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Local Advertisers Still Skittish About Search

June 8, 2009
by Jessica Vascellaro
Tech Reporter, The Wall Street Journal

Jessica Vascellaro

For years, online advertising companies have argued that advertising alongside Web search results is a great way for local businesses to reach prospective customers. Yet many local advertisers appear to be ditching search.

A new study on local search advertising from research firm Borrell Associates finds that roughly 50 percent of businesses that buy search ads directly from Google (GOOG) and other Internet search companies don’t come back the following year. And the churn rate for businesses like Yodel, ReachLocal and LookSmart that purchase search ads on behalf of local advertisers is around 60 percent, according to the study, scheduled to be released Monday. In comparison, the churn rates for cellphone or cable providers are often just a few percentage points per quarter.

Search ad giant Google declined to comment on the report, which was funded by Clickable, a startup that sells software to help companies manage their search advertising campaigns.

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