Google (NSDQ: GOOG) has launched some small tests of its listings ads, hoping it can take away some business away from online directories while challenging Yahoo (NSDQ: YHOO) and AOL (NYSE: TWX) as local online advertising becomes less untapped. Although Google has always trained its AdSense products at smaller business, the Local Listing Ads represents what Broadpoint analyst Ben Schachter calls the first real monetization of the search giant’s Local Business Center.
Google is pitching the service to businesses as a better promote themselves in search results on Google Maps, which typically includes listings on the right side of the results page. Unlike the usual cost-per-click auction process that Google uses for AdWords, the new listings service will cost businesses a flat monthly fee. Google will base the fee on location and business category. The service’s tests are only in San Francisco and San Diego right now, and Google has not said when it expects to do a wider rollout.
Over the past few months, as major advertisers have continued to pull back on even online ad spending, everyone from the NYTimes.com, Huffington Post, NBC Universal (NYSE: GE) and ESPN (NYSE: DIS) have been intensely pursuing online ad dollars. While the increased competition could help build awareness for pizza places and locksmiths to turn from the standard Yellow Pages ad to the web, Google has its work cut out for it, despite having some pretty good relationships due to AdSense. SearchEngineLand advises Google do some advertising for itself and offer up another TV campaign to promote its latest product. That would certainly help spread the word, but it’s not clear that Google got much traction out of the ads it did this past spring for its Chrome browser.
Gordon Borrell, CEO of local ad researcher Borrell Associates, has some doubts about Google’s ability to quickly dominate the listings business. “Local advertising is sold, not bought,” Borrell told paidContent.”Which is only to say that local advertisers tend not to seek out advertising themselves. Opportunities are brought and pitched to them.
He sees two distinct problems facing Google. For one thing, it