SANTA CLARA, Calif.–Type “Miami homes” in Yahoo!’s search box and a mix of national aggregators, regional real estate companies and individual broker and agent Web sites appears in the sponsored results. The reality that smaller, individual brokerages are competing with companies with larger advertising budgets for the same keywords has some observers wondering what happens to local advertisers as more large companies enter paid search.

Search engine experts speaking at a conference here this week, “Drilling Down on Local Search,” discussed keyword competition between national brands and mom-and-pop businesses. Keeping large marketers from out-muscling local businesses in paid search results will be challenging, but not impossible, they concluded.

Local advertisers have proven their ability to compete with national companies offline, said Steve Haar, VP of planning and interactive with SMG Directory Marketing, which helps companies market themselves through print and online directories.

“They’ll realize they also can compete in the online world,” he said.

Panelists agreed Web searchers benefit from small and large companies appearing on paid search results. Allowing large companies to take over the space would be a mistake, Haar said.

“The Internet is quick to punish bad decisions,” he said.

About 400 people attended the two-day conference, sponsored by The Kelsey Group, which provides research and analysis of Yellow Pages, electronic directories and local media. The company expected to draw only about half the number of attendees that showed up, according to a conference spokesperson. The turnout shows local search has become a hot topic.

Most local real estate companies compete by using city names or ZIP codes in their keyword combinations for paid search ads. But national aggregators like ServiceMagic, HomeGain and AgentConnect also use geographically targeted terms.

Geoff Stevens, Overture’s general manager of local search, said national brands advertise with local keywords to drive consumer into their local stores. But he doesn’t believe keyword competition is a problem for small advertisers.

“We have a number of cases where small companies have been very creative and optimistic in how they compete with national advertisers,” he said.

Overture develops paid search advertising products to suit both small and large advertisers. Stevens said local search has “really paid off” for the company.

Some Internet Yellow Pages products enable advertisers to enhance their listings with colors to stand out from the rest, according to Eric Chandler, executive director of e-commerce marketing for Verizon SuperPages. now offers pay-per-click and flat-fee advertising on its Yellow Pages directory site.

Google’s Local Search, which debuted in March, shows results similar to Yellow Pages directories. It lists businesses by distance and relevancy to a local search query. Panelists noted a distinction between consumers using local search versus those who are going to online directories. Consumers who use a search engine are looking for a Web site while those who log on to a directory are looking for a service and are ready to purchase.

Panelists said appearing in the highest spots of paid search results doesn’t pay off unless advertisers can offer consumers content-rich Web sites when they click on the links. For real estate, that means including photos, virtual tours and listing details for home shoppers.

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