Gregory Blackham, a real estate agent with Prudential Americana Realty in Las Vegas, has locally-targeted his pay-per-click ads on Google and Overture for about two years. He thinks using a city name in keyword combinations is essential to target real estate consumers.

Blackham’s thinking mirrors new developments in local Web search methods that are reaching out to change the way small businesses advertise online. Search engine powerhouse Google, which last week launched a beta form of its local search function, plans to offer advertising opportunities to local companies like real estate outfits to display ads on its local search pages.

Take an Inman Pulse survey on local search.

Google Local offers geographically targeted search results and opens a new opportunity for real estate companies to put themselves in front of local consumers searching for real estate services on the Web. Local paid search soon will be another way for realty agents to skim leads off the Web.

Search results appearing on Google Local are ranked according to relevancy and the distance from the ZIP code or city specified in the search, said Sukhinder Singh, Google’s general manager of local search.

“We’re crawling the Web and pulling all the data we can find about a business and mining it for geography,” she said.

Google Local enables Web surfers to enter a ZIP code or city name along with a real estate term in a search query and find relevant local information with neighborhood business listings, maps, directions and useful Web pages. Home buyers and sellers now can search beyond traditional sources of local information, such as Yellow Pages and local business listings, to a greater diversity of local resources drawn from the Web at large.

“Real estate is already a strong category for us, but we look forward to making it an even stronger category in the local function,” Singh said.

Businesses don’t pay to be listed in local search results. However, Google plans to extend its AdWords program to the local search function, enabling real estate companies to appear as sponsored links in relevant local search results. Advertisers who appear as sponsored links pay only when a Web surfer clicks on their ad.

Singh said after Google incorporates AdWords into the local function, advertisers who use the program will automatically be displayed in relevant local search results.

The concept behind Google’s local search function is similar to a Yellow Pages directory of businesses that lists business names, addresses and telephone numbers. Beyond that, however, Google local results also feature a map with directions to the business and related business Web pages. Google also enables the user to search local businesses by keyword, Singh said.

More people are using the Internet to search for local information, said Greg Sterling, managing editor and program director of The Kelsey Group, which provides research and analysis of Yellow Pages, electronic directories and local media. Geographic modifiers have started showing up more in search queries compared with a year ago.

Pay-per-click keyword advertising in local Internet search is a ripe match for real estate agents who want to put themselves in front of consumers using the Web to search for real estate information, he said.

“Real estate is an industry where you are going to see local professionals adopting this marketing strategy sooner than other types of local businesses,” Sterling predicted.

Indeed, individual real estate agents were among the first in the real estate industry to use pay-per-click advertising with Google and Overture.

Sterling’s research shows that small businesses still have a fair amount of skepticism about the effectiveness of search engine advertising. He said many small business owners believe the results of this type of ad spending are unpredictable, even though pay-per-click programs like Google and Overture enable advertisers to set a fixed budget.

“There’s a paradox in this form of advertising because a lot of the early adopters were very small businesses. However, in terms of real numbers, there aren’t a lot of pay-per-click advertisers relative to the whole small business population,” Sterling said.

Send tips or feedback to Jessica@inman.com; (510) 658-9252, ext.133.

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