An article by AdAge reports on a test that Google is running in the US for local search advertisers. In an attempt to attract more local advertisers to buy search ads, Google is experimenting with a new type of search advert and pricing system in the San Francisco and San Diego markets.

Google is offering local advertisers (or non-advertisers) a search ad for a flat fee. The fee is set by Google and based on the average that similar businesses are paying for a given keyword in that market. As the article states, the goal is to simplify search advertising for local businesses that may not want to bid on keywords or to set up and optimize a search campaign.

This is a more familiar model for local businesses, such as plumbers, electricians or restaurants, or any local business that has advertised in the Yellow Pages. However, Google is offering an additional option to link the advert to a Google voice number so that advertisers will know which calls are being referred from the search ad. This is something they have tested before and allows small businesses that don't have a website to test search advertising and track the performance of their ad.

These local advert tests come at a time when Google is nearing the end of an extensive review of its search advertising system which has taken place over the last 6 months (and known internally as AdWords 3.0, according to this article).

As part of this revamp, Google is trying to give more relevant results for local searches, which plays into its local strategy. A user who searches for a restaurant, for example, no longer has to specify where they are as this can be determined by their IP address or browser, and relevant local results are returned, along with a map. Although not a perfect model, it could enable Google to vastly expand its search offering to a much wider market.