Strong growth expected for local search advertising

Companies globally will increase their spending on local search engines and online business listing directories an average of 22.3 percent per year through 2011, according to a study by The Kelsey Group Inc.

The finding reinforces the notion that the popularity of these sites, which provide a variety of information about a specific geographic area, is growing at a rapid pace among advertisers and users.

“There are a lot of goods and services that people can’t or won’t buy on the Internet and people need to find local businesses for them,” said Matt Booth, Kelsey Group’s senior vice president and program director of interactive local media.

Kelsey Group expects advertisers to spend US$11.1 billion in 2011 in these sites, compared with $4.1 billion last year, the company said Wednesday.

The growth will be fueled by factors like new advertisers, fatter online marketing budgets, better ad targeting technology leading to better conversions and an increase in the prices of these pay-per-click ads, Booth said.

Many of the new advertisers will be small businesses that currently advertise in the print editions of phone directories. The telecommunications companies that publish these directories will become more aggressive at offering these small business combined print and online deals, Booth said.

Local search engines, like Google Inc.’s Google Local and Yahoo Inc.’s Yahoo Local , let users enter queries pegged to an area, in order to find places, businesses, events, driving directions and maps. Business listings directories, like Yahoo’s Yellow Pages , are designed for a similar purpose but emphasize browsing their directories over entering search queries.

Ad growth in print “yellow pages” phone directories will be almost flat through 2011, increasing an annual average of 0.9 percent, with $27.8 billion expected to be spent in 2011, according to The Kelsey Group.