuff all the time. :D

Anyone who thinks this rich content SERP which promotes Google is only about local is going to be sorely disappointed as it moves to:

  • travel search (Google doesn't need to sell airline tickets so long as they can show you who is cheapest & then book you on a high margin hotel)
  • any form of paid media (ebooks, music, magazines, newspapers, videos, anything taking micro-payments)
  • real estate
  • large lead generation markets (like insurance, mortgage, credit cards, .edu)
  • ecommerce search
  • perhaps eventually even markets like live ticketing for events

Google does query classification and can shape search traffic in ways that most people do not understand. If enough publishers provide the same sorts of data and use the same types of tags, they are creating new sets of navigation for Google to offer end users.

No need to navigate through a publisher's website until *after* you have passed the click toll booth.

Try #3 at Reviews

Google SearchWiki failed in large part because it confused users. Google launched SideWiki about a year ago, but my guess is it isn't fairing much better. When SideWiki launched Danny Sullivan wrote:

Sidewiki feels like another swing at something Google seems to desperately desires — a community of experts offering high quality comments. Google says that’s something that its cofounders Larry Page and Sergey Brin wanted more than a system for ranking web pages. They really wanted a system to annotate pages across the web.

The only way they are going to get that critical mass is by putting that stuff right in the search results. It starts with local (& scrape + mash in other areas like ecommerce), but you know what they want & they are nothing if not determined to get what they want! ;)

Long Term Implications

Scrape / mash / redirect may be within the legal limits of fair use, but it falls short in spirit. At some point publishers who recognize what is going on will align with better partners. We are already seeing an angry reaction to Google from within the travel vertical and from companies in the TV market.

Ultimately it is webmasters, web designers & web developers who market and promote search engines. If at some point it becomes consensus that Google is capturing more value than they create, or that perhaps Google search results have too much miscellaneous junk in them, they could push a lot more searchers over to search services which are more minimalistic + publisher friendly. Blekko launches Monday, and their approach to search is much like Google's early approach was. :)

Published: October 30, 2010

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Comments

October 31, 2010 - 4:36am

This post should be required reading for anyone in the Yellow Pages business. After experiencing the first drop in print YP usage ever recorded, I recall hearing the CEO of one of the top YP publishers exulting how they were seeing amazing growth in YP book usage by married people age 18-25. With that kind of thinking, it's kind of easy to see how GOOG has painted them into a corner.

I had never thought of YP sites as "thin affiliates", but that's essentially what they are. The difference between a top publisher's site and a no-name local search start-up are barely perceptible.

Ultimately I think most YP publishers will consolidate their consumer offerings under a single brand like YP.com. If YP publishers are going to survive in the GOOG world, they are going to have to focus like crazy on what they are supposedly good at (i.e. selling marketing services to local businesses) and/or roll the dice and create a brand that everybody wants/needs (e.g. Yelp).

But even Yelp relies on GOOG for a huge portion of its traffic, and thus far the incumbent publishers have not had much luck creating brands that mean much to anyone. Time to revisit those strategy decks guys.

October 31, 2010 - 1:45pm

Andrew, what % of Yelp's traffic do you think still comes from Google, (speculating of course) from the IYP sites that you do track? Seems like I read somewhere recently that 1/3 of Yelp's traffic comes from Mobile, which tells me they're already transitioning into a Google-independent business model pretty nicely...

That said, clearly Yelp would not be the force it is today without all the Google referrals in the last five years...and new IYP-like start-ups presumably aren't going to have that traffic channel.

October 31, 2010 - 8:32am

As the local seo is more powerful than Global SEO, It will be a better chance for spammers to start spamming the results with multiple listings in Google Local Listings.

October 31, 2010 - 8:40am

I don't view Yellow Page companies as being "thin affiliates" but they sorta make themselves the equivalent through them openly making it easy for Google to scrape & cross-reference their data, and then cross licensing it to other yellow pages ... it is like taking 100% of what makes you unique and throwing it into the trash can. Sorta like the early internet business models of losing money on every transaction, but making up for it on volume. ;)

Our blog posts here are Creative Commons licensed, but would anyone pay to be a member of our site & participate in our private forums of those were also licensed via Creative Commons? Not likely.

