Location-based mobile search is becoming an essential channel for merchants seeking to drive business from local search.

There is an evolution going on within the local mobile search sector. Industry experts spoke with Mobile Marketer regarding the complex set of factors at play in the growing industry and offered up some best practices.

"A shopper with a location-based mobile phone is most likely looking for something nearby, rather than wanting to purchase something online from that small screen," Scott Dunlap, CEO of NearbyNow, Mountain View, CA.

"One example we've found with iPhone users who are shopping is that they are 17 times more likely to use the ?find nearby' button than the ?buy online' button even when both buttons are right next to each other," Mr. Dunlap said. "This has been the case for thousands of products we have displayed to hundreds of thousands of shoppers."

NearbyNow builds search technology to help consumers find what they want near them at any time. The company's "find near me" button appears next to products in mobile applications and online sites.

Location-aware mobile devices are a big opportunity to local businesses.

"Location-aware devices are changing the order of ?instant gratification,'" Mr. Dunlap said. "It used to be that buying online was the fastest since you would get it in 24 hours. Now with a location-aware mobile device, you can purchase it near you and have it in your hands within the hour."

NearbyNow lets shoppers put an item on hold in their desired colors and size.

Mr. Dunlap said most of the NearbyNow shoppers are making purchases within three hours.

"At NearbyNow, we saw one of the biggest growth areas of local and mobile search was at the product and brand level," he said. "Where's the closest pair of Nike Air Jordans near me? And do they have it in my size? We're populating the Internet and mobile phones with inventory of over 70,000 stores to serve this need."

Mr. Dunlap said NearbyNow's iPhone shoppers average 6 to 8 percent conversion to purchase, with most of those purchases going to local stores. Most Web sites average less than 2 percent.

Location-based mobile services were very stagnant in the U.S. until the iPhone came along.

"The iPhone has a simplicity and ease-of-use far beyond any other location-aware mobile device, particularly with the ubiquitous use of determining location," Mr. Dunlap said.

"The dramatic increase of search use that came from the iPhone -- both apps and Web-based -- caused search engines to adapt their mobile search engines because of the overwhelming demand coming," he sad. "With more devices coming, it became even more important."

Paran Jahar, chief marketing officer at Jumptap, New York said 30 percent of all searches involve geography, but the location is where the user is going as opposed to where they are.

"Another use or consideration might be to use search word query data or search behavior in general to drive relevancy in search advertising," Mr. Johar said.

Geography and search terms will help advertisers better serve to the targeted demographic.

He cautioned that advertisers shouldn't serve ads based solely on location because it may not be meeting the targeted demographic.

Only looking at location to serve a relevant advertisement could mean serving a 12-year-old a automotive ad just because they're in Los Angeles.

"If you're only location targeting you don't know if people are in the target audience," Mr. Johar said. "Just because they are in the geographic area doesn't mean they are the target."

Age, income, lifestyle and location constitute relevancy.

According to Dan Miller, senior researcher at San Francisco-based Opus Research, merchants need to have their mobile Web presence developed in order to be relevant in mobile searches.

As use of mobile phone search evolves it is very important for local merchants or local outlets for major chains and brands to use a certain amount of Web presence and search engine optimization to get their messages out to the people nearby.

"They need to take advantage in response to search query but not general delivery of targeted ads," Mr. Miller said.

Mr. Dunlap said there is a big difference between mobile and PC searchers.

"There is big difference in two areas -- shopping and local services," he said. "A mobile phone search for ?plumber' or ?pizza' can just be assumed that it's a local search, and you've seen search engines adapt to this.

"Similarly, we've found in the shopping arena that categories like apparel, shoes and jewelry are defaulting to looking for a local store. Searches for big item purchases like televisions and refrigerators are still likely looking for research information."

Xavier Facon, chief technical officer at Crisp Wireless, New York said merchants still need a WAP/XHTML-optimized site to look good to mobile search engines.

Just a regular Web site or just an iPhone site is not sufficient. Google rewards content that is mobile-optimized.

"Your mobile site should not be blocked for any user-agent or online robot," Mr. Facon said. "The duplicate content issue that affects ranking on the non-mobile search engines does not affect mobile.

"There are ways to have your regular Web site point to the mobile site if a mobile search robot visits your regular site," he said.

But with more devices and more availability of open-handset operating systems and published APIs, how will location-based mobile applications be influenced?

"The general trend is that it will be more difficult for operators to control access to location information and, as a result, leverage their E911 investments in the form of location-sensitive applications," said Charles Golvin, principal analyst at Forrester Research, San Francisco.

"This is a combined effect of more handsets with true GPS -- especially among GSM operators like AT&T and T-Mobile -- open operating systems and concomitant APIs, and wider acceptance of location-sensitive apps by consumers," Mr. Golvin said.

Mr. Golvin said not every open OS handset means open access to APIs and services.

It would be possible for an operator to commission an Android-based device that implements restrictions on access to location so that only operator-blessed applications could access location informations.

But, it remains to be seen whether some manufacturers may opt to use Android in this fashion."

Mr. Dunlap said content is the area where the industry will be defined.

"All of the hardware and services are coming together to the point that you can buy a location-aware phone for $49; at the same time, Tom-Tom, Garmin and others are building portable navigation devices for under $100," he said.

With an increase in location-based features, capabilities for social networking increase.

Social networking on a phone often means squeezing Web-based social networks onto a smaller screen and a reduction in functionality. According to Rob Lawson, cofounder and chief marketing officer of Brightkite, Burlingame, CA, phones allow users to interact with social networks in three powerful ways that cannot be achieved online.

1. The user is mobile, and therefore typically somewhere more interesting than when they are online. They might be in a bar, on the bus, at the airport, buying an ice-cream or having their nails done. Location technologies make it simple for a user to tell their friends where they are (and what they are doing.
2. The phone has a camera, so users can post a real-time photo of your drinking cocktails, eating their ice-creams, or their shiny new nails.
3. Most online social network content is generated when people are alone -- sitting at home or at work, reaching out to their dispersed friends. On the other hand, mobile phones are with consumers when they are really socializing, having a good time, hanging with their friends. Hence the posts tend to be about shared, social events.

Mobile social network Brightkite invites users to keep track of friends and reveal their location to, meet and chat with people around them.

Mr. Dunlap said he thinks the opportunities for local merchants in the mobile search space are huge.

"A store's physical location is its greatest asset in a location-based world," Mr. Dunlap said. "Why buy from Amazon when you can have it in one hour down the street? As long as local merchants are sharing what brands and products they have (so searchers can find them), they will become the ?instant gratification' choice. In most cases, they can charge a premium for this since there is no hassle, no shipping, and you can have it now.

"We've seen the most success for local merchants by teaming up with magazines," he said. "For example, we have an iPhone app for Runner's World that allows you to read reviews and see images of over 100 shoes. If you want to try on a pair, you just tap "find near me" and it finds the closest specialty running store that has your size (these are typically small businesses).

"Runner's World is great at producing content that inspires people to purchase, but it's the local merchant who benefits. Note that there is no need for the local merchant to do anything. This is where I suspect you are going to see the biggest benefit for local merchants -- media and brands adopting the technology to drive local purchasing."