Google, Twitter Woo Small Businesses

The web is mirroring the real world more closely every day, and tonight both Twitter and Google (s GOOG) are trying to help accelerate that shift. They are introducing features that allow small businesses to connect with their customers.

Twitter enlisted Citysearch (s IACI) as the first user of its Sign-Up API, which helps new users create Twitter accounts from other people’s web sites. Citysearch gets a sprinkle of social media goodness from the arrangement, fostering real-time interaction between consumers and companies, while Twitter — which has a notoriously inscrutable new user experience — gets someone else to handle customer acquisition of smaller brands as it prepares to offer corporate accounts. Citysearch says it has direct relationships with some 200,000 local merchants, and it wants to build a multi-service social media directory for small businesses.

Meanwhile, Google is trying to forge closer relationships with small businesses by launching a “Favorite Places on Google” program. Instead of employing user-generated reviews like most companies might, Google is counting how many times people search for a business, look up directions to it, or click through to its web site. Some 150,000 chosen businesses (which must already have joined Google’s Local Business Center) have been mailed a “We’re a favorite place on Google” decal with a unique bar code to put in their store windows. Potential customers walking by the store can scan the bar code with their phones (for instance, using Android’s bar code scanner or the QuickMark app for the iPhone (s AAPL) — which usually costs 99 cents but will be free to the first 40,000 phones that download it starting Monday) and bring up the business’ Google page.

Google and Twitter are just trying to build small business relationships, but neither program will really work (i.e., monetize) unless merchants actively participate. For instance, Google just launched mobile local coupons, so a retail store could use the sticker to bring in bar code-scanning, window-shopping deal seekers.

With Google and Twitter zeroing in on this space simultaneously, who wants to take bets on how many hours till Facebook Local launches?