Our ILM:10 conference probably hit something of “a perfect storm” for the 681 senior level execs and entrepreneurs in attendance. While we’ve been cheerleading the local opportunity since the mid-1990s, the big money has now really focused on the local opportunity.

Amazon’s $175 million investment in LivingSocial and Google’s failed bid last week to buy Groupon for $6 billion really put things in perspective. During 2010, so did mega-investments from various VCs in everything from Yelp to Angie’s List.

At the end of the day, the takeaway from such an event depends on where we are coming from. Search experts David Mihm and Andrew Shotland certainly have their own view on things, as do social execs like Mike Orren and Sebastien Provencher. Here’s what I walk away with:

1- Google remains the elephant in the room. Google Places simultaneously democratizes the Web by opening up more information sources, while weakening the dominance of major review aggregators like Yelp. But we don’t know yet whether Google will use the super fragmentation to support its own competitive position as it gets deeper into SMB and vertical marketing. Neither does Google.

2- Yelp, and others, can’t count too much on Google to drive its growth anymore. But it has 14 million reviews to leverage, and an alternative opportunity via the whole “App” channel on iPhones and other mobile devices. The App channel represents a major workaround of search, although it doesn’t strike me as being nearly as large.

3- Facebook represents a new avenue for SMBs and others to engage consumers “in context.” Apparently, 48.5 percent of SMBs have a Facebook page (OK, some screwed up data there!). Regardless, some Yellow Pages and event site leaders think that it is already more important than search. Aside from effective brand positioning, and discount promotions, however, it is almost entirely green field. But whatever the model, “local should be a layer across all products,” according to Facebook Local Leader Emily White. We’d buy into that.

4- Location-based services such as Foursquare and Gowalla — and LBS features for major sites — currently rely on game-loving younger men. But as smartphone and tablet penetration zooms — comScore sees 87 million users by 2013 — they have real potential for building community and rewarding frequent users with promotions, etc. This space is exploding fast.

5- The tie-ins between LBS and deal-a-day group buying models and other promotions seem clear — especially those that are heavily networked or syndicated. But can the audiences be combined? LBS is currently dominated by men, and deal a days, of course, are heavily dominated by women. It is not a long-term problem.

6- We think Google’s interest in Groupon was partly driven by its disruption of traditional sales channels. There are other interesting takes on how Groupon and other group buying efforts evolve, and incorporate search, Yellow Pages and other features.

7- SMB services may use deal a day as a base for other services. Groupon is pursuing this, and so are Nimble Commerce, Tippr, Adility, DealCurrent, Closely and many others. Angie’s List noted that it is using its Big Deal as a retention tool for advertisers. At the same time, the Big Deals result in more profiles and reports. A win-win all around. Cox Target Media’s Jim Sampey noted that deal a day becomes part of an arsenal to keeping SMBs engaged throughout the month.

8- Self-serve is no longer viewed as a holy grail that makes local selling viable on its own. It won’t. But it is increasingly part of the solution for many SMBs. As Yodle CEO Court Cunningham noted, “people pay with their time or with money.” Cash-strapped SMBs “pay with time.”

9- Local content drives engaged users. Perfect Market‘s Julie Schoenfeld notes that it will be especially important when content is tagged with “great meta data about when and where it is written.” Amen.

10- It isn’t “online media” anymore. Or “mobile media.” It’s all advertising, whether the format is Web, mobile, audio, video or banner. As Pandora‘s Cheryl Lucanegro noted, a multimedia effort can also create multiple consumer experiences: branding, direct response, engagement and multi-screen. I am especially intrigued by multi-screen, as data show that people are using their smartphones along with TV and laptop use.

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Facebook sees strong potential in local advertising and will develop an aggressive local strategy, according to Facebook Local Leader Emily White, a Day 3 keynoter at ILM:10.

White, who left Google four months ago, said businesses are always being told that they have to be online. But it hasn’t really been clear what they can actually do online that relates to their customer base and actual activities. “The online marketing world has completely forgotten about the fact that local businesses are run by people,” said White. “To date, they have not been particularly well-portrayed by their static Web sites.”

But as the Web changes from an information Web to a social Web, Facebook is well-positioned to help SMBs via “liked” home pages, as well as via several featured products, White noted.

