A couple weeks ago the Nifty Marketing blog highlighted Google’s offline marketing initiative to engage local business owners with a $100 AdWords offer ($100 offer ends January 31, 2010).

The promotional offer applies to local businesses that have verified their local  listing(s).

“I got a letter from Google today with $100 worth of free advertising.

The letter is being sent out to businesses with claimed LBC listings and starts out saying “You already use Google’s Local Business Center to help customers discover your business online when they search locally on Google or Google Maps.

Then goes on to explain the effectiveness of search advertising.

I have included an image of the letter for your enjoyment.”

Nifty’s article goes on to ask the question, “…why would Google be promoting AdWords to LBC users if they are planning to launch local listing ads any time soon?”

Why Google Is Promoting AdWords To LBC Users

In case you are not familiar with Google’s Local Listing Ads program, here is a screenshot:

The Local Listing Ads platform provides local businesses a turn-key advertising solution for a flat monthly fee.  No bid management, no keyword selection, no geo-targeting–just select your Categories and purchase.

This option will increase the number of Google advertisers and puts to bed the issue of click fraud for small entities with very limited budgets.

Still, there are numerous reasons why AdWords is a viable advertising platform alongside Local Listing Ads:

1.  Ad Inventory

There is a limited amount of ad inventory available for Local Listings Ads.  In my opinion, displaying more than four Local Listing Ads for any given search is just clutter and creates a negative user experience.

Alternatively, replacing the “free” local business results (Google 7-pack) with only paid listings would be problematic for Google.

On another note, piling AdWords on top of Local Listing Ads on top of local business results on top of organic results and additional universal search elements is also a blow to user experience.

I personally believe the AdWords ads should only be presented in the sidebar if Local Listing Ads are present.

2.  Ad Revenue

Ad revenue for the Local Listing Ads program is limited to inventory and flat monthly fees.  Conversely, AdWords is bound by neither.  Engaging LBC users with the AdWords option increases ad revenues.

3. Long Tail Search

As it stands today, Google doesn’t present local business results for long tail searches.  To give you an example, the screenshot below displays side-by-side search results for the keyword sets “dry cleaners Dallas” and “organic dry cleaners Dallas.”

As a result, it is unlikely you will see Local Listing Ads for the search “organic dry cleaners Dallas,”  which clearly conveys local intent.

4.  User Preference

Why not give users options?  The Local Listing Ads simply display local businesses with very little detail.  On the other hand, AdWords offers the advertiser space for marketing copy.  A compelling call to action is often the difference maker to convert competitive keyword sets.

That is my take.  Can you think of additional reasons?