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Wednesday, September 10, 2003

Overture Gets Local

Overture Research, the recently announced experimental technology division of Overture, is toying with local advertising, according to News.com. The premise is to display pay-per-click ads for local businesses when performing a general search for "shoes," as an example.

Instead of being forced to wade through ads that may not represent companies local to your area, you would see ads for companies just down the street, which would be very helpful when doing research for products and then seeking local merchants that carry such products. This is a segment of PPC advertising that has yet to be tapped, and would be another good way for businesses to find and attract local consumers.

Overture's local search demo, while promising, leaves much to be desired. For example, in addition to entering their desired keywords, testers must also specify a zip code or city and state. Obviously, the benefit of the local angle is only realized if the search is transparent and elegant, not one that requires too much input from the user. This demo is more akin to a yellow pages search. My guess is that once this is rolled out, the algorithm behind it will detect your IP address or some other way for you to tell the search engine where you are, and it will do the rest. But, that's not happening yet.

Of course, Overture must struggle with how to determine when a user is searching for a local business and when a non-local source is sought, and that's an important detail.

This was a hot topic at SES in San Jose last month, and I wouldn't quarrel with estimates that this will be a $1 billion segment within five years. Advertisers should reap the benefits of lower competition for these local ads, and therefore, a lower cost-per-click. Should be fun to watch!

Posted by Cory Kleinschmidt




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