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Friday, September 29, 2006

Local Search Surging; Google, Yahoo winning

A comScore report (via Battelle) shows that local search usage is enjoying strong organic growth, up 43% over the same period last year. Clearly this is due to the fact that it is a natural extension of what users are already interested in, i.e. they didn't need any convincing. The strength of their mapping products (in Google's case) or their verticals (in Yahoo's case) have contributed to user loyalty here. But in general, these companies' superiority in information aggregation and their ability to innovate and generate rapid feedback cycles on a dime are driving the growth.

As we explained here 18 months ago, "info aggregators like Google and Yahoo" are better placed than the yellow pages companies to take advantage of the surging user interest in local search. They have now done so, and should continue to lead the pack.

Google and Yahoo are neck and neck for the lead, each garnering about 30% of the market. Other than Microsoft, others find themselves far behind -- even those who purport to specialize in this area. Particularly disappointing is the "Ask Network" -- which presumably includes everything in IAC's stable including CitySearch -- at 2.7%.

My prediction going forward? As a portal guy from away back, I say the portals continue to pull away, and also-ran listings players will continue to be marginal. There is clearly going to be underlying strength in content-rich verticals -- especially user-generated reviews and the like -- which provide the meat on the bones of navigation, so that will continue to be an area for innovation and rapid growth (and potential merger and acquisition activity). Locally-oriented blogs (of high quality) also seem likely to see additional waves of growth.

Posted by Andrew Goodman




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