Businesses that want to stay competitive online longterm need to do one or more of the following:

  • be the default source for their category (and have reinforcing network effects)
  • offer something unique that you can't get elsewhere
  • have a unique editorial voice or bias
  • provide value through interactivity

Building a business model around manually reselling Google at a high markup isn't going to be very sustainable, particularly as Google uses existing market data to automate your work + replace you. ;)

Almost all the media businesses that are collapsing have tried to buy as much exposure as possible by making their stuff free, and then decided to scale quality down to match the price. It is sorta hard to win racing to the bottom.

October 31, 2010 - 1:41pm

Agree with Andrew 100% about required reading for YP CEO's...and would add national SMB service companies to the list. I've long thought from reading all of Google's public missives they're using those guys to get SMB's onto Adwords & will chuck them as soon as SMB's are savvy enough to manage their own campaigns (or they can find a way to achieve the same results without any management). I think that's essentially what you're saying with this line:

"the labor that went into manually creating local AdWords accounts, tracking their results, & optimizing them (which Google tracks & uses as the basis for their automated campaigns)"

Not to mention the fact that as part of this recent interface update, they've just upped the ante for Adwords slots 1-3, meaning resellers like the three mentioned above are going to continue to have their margins squeezed.

Not that I think that's a bad thing for the SMB. I've certainly tried to train my clients as much as possible & give them a roadmap to achieve success after I've moved on to new ones. That business model works just fine for me (and other small agencies) but doesn't look good to Wall Street. There will always be room for individualized consulting shops, in my view, but I'm not sure how much of a sweetspot these bigger providers are going to be left with as Google evolves.

The data side is particularly interesting to me because there still isn't a hyper-accurate baseline Local data set. Let's say there are 18MM US businesses and somewhere between 2MM and 3MM claimed Place Pages. Aaron, I'd be curious what you think the "good enough" number of claimed Place Pages is before Google eschews the paid business data aggregators as they did with TeleAtlas geo-data? Does it matter how quickly they shut down the market share of the IYPs or does that line of thinking proceed independently? Or will they always need to rely on a verified dataset like Localeze or infoUSA because they don't want to go to the efforts to verify 18MM listings themselves (which they're now testing via cold calls from India)?

October 31, 2010 - 8:02pm

Not that I think that's a bad thing for the SMB. I've certainly tried to train my clients as much as possible & give them a roadmap to achieve success after I've moved on to new ones. That business model works just fine for me (and other small agencies) but doesn't look good to Wall Street. There will always be room for individualized consulting shops, in my view, but I'm not sure how much of a sweetspot these bigger providers are going to be left with as Google evolves.

I am 100% in agreement here.

  • Wall Street wants scale, but the only way to achieve "scale" is to water down the depth + quality of service and automate it.
  • But as Google collects data (& uses that data hoard + software programs to do what humans were doing) the business model of "watering it down" is going to get torched, while high-touch heavily interactive services (where you actually care about the client's success and go the extra mile) remain viable precisely because continue to offer more value than they cost.

The data side is particularly interesting to me because there still isn't a hyper-accurate baseline Local data set. Let's say there are 18MM US businesses and somewhere between 2MM and 3MM claimed Place Pages. Aaron, I'd be curious what you think the "good enough" number of claimed Place Pages is before Google eschews the paid business data aggregators as they did with TeleAtlas geo-data? Does it matter how quickly they shut down the market share of the IYPs or does that line of thinking proceed independently? Or will they always need to rely on a verified dataset like Localeze or infoUSA because they don't want to go to the efforts to verify 18MM listings themselves (which they're now testing via cold calls from India)?

I think Google would want to subsidize other companies in this space a bit longer than they needed to, for a couple major reasons:

  • tame anti-trust concerns
  • few people who are beneficiaries of the king want to speak out against his policies
  • to ensure their data outside of that from these companies is of equal or better perceived quality to end users

However, Google could subsidize them in a variety of ways (traffic, AdWords quality score, data licensing fees, partnerships with payment on spend, etc etc etc) and simply keep pulling back on the value of various subsidize over time, slowly killing off the companies & putting the companies in a position to where it looked like they just had "sour grapes" if & when they finally publicly complain about Google.