National chains are already using their pages for promotions, including various promotions that offer discounts or donations to charities for check-ins. Facebook’s new Places product also “helps close the loop between what is happening online and what is happening in people’s real life.” Another product, Facebook Deals, also has practical implications for businesses, and has attracted 22 merchant partners, including North Face, American Eagle, JC Penny, Chipotle, REI, H&M, Starbucks, Macys, Gap and McDonald’s.

Local companies are also expected to jump on board. “It is amazing how many companies at the local level get this,” said White, who added that local should be a layer across all products. But she emphasized that Facebook is mostly seeking to drive more usage at this point, rather than focusing on monetization.

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The ILM:10 conference in Santa Clara ended with what is arguably the most important topic of the conference. How can businesses take all of the incredible users experiences emerging in local and social media and convert them into SMB sales?

Tackling this subject were Court Cunningham, CEO of Yodle; Todd Rowe, head of global channel sales, Google; Gleb Shaviner, director of marketing and strategy, Advertising, Media and Entertainment Division, Amdocs; and Geoff Stevens, executive VP and GM, global business development, WebVisible.

Below are some of the responses to questions posed by moderator and BIA/Kelsey president Neal Polachek.

Polachek  began by noting BIA/Kelsey data showing “clarity” as the determinant in SMBs deciding whether to use self-service. Given that, he asked the panel what is being done around the notion of clarity?

Google’s Rowe noted that in the local SMB market, “simplicity is the killer app” when it comes to self-service and SMBs. Using pre-built templates, wizards and so on are crucial to making it easier for SMBs to engage in self-service advertising.

“People pay with their time or with money,” Yodle’s Cunningham says, noting that many SMBs that choose to use self-service are cash strapped, and therefore have elected to “pay with time.”

Are customers starting to get all this (local online marketing)?

WebVisible’s Stevens says unequivocally yes. “There is an unfair belief that SMBs are not sophisticated,” he says. “That is not the case.”

Cunningham said there are a still a large number of SMBs that need help. He noted that 30 percent of SMBs still have no website. “I was in an office on a sales call where the owner asked his assistant to tell him how to turn on computer.”

Shaviner noted that there is a lot of effort underway among publishers to define how best to assemble multimedia pages for SMBs.  He stressed the ongoing need for education, noting that many SMBs remain very confused.

Does channel specialization make sense in the current environment?

Cunningham says specialization tends to work better around verticals rather than products. He notes that Yext, G5 Search Market and Yodle work with a limited number of verticals, at least compared with Yellow Pages publishers. He says Yodle works with between 80 and 100 categories.

Stevens said WebVisible also takes a vertical approach. “We will work with customers to tailor the right offer” based on their vertical.

Are publishers transforming channels as fast as they need to?

“We use direct channel as mechanism to help our reseller partners,” Stevens said. “Fast enough? They are as engaged as they should be.”

“It is all about tools,” Shaviner said. “Improving organization. Changing to sell a variety of products. Team selling, packages. More investment in planning what to sell to whom and how. Optimizing the whole process.”

Are churn rates getting better?

Rowe said Google’s partner churn numbers are down.

“This is exciting to see. In North America, it is improving. Outside of the U.S. it is a mixed bag,” Rowe said.

The other panelists said churn is improving but offered no specifics.

What does 2011 hold?

Google’s Rowe sees a dual segmentation of SMBs on the horizon. He also expects much more migration of usage from desktop to mobile search.

Cunningham said, “We will consolidation across the board, not just among directories, but also SEM providers.”

“We will also see a fair amount of product innovation that attacks the [local] problem from a different angle [than search].”

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Here are some other key announcements made in conjunction with ILM:10.

On the eve of ILM, Telmetrics issued a release detailing its forecast for local search trends in 2011, which include the prediction that SEM churn rates will improve next year.

Deal-a-day aggregator Monster Offers announced that it has expanded its deal-a-day footprint to an additional 30 metro markets.

Localeze and 15miles announced they have renewed their partnership in which Localeze provide 15miles with business listings for 15miles LocalFeed product, which helps national businesses ensure their brands and locations are included in search engines, online directories, mobile search sites and personal navigation devices.

Telnic has cemented a deal in which WebVisible will offer Telnic’s .tel domains to all its small-business customers. The .tel domain is being marketed as a form of Web presence where SMBs can store all their contact details, across the Web, e-mail, mobile, social media and so on.

