AdAge: 2008 Market for Local Search Engine Ads: $2.5 Billion

AdAge reports on the making of the Google-BellSouth deal that has armies of the telephone company's salespeople pounding the pavement for Google search ads as well as BellSouth phonebook inventory. The theory behind the cooperation holds that small businesses - theoretically the next market to open up billions of dollars in internet search advertising - aren't savvy enough to handle this advertising themselves. Absent from the AdAge piece linked above is the fact that past agreements between phone company sales groups and Internet firms have shown that directory salespeople may need more help than the small businesses they serve.

They haven't done very well selling the Internet. Some think this has more to do with relatively anemic sales commission schedules stifling the suppliers and unpredictable pricing and costs making buyers wary.

One innovation with the Google-BellSouth deal is a new pricing structure with fixed prices and BellSouth's agreement to have sales reps handle trafficking and even ad creation for the small business customers.

The opportunity is certainly large, as the 20 million small businesses in the U.S. spend almost half of their ad budgets on directory advertising, and only three percent on the internet. The Kelsey Group predicts search advertising growth from this segment from $1 billion per year to $2.5 billion by 2008.