If your a local business, like a Car Wash, Local Search is good as you can geo-target your ads within a couple of miles - but there are lots of problems yet to be ironed out such as:

1. Using an Internet provider that registers your location in it's datacenter - I live in Brooklyn yet my location is listed as Jamaica, Queens by SiteMeter when I view my own blog.  Worse yet, when I'm looking at my Blog while at work, SiteMeter thinks I live in Durham, North Carolina.  Naturally, ads targeted to Brooklyn, NY will not be seen by me in either case - even if I'm the target audience.
2. Geo-Targeting technology is not that exact anyway - and if you have multiple campaigns running in very close geographic areas (IE: Fort Lee, NJ, Westchester, NY, which are not actually that far from each other (though it make take a while to get there due to traffic congestion) you can see a "round robin" effect where the ads from these campaigns are interleaved since Google AdWords, in this case, is not that precise to know for sure, where someone actually is.
3. If a business, such as a Car Wash, wants to use Organic Search, forget it - it's almost impossible to control where your pages will come up - and one of my clients only markets in the Tri State area yet their organic pages come up in Brazil and Canada - because Natural Search is not Geo targeted in the way that paid search can be.

There's probably several more reasons why Local Search is still got problems - lots of them.  But one company, Skyhook Wireless, is using a technology that overcomes many of these Local Search issues (mentioned above) and is cooperating with major search engines as well, according to an article in BusinessWeek.com today.

"…….Skyhook Wireless, a small technology company in Boston, is working to target those kinds of prospective customers with a new software tool that—through partnerships with big search engines—will allow advertisers to restrict their ads to Web surfers who happen to be in the neighborhood. The company, which has mapped the 100 biggest U.S. cities, has pioneered a location technology that determines the latitude and longitude of any device with a Wi-Fi antenna, triangulating the location of individual PCs (and eventually other wireless devices), allowing ads to be served within a specific target area.

"….Karl Murphy, president and co-owner of Carolina Auto Spa, a car wash and automotive detailer with two locations outside Raleigh, N.C., says his business depends on impulse decisions—no one makes an appointment to wash a car. So the company's entire $4,000 to $5,000 monthly advertising budget is devoted to inspiring high-income prospects in the immediate vicinity to pull in and drop some coin. "Car washes live or die within a five-mile radius. If you put a [compass] and draw around my site, that's where I advertise," says Murphy. "My best friends 24 miles away won't wash at my car wash—and I'd let them do it for free."

A few months ago, Murphy started spending about $300 a month on Google (GOOG) and Yahoo! (YHOO) pay-per-click advertising. Murphy says the pay-per-click model works reasonably well for his business but it "would be much better if it had more specificity of location." That way, Murphy says he could target more of the impulse purchasers—real estate agents and other "wired" professionals—who may not live in his area but are there for business with time to kill between appointments. "

A couple of things - Local Search is really driven by "impulse buying"!  Wow!  It's locational (obviously) but often driven by "need" like finding a dentist, or a car wash, in this case, or a dry cleaners when your traveling - or anything you need just then.

It's not just local search that's tied to Impulse Buying - major purchases can also be done on "Impulse" …. even though there's some thought usually behind any impulse buy.  Booking a trip, a tour to Ireland, can be done on impulse…and buying a house plan can also be done … believe it or not, on impulse.

What Local Search offers is "immediate fulfillment" - because your searching for some thing you can go right over to - you can walk over to it - maybe drive a couple of miles to the location.   In the same way that you can impulse buy of Amazon and EBay - you can "impulse buy" things you "need" that you can go to locally ….. if you could only find them.

"…At the moment, the service is geared toward consumers, but Skyhook is working to get its technology adopted by handset makers and major search engines. If they do, it could be a boon for small businesses, because it would mean they could get bigger bang for their online advertising buck. Right now, only about 5% of small and medium-size businesses are using paid search, according to consulting firm The Kelsey Group.

To bring more of the multimillion-dollar small-business advertising market online, Skyhook is working on relationships with Yahoo and Google, and the improved local search made possible through its technology will start to be available to small business over the next 6 to 12 months, says Ted Morgan, the company's founder and chief executive. "

So….. we can probably predict that 2007 will also be a banner year for Local Search - as well as Web 2.0 in general and Web 2.0 Metrics, as I covered in my preceding post regarding ComScore working on Web 2.0 Metrics.  The Businessweek article also points out that….

"….Skyhook technology isn't a cure-all. Small businesses still often have a lot of trouble getting up and running online and maintaining an effective marketing campaign …..The challenge for them is how to get from where they are to the Internet—that's what Skyhook doesn't really solve for them," says Greg Sterling, principal of San Francisco tech consulting firm Sterling Market Intelligence."