In August 2009, I was sitting in a large room in Silicon Valley with the local business product managers from Google, Bing and Yahoo no more than 30 feet from my chair.  When it was time for questions, I was the first to stand up and asked the question..

How do you plan on solving the service area problems?

Well, I’ve wanted to create this post for some time, however I’m not sure if it will really add any value to you, unless you’re a search engine!

They didn’t have their answers, or didn’t want to share them at this time.  In fact, when asked if they would listen to us marketers who represent 10’s of thousands of local business, would they listen?  As much as I love Google, I was appauled by the response, I felt like this Google employee had a chip on his shoulder and basically said “We’re Google, we don’t need you“.

On the other hand, a couple of days later my office phone rang with the caller id showing “Microsoft Corp”.  It was Kevin Hagwell, Bing’s Product Manager…how cool is that?!  I mean, scary too, I don’t remember giving him my card!

The problem the search engines are facing right now is the service area challenge in their local business listings.

Let’s take a look at this search.  Notice the keyword [courier service].  Google has kindly let me know of the local companies in my area and given me a map without telling them where I am located.  This is done via my IP address.

This is fine and dandy, but let’s consider this.  Google wants to show only companies that have a physical address, a business that you can walk into.

You don’t walk into a courier service.  Since I’m in Chicago, I know there are 350 companies to chose from in Chicagoland.

A courier company services the entire area.  They may have a physical location downtown but have some drivers who live within a mile of my business.

Therefore, under this model, the search engines won’t ever show this wonderful company located downtown chicago, because right now I’m located exactly 47 miles from the center of Chicago.

The point is, Google has decided to show about a 7 mile radius of courier companies around my area.  In fact, they show me FedEx Kinko’s, which is not a courier service!  Who is Google to decide that the right company for me should be decided on the proximity of their physical location?  This makes no sense in the same day delivery business.

What about a pizza delivery company?  What should their service area size be?  3 miles?  10 miles?  What about a delivery company, should their service area cover 25 miles?  What if they are a national delivery company?

See the number two organic listing?  That’s a business with 250 agents on a national basis, representing likely 5000 drivers around the country.  They do not have a location in Chicago, therefore won’t show up on the map.  However, this company provides  Same Day Delivery and provides a great service.  They are likely a good choice for my neighboring businesses, but will never be found in the LBR listings.

This problem stems accross many industries who typically provide a service and has a service area.  The problem is both for those business who have customers come to them and those businesses where the business goes to the customer.  For the most part, the latter is the biggest challenge the SE’s are facing.

The Solution Seems Simple Enough

OK, the problem is rather simple when you break it down.  The search engines need to define a service area for each business.  The problem is how to define the service area with trust and authority.

Well, I’m sharing this solution because I believe, from what I know in organic, my marketing background and many years in business, that the LBR challenge is solved with customers.  I believe that in time, the strategies I teach will naturally fall into this place.

Ok, so the solution is customers.  Well, take for example a mobile mechanic.  They will acquire customers throughout their typical service area.  Over time, a customer pattern will be established with a history.  With this pattern, a search engine now has a geographical service area for a specific business, which could be tied to the LBR Listings.

Now the problem is, how does a search engine capture accurate, non-bias, non-manipulated data on service areas and customer patterns?  Well, this list could be pretty long, there are many ways to do this.  The fact is, we’re living in a user generated content world with many profiles, many social sites and now moving towards mobile.  It is becoming more important to have location information tied to associations.  I believe Twitter won’t survive unless they impose location aspects, either they will lose marketshare to newer concepts or will have to adopt it themselves.

Try this theory.  You have a nice local directory like Yelp.  Yelp provides business information and a place for customers to leave reviews.  These IP’s are stored.  The search engines provide some trust to certain directories, in many cases more trust than their own data.  Right now IP information is not passed with reviews.  The data is there, but no service areas are being established.

Now consider a dozen different review sites with a variety of customer data including IP review locations, along with a customer provided service area map, perhaps some links to other customers’ sites and you have a pretty solid service area in the form of data accessible to the search engines with a high level of trust and a system that is next to impossible to game or manipulate (those black hat SEO’s).

This post is merely scratching the surface.  I mean, companies like FourSquare and other location based solutions are going to emerge in 2010.  They are going to play havoc and provide value to companies like Yelp.  Then the questions becomes, what do we do when we’re all on the move with mobile?