And some of those areas are quite more insidious than they look at first blush. Being non-transparent makes that easy to do. Consider how Google used their AdWords quality score to wipe out Geosign & set an example nearly a half-decade ago, and yet allows many companies like Ask.com & info.com - run rampant with arbitrage today. And some of today's big arbitrage players were also big arbitrage players back in 2006.

Why allow arbitrage to scale up in 2009 & 2010 if they were deemed to have a poor user experience a half-decade ago? Is there user experience any better than all the affiliates who were axed in December last year?

October 31, 2010 - 3:13pm

This brings me to a self reflection on scale of thought. On a strategic level Google is in some ways invisible to most. You need to scale your thoughts far outside the normal focus of any business or individual to begin to see where Google is coming from. Aaron provides us a critical service in helping us see this.

Down here on the totem pole from my admittedly niche point of view it is easy to lose sight of the big picture and follow the bouncing dot instead of asking who wrote the song and why we're singing it in the first place.

It reminds me of a classic shell game where Google keeps us focused on the prize of rankings and short term monetization while it maneuvers around us on a global scale to further its objectives.

No big surprise really, but as Aaron points out, Google appears to be using things like combatting spam and other causes for greater the greater good as a smoke screen to the underlying motives.

For me a welcome wake up call in looking at my efforts strategically over the long haul and where i might hope to create value and return on those investments.

Also maybe a glimmer of hope in things to come as the competitive landscape continues to unveil.

Thanks Aaron

October 31, 2010 - 10:25pm

This will definitely increase the value of local design and search clients, but have you tried to find our own professions in the local results?

Sure, pizza shows you local pizza joints, and plumber shows you local plumbers... but have you searched for website design, SEO, internet marketing, ANY of the things OUR local clients may be searching for?

No local data sets in that regard... even dropping the city, state into the query shows no local map or any of the other goodies the local service companies see.

November 1, 2010 - 1:56pm

Mark,

Google outlines in their announcement of the new Place Pages that you can force a local or Place Page search by clicking "Places" in the left hand column with any geo-modified search. Maybe not the most effective or well trafficked approach, i don't know, but it would be interesting to see. Also there's a certain "cuz it's there" feeling inherent in addressing this in local marketing to me. Referrals and word of mouth are certainly my strongest business generators but as a local marketer I think it is a duty to rank here on my terms. Probably a good credibility builder too.

November 1, 2010 - 1:04am

Paradoxically, I don't think search results drive a lot of buyers on those fronts. Typically word of mouth marketing works much better for selling those types of services IMHO.

November 1, 2010 - 4:04am

Mark,

Google has gone on the record stating that they don't consider queries for SEOs, ad agencies, etc. to be local queries. Also, as with many relatively new industries, the Yellow Pages publishers definitely don't have that data. But I agree with Aaron - these queries aren't worth as much as you'd think.

David,

My best guess is that Yelp gets somewhere between 500K-1MM visits from GOOG every day. I don't care how many direct visitors you get, even if I am off by 50% (and I don't think I am), you still don't want to lose that amount of traffic.

November 1, 2010 - 7:31am

I'm swimming against the tide here, obviously ... but has anyone seen anything on about what you have to do to get your local directory's reviews listed in the "reviews from around the web" section of a Places page?

Is it just a matter of making it blindingly obvious you have reviews (Eg microformats)? I've seen some mentions that Google has decided is a review that are just citations on large news sites, so there seems to be more to it than that. Is there some sort of domain authority at work when deciding who gets counted?

Whatever they are doing, the numbers don't match well (ie quick a "Website X reviews" link under a Places page and there are usually Y reviews, where Y isn't X.

November 1, 2010 - 2:13pm

Interesting to view today's news, focus, concern, excitement in context, as much of what is now "taking hold" was beginning to "take off / take shape" in 2005.