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While 2010 has been lauded as “the year of local,” it has also seen an influx of interest and spending by national brands to drive neighborhood-level store traffic. These initiatives have taken diverse (and sometimes highly publicized) forms: Gap’s deal-a-day offer through Groupon, Best Buy’s mobile check-in experiments with Shopkick, and a host of real-time inventory providers (Google Product Search, Milo, NearbyNow) allowing retailers to engage customers at the apex of purchase intent.

Geomentum VP Casey Squier told the ILM:10 audience that, as a byproduct of this hyperlocal focus, national brands are “turning to large agencies to put together a local program that can be understood by C-level execs that resonates throughout the entire organization.”

That’s exactly what Geomentum hopes to do for its clients when it officially launches the new technology in March 2011. Spawning from traditional agencies, it allows its client to do store-level planning by layering their sales data on top of Geomentum’s 2,000 data points about local neighborhoods. Retailers can then alter their media mix accordingly to better reach customers where they live and buy.

Ultimately, this should foster higher-quality lead generation, which is exactly what Marchex is touting to agencies through its performance-based pay-per-call platform. Scott Greenberg, Marchex senior VP of strategic development, stressed that as online and mobile advertising becomes more complicated, merchants of all sizes still demand the simplicity and measurable quality of phone calls.

Marchex’s platform allows resellers to create and distribute ad content for its clients across a pay-per-call network. Because performance governs the business model, businesses pay only when the phone rings. While Greenberg reports that the platform is largely being sold to larger brands to enable them to track store-level leads, he also hopes that it continues to move down market to SMBs.

Marchex is placing its bets on calls, but Reply.com CEO Payam Zamani thinks that search and display can still be effective as long as these clicks, or leads, are “enhanced” to account for consumer intent and location. Otherwise, driving targeted traffic is both expensive and imprecise.

The pledge to businesses through the Reply Marketplace is simple: “sign up and receive locally targeted and intent specific prospects” based on particular customer actions being sought. Echoing Marchex, he noted that two-thirds of the company’s business comes from bigger businesses looking to locally target.

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Best-selling author Steven Johnson keynoted at ILM:10 in Santa Clara today. In his talk, based on “Where Good Ideas Come From,” a new book, he focused on how local media and commerce is affected by ideal environments for innovation that don’t inadvertently add an “innovation tax.” The best ideas, he noted, come from “putting yourself in situations where these kinds of unlikely developments will happen.”

The idea for Outside.in, the local company that Johnson founded and chairs, for instance, originated from the intersection of three things: his research into Victorian England via the Web, the emergence of local bloggers in his neighborhood in Brooklyn and the emergence of the Google Maps API. Basically, you never know where the serendipity comes from.

Fifteen years ago it wasn’t clear that the Web would actually support local, Johnson noted. Futurists speculated we were headed to a “post geographic” age that would make physical location obsolete. In fact, the opposite has happened.

“We failed to anticipate a couple of core innovations,” said Johnson. “GPS and the concept of the geographic Web. We didn’t realize that the Web would enhance geography and that it would solve a problem: figuring out what’s going on in our community.”

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So why do people check in? Is it, as Gowalla’s Andy Ellwood jokingly suggested, because “I am in my 20s and you should just care where I am”? Or are the reasons more substantial?

This afternoon’s panel on location-based services focused on why and how users engage with LBS (check-ins).

Gillian Heltai of comScore said the firm’s research data show that most consumers are either comfortable or at worst ambivalent about disclosing their location on services like Facebook, Foursquare and Gowalla.

The comScore survey showed that 44 percent of consumers want to know where their friends are, while 37 percent were comfortable disclosing their own location. A minority were opposed to doing so.

Heltai said that when you project out smartphone penetration three years (when we are expected to reach 50 percent penetration), there is the potential for 87 million mobile social users by 2013.

She said use of location-based services will be “driven by device proliferation and the availability of content.”

She said current data show that check-in services (Facebook Places) today are used heavily by younger males (63 percent aged 18-34 and 60 percent male).

Gowalla’s Ellwood said the reason consumers use check-ins and social media in general is because people like to “tell stories about their lives.” That may be a bit self-involved, but it is more substantial than the running cliche about tweeting that you just put grape jelly on your toast.

So checking in at a restaurant, pub or charity event helps advance that personal narrative. Check-ins at more mundane stops (the dry cleaner) are much less common.

Ellwood talked about how Gowalla is working with some very well-known brands to leverage the check-in phenomenon to engage with customers and build their brands.

