AOL goes public with local search

AOL, the online arm of Time Warner, has launched Local Search for the general Web population, as opposed to exclusively for AOL members, after eight months of testing.

The service lets people personalize search results to their locale and review past queries. It also attempts to showcase the company's far-flung local services: MapQuest for directions; Moviephone for film times; and AOL City Guides for editorial reviews of neighborhood businesses.

The move comes on the heels of an overhaul to AOL Web Search and is part of AOL's campaign to reel in a broader Internet audience as the company faces member defections. In recent years, AOL's share of the Web search market has declined as the popularity of its search partner Google has soared. By some accounts, AOL's a distant fourth on the search charts. Consequently, the Internet service provider has sought to best search rivals by using the content assets of its parent media company, providing "answers" to queries instead of links.

"There's been a direct relationship of the activity on AOL service and AOL search activity--as that's been softer, it's been softer on the search side as well," said Jim Riesenbach, senior vice president of search at AOL, who added that despite this, the company has grown search revenue 50 percent year over year.

"We've refocused our efforts," he said. "We think AOL is establishing (itself) on the Web in a position to be a market leader."

Still, the competition is stiff. Yahoo, MSN, Google and Amazon.com have made strides to improve local search features of late. Google unveiled an advanced mapping service, for example. And Amazon's A9.com debuted a digital photo library of businesses in 10 cities.

AOL also wants to become a bigger player in the advertising industry linked to search, an estimated $4 billion industry this year. The fortunes of many dot-coms, including rivals Yahoo and MSN, have been resuscitated by search marketing, and AOL has yet to capitalize on the market to the same extent.

As a result, the company has started selling some of its own sponsored listings to Fortune 500 advertisers, Riesenbach said. Though it continues to license sponsored search results from Google, it has also added sponsored listings from third parties, including Ingenio and Shoplocal.com.

Local search is a flourishing area of development among all the major search providers because of its ad revenue potential. The Kelsey Group, a research company, expects local search marketing to be worth $3.4 billion in four years.

AOL plans to improve its local and Web search service over the coming months. For example, it plans to introduce a travel search site in partnership with Kayak.com. It also plans to introduce improved local shopping tools in partnership with Bizrate.com. The local search site unveiled Thursday is powered by technology from Fast Search & Transfer. It also features local news aggregated by Topix.net.

Advertising also plays a big role in AOL's new local service. The company has partnered with Ingenio to display "pay-per-call" ads related to local search results. For example, a search for San Francisco tax lawyers might display an Ingenio-sponsored ad with a phone number for a local specialist. If the visitor calls the number, Ingenio collects a fee from the advertiser and shares that revenue with AOL.