Who Will Win the Location-Based Ad Wars?

There is a battle going on for your location-based, disposable-income dollars, and the latest salvo has been launched by Google with their Google Boost product. Available as a beta product right now only in San Francisco, Houston and Chicago, Google Boost makes it very easy for local businesses to create search ads from within their Google Places account. In fact, to create an ad all you need is a short description, your URL or Places page, your business category and a monthly budget. From there, the Google system sets everything up for you—including determining the best keywords. 

These ads appear within the sponsored link section of Google.com after a user searches for a business type or service and a location. The ads also appear within the Map section of Google, clearly identified as a sponsored link with a blue location tag on the map—differentiating itself from the normal red location tags. The example Google gave on their blog (see below) clearly illustrates how this would look if you were searching for an Asian restaurant in San Francisco.

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The location-based wars heated up this summer with the launch of Facebook Places, a service that allows you to check in to venues much the same way as Foursquare or Gowalla.  Your location then appears in your ever-ubiquitous Facebook news feed. (As has been Facebook's model of late, the service immediately sparked concerns over privacy.) However, Facebook has yet to create an advertising model around Facebook Places, but let's face it (no pun intended), that's just a matter of time.  

As usual when two tech giants face off, there is speculation over who will win and who will lose. Obviously, it is too early in this conflagration to determine such a thing with any certainty. However, it would seem that Google's location-based ad model would be a bigger boon to local business. And the difference comes down to how both services are used.

Currently, Facebook is still used as a personal information megaphone, allowing you to share the smallest details of your life with your friends. Because of all the minutia it is able to aggregate on its users, Facebook is very good at serving up extremely-relevant advertisements. But location-based ads on Facebook—like their current regular ads— would be more akin to a billboard or print advertisement. Sure they may influence me if I am in the right state of mind, but just because I check in at a local gift shop, doesn't mean I am interested in the latest dinner specials at the restaurant next door.

Google, on the other hand, is a more active process. You use Google because you need information and are actively pursuing it. Google may not know everything about your life (then again, you might surprised what they do know), but they know that at the instant you use their service, you are looking for something. So using the old-school advertising model from the previous example, it's more akin to seeing an ad for a restaurant in the restaurant section of your yellow pages. An advertisement in that context is more apt to influence you because you are actively looking for a place to eat.  

Until Facebook enters the world of search—and that might be coming—Google seems like the better bet for local businesses to reap the benefits of location-based advertising.  As with anything, time will tell.

What do you think? Is Facebook or Google better positioned to reap the benefits of local-based advertising? Or maybe there is another player like Foursquare or Gowalla that should be considered?

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