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AOL enters local search market
By Juan Carlos Perez

America Online Inc. (AOL) has launched a local search service designed to let users of its search engine find information tied to a specific place, such as business listings, movie times and events.

With this move, AOL joins search engine rivals Google Inc., Yahoo Inc. and Ask Jeeves Inc., which have similar services. The free service is available to both subscribers of the fee-based AOL online service and to Web users at http://localsearch.aol.com.

AOL estimates that about 20 percent of the queries run on its main Web search engine are for local information, so given the interest in this type of search it makes sense for AOL to have this service, said Dariusz Paczuski, vice president of marketing for AOL Search and Directional Media.

Interest from AOL and its rivals in local search is also driven by the new advertising opportunities offered by drawing in local businesses that may not have been interested in having their ads run along with query results that weren't specific to the city or area in which they do business.

For the local search service, AOL is aggregating information from a variety of its existing properties and from several partners. For example, local search results will feature business listings gathered from the AOL Yellow Pages, local entertainment information, reviews and ratings from AOL City Guide, maps and driving directions from AOL subsidiary MapQuest and movie information from AOL's Moviefone.

On the partner side, AOL's local search will feature retail shopping information from CrossMedia Services Inc.'s ShopLocal.com, restaurant information and reservation services from OpenTable Inc., dining certificate offers from Restaurant.com and event-ticket purchasing through AOL Tickets, which in turn partners with several ticketing services.

Future features AOL plans to add to the local search service include local news provided through Topix.net, as well as an index of general Web sites containing pertinent and timely local information that AOL will build in partnership with Fast Search & Transfer Inc.

AOL has hit the bull's eye with its approach to local search by providing not only useful information but also ways for users to act on the information, such as buying event tickets, obtaining driving directions and making restaurant reservations, said Allen Weiner, a Gartner Inc. analyst. "That's one of the most powerful and valuable things I see in this local search service: actions with content," Weiner said.

This service and others Dulles, Virginia-based AOL has unveiled recently make it clear the company is on the comeback trail, but a core issue remains unresolved: AOL's dual strategy of having a proprietary fee-based online service and a public portal open to all Web surfers, Weiner said.

AOL can make AOL.com a world-class Web destination that is in the same league with the offerings from Yahoo, Microsoft Corp.'s MSN Internet division and Google, Weiner said. But AOL will not be able to achieve that goal as long as it has to devote resources and efforts to its proprietary online service as well, he said.

Subscriptions to AOL's fee-based online service have been dropping consistently, and in response the company has begun devoting more attention and resources to AOL.com, whose business model is attracting Web traffic and selling advertising.

However, despite the erosion in its subscriber ranks, AOL, a Time Warner Inc. subsidiary, still has a significant number of members. Its U.S. subscriber base stood at 22.2 million at the end of the fourth quarter, 2 million less than a year earlier and down 464,000 from the immediate prior quarter.

This means that the fee-based online service still provides significant ongoing revenue for AOL, Weiner said. "AOL is waking up to the power that it has always had and packaging (its content and services) in a way that has tremendous value. But this doesn't negate that they're still pursuing this dual strategy," Weiner said.

Posted February 25, 2005 05:23 PM |