Study: Facebook Sees Growth as Local Search Source

To industry watchers, Facebook’s local opportunity feels perennially nascent. The company has pulled back on some efforts, and taken its time developing others, leaving many wondering when the social giant will make its big move. But a new study by Yext finds that consumers have already started to come to Facebook to find local information, corroborating recent studies that have seen a dramatic increase in adoption even as its two emergent local products, Graph Search and Nearby, remain in their early stages.

The study, which surveyed over 1,000 consumers, found that a little over 12% of respondents used Facebook to find local information, nearly twice the number for specialized-sites and a few points shy of local directories. Facebook’s share of the pie is still marginal compared to Google’s, but the strong showing indicates a deepening foothold in a $20 billion local search market for the company, says Greg Sterling, senior analyst at Opus Research and a co-author of the report.

“It indicates that there is an appetite and a significant potential for Facebook to be a meaningful player in the local search space, and the local space broadly, if they can get their ducks in order, invest and continue to innovate,” said Sterling about the findings. “Facebook has a ton of users and that weighs in its favor, but the fact that it’s as widely used to find local business information was very surprising given that people didn’t know about Graph Search, and Nearby wasn’t well promoted and widely known.”

With the adoption of Graph Search and Nearby still low, it’s unclear how consumers are using Facebook to find information about local businesses. Sterling believes consumers likely use the service’s business pages, powered by the 16 million small business on the platform, as an alternative to the “sort of name-in-mind or specific business searches where they’re just trying to find information as opposed to an open-ended category search like ‘Indian food.’”

That behavior will likely transition to a more discovery-focused activities as the company builds around its mass of social data, but Facebook’s entry points to an ongoing shift in local search toward more dynamic, and integrated systems. As consumers want more from local search – beyond the transactional ‘find’ behavior toward more complex discovery and commerce activities – users are set to flock to a handful of large brands that can invest heavily in these services and away from the deluge of listings sites.

“There is this quasi-winner-take-all scenario that exists on the consumer-side, where there are a handful of high awareness, brand sites that are investing heavily, and where there’s a big gravitational pull for consumers,” said Sterling. “There are lot of long-tail sites out there that have some version of the [same] database and have not done a lot to add to it. It might not be a question of the quality of the base data, but rather that there’s much more to be had as a consumer on a site like Facebook or a Yelp.”

Local however, tends to resist consolidation. The natural fragmentation implicit in local markets means there’s always room for a new entrant to build an effective feature and find an underserved market to grow its business. But that proposition will likely be harder tomorrow than it is today.

Steven Jacobs is Street Fight’s deputy editor.