See, for example, various discussions at WebmasterWorld circa March 2005 - 2006, summarized at one of my new favoriate places to comment (:P):

http://internet-marketing.com/local-search/local-search-iyps-and-google-...

Jeff

November 1, 2010 - 11:19pm

Thanks for the mention Jeff :D

And yup...many of the big themes are around for years & years, and discussed in advance by the people who see where the game is going. That is one of the reasons I tried to make the above post parallel local to other markets too, so it was helping to show where search could go.

November 3, 2010 - 6:10pm

As people have mentioned, Google seems to be narrowing the long tail on the local side by combining (or ignoring) some of the longer tail keywords. For instance if you search using the new implementation for the term "Chicago Dental Implants Cost" or this link:

http://www.google.com/search?hl=en&esrch=LocalMergeImpl%3A%3AExperiment&...

The first website listed under the paid results (haroldkrinskydds.com) according to a Google site search has one page with the phrase "what do implants cost?" The site is listed as a PR 1 site, with no public Google backlinks, 45 total indexed Google pages and only about 25 Yahoo backlinks, plus virtually no traffic in SEM Rush or Quantcast.

The first website listed under the local mapped "organic" results (clearchoice.com) essentially the old style, according to a Google site search has 89 pages with the terms "implant cost" in the body text. The site is listed as a PR 4 site, with 56 public Google backlinks, 481 total indexed Google pages and almost 1,000 domain-level Yahoo backlinks, plus average traffic in Quantcast of almost 45,000 visitors per month.

Google may still be testing this and will clean up the algorithm, but if this is as "good as it gets" then it does seem Google has a new criteria beyond the traditionals for ranking the best sites. I understand those who say that reviews or other criteria might make a better ranking for the user, but from an SEO perspective if they are again chopping at the long tail (the bulk of the searches in total), then how much influence can we as a "profession" continue to have?

I'm also curious if the users will really notice that their search results are less specific since few click beyond the first few listings. It's hard to tell from site-specific analytics but is there a way to keep track of how many abandoned searches there are? If this increases, perhaps Google will notice. Then the question is will they care?

November 3, 2010 - 9:45pm

Google has to send the traffic somewhere. They can change the mix of where they send it to & perhaps send more of the clicks through paid ads, but as long as there is a search result there will be opportunity.

I am sure Google has metrics in place to track users leaving their search service unsatisfied, but like anything else it is likely measured against revenues / P&L.

November 3, 2010 - 8:32pm

"The only way they are going to get that critical mass is by putting that stuff right in the search results. It starts with local (& scrape + mash in other areas like ecommerce),"

"but you know what they want & they are nothing if not determined to get what they want! ;)"

Yes Google Has Control.

True Google is all about being determined to get what they want. Having 97% of the search market in an industry that is reaching the entire World population coupled with putting their hands on the technology of wireless communication, puts them in a position to have what they want.

I don't think it's a matter of will they take over control of advertising and communication and information presentation but when will they finally do it.

It's even possible that it won't be them that does it. They'll just go down in history as one of the forerunners.

With Internet interconnected with Wireless devise communication the entire human race is heading towards a One avenue of communication and information leader.

But the good thing about it is this: Along with the change there will always be the opportunities that come with it. Are you watching for them? :-)
JohnRobbins

January 25, 2011 - 8:43am

Google is about taking control. Like all big business they are looking at the money and chance to consume
they already saw the yellowpages numbers and thought with a few tweaks they could dominate the local small business advertising....hence:/local, /lbc, and now /places....with wait for it...boost (adwords for google local maps) and tags (one price advertising). Our main office (trustseo.com ) is in Miami which is a heavy tourist area and all day long we are getting people wanting "local google optimized" websites built. So as one business is pushed out a new one emerges...so the best advice is to notice changes and adapt to them quickly. :)

June 29, 2011 - 1:16pm

This is very obvious move by Google. They started as a Web Company, now they are moving in direction of becoming a Local + Web Company.

The major reason for this shift is the increasing number of Mobile Users.

It's adding new dimensions in the local marketing niche.

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