2x as many product searches start on Amazon vs. Google. That’s a big problem for Google, especially as Amazon has built a $30b advertising business and cut into Google’s monopoly twofold. Since shoppers can buy directly on Amazon, it’s difficult for Google to compete head-to-head, even though Google recently revamped search results pages to feature a lot more products and is growing at a rapid pace: +33% YoY in Q4 and +15% QoQ. Enter local search. [1, 2, 3, 4]
Local Search is a competitive advantage for Google
Amazon is strong in ecommerce but doesn’t play in local search, which Google is ramping up: since February 2022, Google shows a lot more Local Packs in the SERPs.
To understand how the Local Search landscape changes, I used Semrush’s SERP Feature integration to look at some of the largest sites on the web (based on the organic traffic they get) and how many local packs appear for their keywords.
Here is what I saw:
+45% increase (658K → 954K) in top 10 keywords that show local packs
+70% growth (766K -> 1.3M) from September 2021 to April 2022
+75% increase from January to February ‘22 on mobile (109K → 190K)
+3.7x increase (9K → 34K) in top 10 keywords that show local packs
+65% increase (26K to 43K) in top 10 keywords that show local packs
The Local Pack increases are significant! Google is pushing more local packs in Search. Even queries like “SEO” show local results for SEO agencies. While a subset of searchers who look for “SEO” might be interested in finding an agency, it is interesting that Google amps up the local search intent for shorthead keywords. “SEO agency” seems much more intentful, but Google seems to think otherwise.
Amping up the number of local packs in search is not the only way Google doubles down on local.
How Google pushes Local Search
Google recently rolled out a lot of product features to push its competitive advantage in Local Search:
- Inventory schema to show whether a product is available for retail purchase [x]
- Trusted store badges for stores with good customer service (x)
- Delivery time for products 
All of these new features build a landscape that makes it easier for users to find and buy from local stores. Users might not want to buy everything online, even though the total share of online sales is steadily growing.
The improved visibility also opens up competition between offline and online retail, which is very much in line with the new form of hybrid retail that’s crystalizing after the pandemic. A local retailer competes with Amazon and other marketplaces and it’s not yet clear what the factors are that make consumers prefer one over the other.
Google knows that reviews are an essential part of the local (shopping) experience and invests heavily in LocalGuides, which has 150 million users by now and is almost a social network. It’s a play to validate and verify information generated by machines. The Local Guides community does the same thing for Google Maps that quality raters do for Google’s search ranking algorithm: provide a human feedback signal. (6, 7)
The larger context: Maps = big revenue stream
Google Maps has over 200 million places and is the driver behind Local Search. What started as a simple product to navigate from A to B has become a place to discover and engage with new businesses through reviews and recommendations. It’s the engine for a lot of Google’s future growth. This is something Amazon does not have and therefore, a competitive advantage for Google. (8)
In its earnings report, Google still includes Maps under “services”, which doesn’t make a lot of sense. Maps results are search results just like images or videos that are mixed with regular organic search results. Businesses can pay to advertise on Maps and receive information about customer behavior. I assume that revenue from Maps and Local search is growing rapidly and currently disguised under “services” but will be broken out in the future.
Brian Nowak, Morgan Stanley analyst, called Google Maps a $1.6B opportunity in 2020. Based on Google’s reliable, average, annual revenue growth of 20%, Maps could be a $2.3B business in 2022 and touch $3b in 2023. I think Google Maps could cross the $4b no later than 2025, at which point Google could start breaking Maps revenue out, if not sooner. (9)