Making Money From Online Maps - Forbes.com

location based services

Burlingame, Calif. -
Even the most dedicated Internet surfers have to get away from their PCs at some point. But before they log off, they need to know how to get where they're going next.
Perhaps that's why the audience heading to online map sites has increased by nearly 20% in the last year, according to ComScore Media Metrix. And that traffic is driving an ongoing battle between the big portal players. Each seems intent on proving that its map service is bigger, better and more accurate.
Last week, Yahoo! (nasdaq: YHOO - news - people ) announced that it has added satellite images of the entire world to its service, bringing it in line with products that have been offered for months by rivals Google (nasdaq: GOOG - news - people ) and Microsoft (nasdaq: MSFT - news - people ).
But Yahoo! went one step further, arguing its satellite maps are now the most detailed. Their resolution is now one meter per pixel for U.S. locations and 15 meters per pixel for the rest of the world.
This follows Yahoo!'s latest round of follow-the-leader, completed last November, when it beefed up its map service and began to integrate retailers' locations—just like Google already offered. Prior to that, Google had aped Yahoo! by linking its maps to its local search offerings.
"We do keep our eye on the competitive landscape," says Yahoo! Maps product manager Michael Lawless. "That influences what our users ask for, and we pay attention to that. We spend a ton of our efforts on those fronts that are related to accuracy, stability and navigation."
For all the one-upmanship, Google and Yahoo! remain locked in a battle for second place among the online map offerings. Yahoo! brought in 20 million unique visitors to its map service in March, according to ComScore, while Google brought in 19.1 million.
Meanwhile, Time Warner's (nyse: TWX - news - people ) Mapquest, offered through its AOL service, reigns supreme: The service, which has been around since 1996, drew 46.4 million visitors, or more than Google and Yahoo! combined.
All three of the big map services are primarily interested in keeping users at their portals, not turning a buck. "The big guys have the capacity where they don't have to make money on this tomorrow," says Kelsey Group analyst Neal Polachek. "It's much more important that they nail the user experience."
That doesn't mean they're not trying to make money. Google began auctioning advertising space atop its maps to businesses last month. Restaurants, hotels or any other companies can pay Google to place brand icons, logos or photos next to their correct locations on the map after a user searches a proximate location using a certain keyword.
Yahoo! also allows map users to select various chain locations to show up on a map search. Those deals have included companies like Holiday Inn and Washington Mutual (nyse: WM - news - people ). Other paid ads are hosted at the bottom of the page, but not on the maps themselves.
Now portals are looking to start working deals with the travel, employment, automotive and real estate markets. A real estate agent, for example, could pay to get favorable placement for her properties—for example, on top of a map when related search terms are used. Google has already begun integrating real estate listings posted to its classifieds service, Google Base, with its mapping software, but it does not currently charge advertising fees for that service.
While the portals themselves aren't generating lots of map-related money, countless start-ups benefit from Google and Yahoo!'s offerings, which both let independent programmers meld their offerings with their respective maps.
Trulia.com, for example, is a real-estate search engine company that relies on Google's mapping software. It received nearly $6 million in venture funding in 2005. It's a symbiotic relationship: The portals help start-ups get off the ground, and the start-ups help draw more traffic to the portals.
Another beneficiary of the mapping wars: Firms that deal in digital satellite and topographical maps. For instance, last year Navteq (nyse: NVT - news - people ), which works with both Microsoft and Mapquest, saw revenues jump 26%, to $497 million. Yahoo! works with GeoEye, based in Dulles, Va., for its satellite imagery. And DigitalGlobe, based in Longmont. Colo., provides imagery to Google.
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