Kevin Ryan of iMedia Connection beautifully sums up the reason why local search is becoming so important. “The essence of local search lies in the nature of users seeking information about services in which they already have a need.”

Unfortunately, about 70 percent of small and medium sized businesses don’t have websites (Rob Wright, ReachLocal.com). This creates a huge gap between increasing customer demand for local goods and services and an inability for local companies to supply that demand because they don’t have websites. But it also leaves room for phenomenal growth in the local search sector and untapped profit.

Searchers are determining future advertising paths by demanding targeted local information. They no longer want just a “bakery,” they want an “Atlanta bakery.” These geotargeted keywords are enabling local businesses with websites to compete with larger companies, in some cases, giving them the edge.

Marketers are realizing the profitability of local search and some are encouraging their smaller customers to target these new keywords.

I did some research to find how profitable local search is and other reasons investing in it may be a great idea. I found some very convincing statistics and lots of other great information (with links) to increase your awareness of the local search market and the new marketing avenues it presents.

• In a recent survey completed by eMarketer, in 2006, businesses spent $1.3 billion on local search ads. Future predictions have been made by five different companies, all emphasizing the enormous growth potential local search has.

• Between 25 and 60 percent of all searches are targeted locally.

• Search engines, like Yahoo and Google, have noticed the need and demand for local search results and are heading up whole divisions dedicated to helping searchers find products and services in their own backyards.

• Michael Gray, an SEO expert, compiled a list of about 20 interviews with SEO guru’s around the nation about local search. Each interview offers a different angle about the benefits and how people use local search.

• More people are searching for their local news online. Local papers are catching on and some have websites, creating a new advertising market. Newspapers used to get a bulk of their revenue from classified ads, but now, online websites, like Craigslist that offer free classified listings, have taken the wind out of newspaper sales.

• Kibibi Springs of iMedia Connection has a great article about geotargeting, how to get started, who should do it and why. Read through it and find out if advertising related to local searches is right for your company.

Local search is certainly in its infancy for major search engines like Yahoo! and Google (who jumped on board in January 2007). But the market for new, extremely targeted advertising cannot be ignored. This is the break smaller businesses have been waiting for to get their share of online profits and give the big boys a little competition.