How local is the local search market in India?

by Satrajit Sen

Gone are the days when small businesses had to look for road-side banners, newspaper and TV advertisement slots to promote their offerings. Internet has provided them a new and cost-effective way to reach their target audience. But are the people really listening and are there enough business owners who are aware of this medium? AlooTechie dug deep into the matter and spoke to some of the industry players to find out how the local search market is presently shaped in India.

Shriram Adukoorie, co-founder of AskLaila.com, felt that the local business search market is still very nascent in nature both from the consumer and merchant’s point of view. “The Indian consumer is still very comfortable to gather local information from relatives and friends. Be it about new school for kids, restaurants, cinemas and other services, not many Indians are coming on to the internet for consuming related information. And the merchants are also finding it hard to reach more consumers in a cost-effective way as they are not very much aware of the facilities of the internet medium,” said Adukoorie.

According to Alok Goel, product manager at Google India, there are not many local businesses that are willing to get listed on such platforms. “Consumers are not very much a problem in India, but local businesses in India are not sophisticated enough to adopt internet as default channel of acquiring consumers. They appear more comfortable to spend more money by advertising on an offline medium rather than using the internet platform,” Goel said.

Satya Prabhakar, CEO of Sulekha.com, observed that presently in India, there are around 7.5 million small and local businesses that are willing to target 1.1 billion consumers by advertising their services. Out of these businesses, 5000 are deep pocketed corporates who can go for broadcast and offline media. This means that there are a lot of local and small businesses who are potential advertisers on the internet. “We call internet and mobile directional media as people come on these platforms looking for information. Local businesses can benefit from this media as the cost of customer acquisition is low and the response is value-based,” added Prabhakar.

Amarjit Batra, country manager, OLX India, held that there is a lack of awareness and exposure to the new local business search options among the mass population and it would require an extensive marketing effort to reach across the large audience in India. Agreeing on the same, Shriram Adukoorie of AskLaila said that awareness is a big problem and it can’t be solved overnight. “The issue needs to be addressed by taking on a targeted contextual marketing effort and thus reach the desired consumers in the country,” Adukoorie observed.

Ajay Sethi, CEO of Ziva Software, the company that owns Zook.in, which provides local search on mobile, said that local search market in India is currently facing the challenges of data collection and revenue generation. “Both of these activities require people on the ground and, therefore, are expensive options. These practises also make things difficult for local search business to scale quickly,” opined Sethi.

Amarjit Batra of OLX further held that the value of a local business search also depends on how quickly one is able to search the relevant options and the multiple ways to connect with the business provider. According to Shriram Adukoorie of AskLaila, providing a friction free experience to consumers is an important point for local search businesses. “We list everything that is available in the market and we validate all the entries. If we miss on any category, the consumer will not think twice before leaving our platform and consuming information from other providers,” said Adukoorie.

Sulekha.com has integrated yellow pages, classifieds and events into the mould of local search, according to Satya Prabhakar, and this helps in creating a social community where users can actually transact and buy. “This ensures a proven reach for businesses that get listed. Moreover, this helps us in monetising yellow pages. Nobody has done that successfully in India,” opined Prabhakar.

“The searcher is now looking for options to search by locality, and pin code. He has many options to choose from such as directories, classifieds and business listings and is now able to access content through print, online, mobile (browsing, voice and SMS). The real value of this business would emerge through a higher depth in larger cities and increase in reach to smaller cities,” said Amarjit Batra of OLX.

According to Alok Goel of Google, local information should reach the consumers wherever they are. “Local search businesses should not make the consumer make an extra effort to consume the information. Hence, adopting a 360 degree approach including online, voice, SMS and print might work well for a listing business. This will enable local business information to reach the seeker whenever and wherever he or she seeks it,” said Goel.

Speaking on the issue of adopting a 360 degree approach, Amarjit Batra of OLX said that the strategy will have a much higher reach in terms of the business adoption as well as in the distribution of the information to a wider audience. However, according to Batra it is unlikely that any one company has the strength to execute such approach and a partnership approach between experts in each area would make more sense. Satya Prabhakar of Sulekha.com informed that the company is soon going to launch its services on voice and offline. “We believe that this move (adopting a 360 degree approach) has tremendous opportunity for the local search businesses and hence we are also following suit,” he added.

However, according to Shriram Adukoorie of AskLaila, the 360 degree approach might not work well for some businesses which want to reach some targeted audience. Citing an example, he said that a new restaurant that has opened in a particular locality would want to target the prospective consumers in the vicinity. Thus for reaching targeted audience, internet becomes the best advertising option for the restaurant owner. Adukoorie further said that voice and SMS can be differently helpful at times but not when one is looking for contextual targeting.

Agreeing with Adukoorie, Ajay Sethi of Zook opined that adopting a 360 degree approach might not help businesses to keep the costs low. Taking his own example, Sethi said, “Zook does not have presence in the print media or in the human-assisted (voice-based) directory service business. This helps Zook to get a self-selected target audience -- audience that is more likely to do mobile-based transactions.”

Amarjit Batra of OLX further observed that collecting data from a vast market like India could be time consuming and challenging with difficulties in updating content. New businesses are opening up every day and old businesses are re-organizing, diversifying or closing shop. In this scenario, publishers who allow user generated content to be uploaded on the site are becoming increasingly popular.

According to Satya Prabhakar of Sulekha.com, 90 per cent of the content on the website is user-generated. “Generating traffic through SEO campaigns is very easy, but having an organic reach is very important for a business listing website. At Sulekha, a used car description gets listed within every two minutes. Moreover allowing more free listings to consumers makes the user come back to the site whenever he or she comes across an interesting service,” said Prabhakar.

Agreeing on the same, Alok Goel of Google observed that allowing consumers to add their favourite business and services on local search platforms is a viable idea. “We allow consumers to add local information on Google Local Business Centre and then validate the information. This helps us in being updated always,” said Goel. Shriram Adukoorie of AskLaila observed that providing current information to the consumer is imperative and local search platforms should develop such infrastructure where the information is always updated.

According to Ajay Sethi of Zook, local search companies should try and develop some dynamic result ranking technique, which will have the ability to extract relevant local information from the web. “Developing such technique offers a huge competitive advantage over the traditional local search companies. We have developed a technology where Zook utilizes the popularity and usage trends to identify the most appropriate ordering of the listings,” he added.

Speaking on the opportunities of mobile being a key driver in the growth of the local search market in India, Alok Goel of Google said that 2009 will be the year of mobile internet in India, and local business search will be a key driver in the growth of mobile internet.

According to Amarjit Batra of OLX, in countries like India where there is a limited PC and internet penetration, mobile is likely to become a key driver for accessing local content as a handheld device scores on convenience, especially when one is on the go. “There are various reasons to it -- significant mobile user population of 400 million compared to 50 million internet users; the emergence of smart phones which equip users with a superior browsing capability and an ability to do everything on mobile that one could do with a PC and a location based service is more apt and has more relevance for a mobile user.

Shriram Adukoorie of AskLaila also believed that mobile is going to be the key driver in the growth of the local search market in India and SMS will be the more relevant service for local search on mobile. According to Adukoorie, the local search market in India will be a billion dollar market by 2016, and mobile will play an important role in this growth episode. Satya Prabhakar of Sulekha.com thought that the local search market in India will be worth 1.5 to 2 billion dollars by 2012, and the emergence of mobile, netbooks and 3G will be the key drivers to this growth of the market.