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You need to have enough sites that there is a demand to get on page #1 and/or top listing.
Also you need to have traffic. Most small PPC engines are really directories and you'll probably have to go through a startup period wherein:
1. You allow free local listings.
2. You do your local promotion to get people searching your directory.
In a local SE be prepared to have to pound the pavement to get business and searchers.
If you sell a product that you can ship, then you want traffic from all over. In my case for example, I want traffic from anywhere in the USA, because my shipping charges remain reasonable within the 50 states.
But if I sold a service - let's say dental surgery for example - then I would NOT want to pay for clicks from people outside of my immediate region.
Consequently, a lot of those kind of businesses are very hesitant to use PPC - as they should be.
Let's take this one step further. As we all know, Overture feeds results to AltaVista. Imagine AV having a check box that said:
__ Do you want to search the entire web?
__ Do you want a local search?
I want to find a dental surgeon in West Virginia, so I click "local".
Next AV box says:
Indicate the region for the search:
My answer: West Virginia, USA.
Then in the AV search field I type: "dental surgeons".
This search would return very targeted results, giving me any dental surgeon who was using Overture for SE placement, and who configured in his Overture control panel (this option does not exist, but it should!) that his results were *only* to be returned for people who indicated West Virginia.
Carefully allowing the user to narrow their search, and combining that with PPC, is a winning formula: the individual gets the kind of results that they are looking for; the surgeon gets a better ROI; and Overture gets a lot more clients - every body comes out ahead.
This is exactly what I had in mind, I read or heard that 60% Internet users are looking for something local... I'm not sure how true this would be but if so this could be big....
My friend and I are going to try this on local restaurants in my area... He has a local classified paper that receives 150,000 readers/week... So hopefully, this will help us get traffic to the site...
But now, there is TOO much information, and it is not targeted, so it is time for the next stage of development.
Just as "all politics is local", so too for a LOT of people, "all business is local".
If a navigation / search configuration can be designed to be simple, elegant, and effective, then look out - we'll see an explosion of interest in using PPC's, and the web in general will be better for it.
In my opinion, such a service will require a lot of effort to pull off if you are building it from the ground up. The reason for that is "desk top real estate" - that is to say, people have 2 browser choices (and IE dominates), and then when they log on, they only realistically have a dozen or so search engine options for their searching.
So if MSN or Yahoo or Netscape or Earthlink, etc is their launch page, then the search services that feed those pages are going to be used by default. Thus, this idea we are discussing is only going to really work if *the big dogs* start running with it.
I think it is to their advantage to do that, but so far, there isn't much evidence that it is about to happen.
So given that they are not yet jumping on this bandwagon we are building, you would therefore have to feed these big services with your own content to get the exposure you need.
You can of course do that on one level if you use PPC's and bid on phrases that are real specific to your area. For example, "San Diego restaurants"; "restaurants in San Diego", etc. Then if you had a site called something like "SanDiegoRestaurants.com", and optimized every page for the best possible indexing, then you'd have a shot of generating steady traffic. It will take a steady focus, and a lot of work.
Good luck with the project - as the old saying goes, "a journey of a thousand miles starts with the first step"....
You might want to consider charging a flat annual rate. I run a directory (not a local one). I have free area that just gives very basic information, because you have to have some information on your site to get people to come to it. Then I charge a flat annual rate to be a sponsored site, that is where all the good information is at. My site does pretty good with this format.