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Local Search Market Heating Up

Local search companies such as Judy's Book and TrueLocal are finding a niche in Google's shadow

In the latest sign that localized search is the next big thing on the Web, Judy's Book, an online community that provides local word-of-mouth on everything from restaurants to car washes, has raised $8 million in venture funding, led by Mobius Ventures.

The site, which launched earlier this year, is essentially a forum in which consumers within a market can swap tips on businesses they trust. The founders, Andy Sack and Chris DeVore, are banking on the fact that local businesses will invest some portion of their marketing dollars into tapping into that word of mouth, and understanding how it impacts their business. The idea is to connect consumers with businesses that provide the best service, rather than those that have the biggest advertising budget.

Local search is seen as a potential hot-growth sector of the search market that could spread some of the wealth beyond search leaders Google and Yahoo, both of which launched local search features last year. Research firms such as The Kelsey Group are predicting that local search volume will exceed 20 billion searches in the next year, representing about one-fifth of all Web searches. How that growth will impact the way businesses allocate the estimated $100 billion a year they spend on local advertising will be one of the central themes at Kelsey Group's upcoming Interactive Local Media 2005 Conference in Reston, Va.

Meanwhile, Judy's Book's latest cash infusion (it raised $2.5 million in seed funding last year) isn't the only development on the local search scene this week. Startup TrueLocal launched its local search site, which is built on a technology it calls "ground to web." The company's goal isn't to spur E-commerce, but rather to drive online consumers offline and into brick-and-mortar businesses. TrueLocal starts with a base of listings from nationwide yellow pages, matches those businesses to their Web sites, and then, when a search is conducted, only returns results for businesses that have an actual physical address in the desired geography. Local businesses can advertise, Google-style, by bidding to appear high up on listings based on category and zip code.

Despite the increasing attention Google and Yahoo are paying to local search, it's clear that challengers like Judy's Book and TrueLocal think there's plenty of room for improvement. TrueLocal, for one, says Google and Yahoo both return too much "search engine spam," a term used to describe search results for sites unrelated to the search in question. In the local search context, it refers to results that aren't actually local. Yahoo's purchase of U.K. location-based services firm Whereonearth last month to boost its local search indicates that it recognizes the need to get better at addressing what is a fast-growing market.

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