One example is the Sundance Film Festival, which is using Gowalla to help solve the problem many festival goers suffer — an experience overload that leads to a rather sketchy memory of what they did at the festival.

So Gowalla built a program that allows Sundancers to check in at every screening party and receive a stamp that will leave a digital trail of what they did at the festival.

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Panelists on the Home and Trade Revolution panel this afternoon echoed the sentiments BIA/Kelsey CEO Neal Polachek expressed during his opening presentation yesterday about the importance of trust. Increasingly, this level of trust is achieved through the process of service provider or SMB verification. In other words, the small business is what it says it is.

Start-up SeniorChecked.com, run by former AOL executive Chris Spanos, is in the business of matching qualified and verified service providers to seniors and their caregivers. As 58 percent of senior-related fraud is committed by service providers, SeniorChecked makes businesses that want to be included in its directory go through a process of background checks and verification as well as annual re-verification. The cost to be a member of SeniorChecked, which currently covers 24 vertical categories targeted at senior-related services, is $699 a year. Spanos expects between 2 percent and 5 percent of businesses that apply to its site to be denied.

Likewise, Charlie Anderson of FindCo talked about the issue of SMBs not knowing whom to trust for their local advertising options. Currently serving a market of 10,000 businesses through its SMB OnRamp product, FindCo provides a variety of products and services ranging from identity management to lead generation and tracking to mobile offerings and the like.

We also heard from Ethan Anderson, CEO of Redbeacon, who like the other panelists referred to the trust element and noted that it is core to its business. Ethan compared a consumer seeking a service provider to the game show “Let’s Make a Deal.” Redbeacon, which matches consumers’ requests to service providers, said that ratings and reviews are fine, but consumers want a price element, availability of the service provider when they want the service performed, qualifications of the provider, background checks/verification and, importantly, using a social network angle (i.e., who their family and friends recommend). Redbeacon is approaching 10,000 businesses in its select markets and reports that almost 100 percent of its consumer requests receive quotes and receive an average of 5 quotes per request.

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Cox Target Media’s Valpak business is “better than ever, with free cash flow better than it has ever been,” according to COO Jim Sampey, who was keynoting the Deal-a-Day SuperForum at ILM:10 in Santa Clara. But the company, which puts out The Blue Envelope of local coupons in 70 metro areas and has 800 sales reps, has been trying to figure out how to extend the print business — and the Valpak brand — into digital.

Specifically, the company has been looking at online coupons, a Facebook coupon app, scannable QR codes, video ads, loyalty programs, LBS push messaging and daily deal offers.

Sampey acknowledged that Valpak.com, as an online flagship for the company, has been “part of the get rich slow” train. But the company is currently revamping the entire portal to focus on its traditional strengths, such as neighborhood zoning. The key is to provide advertisers with services throughout the month.

“We’re rounding out our offering to our SMB folks,” said Sampey. “ It has to be better than just activating a deals coupon and then being “dry for the next 28 days of the month.”

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At ILM:10, Pandora’s Cheryl Lucanegro (senior VP of ad sales) and Brian Mikalis (VP of performance sales) made it very clear where the popular Internet radio service is headed next — to your car dashboard.

The company is leveraging two fundamental insights in driving (pardon the pun) its migration into the vehicle: More than 50 percent of all radio listening occurs in the car, and more than half of Pandora’s traffic is mobile (with more than 100,000 mobile activations each day) … a natural transition for on-the-go users.

Currently, Pandora’s auto strategy is nothing more than basic Bluetooth phone connectivity, but that will change in 2011 with manufacturing deals having been announced with Ford, GM and Mercedes.

Auto represents just the latest turf traditionally reserved for over-the-air broadcasting that Pandora is now loudly treading on. Now, the Oakland, California, service is targeting local businesses, many of which have longstanding relationships with legacy stations.

Mikalis runs an inside sales team that mainly prospects national and mid-market clients but has also begun local outreach. He emphasized that Pandora is also “aggressively talking to companies with feet on street to allow them to include Pandora as part of their network to find distribution for their advertisers.”

Pandora users personalize streaming stations around their favorite music genres and bands. This behavioral information, combined with gender, age and ZIP code, gives its sales force the ability to do multi-layer targeting for local business advertisers. Lucanegro said it distinguishes Pandora’s value propositon from traditional radio by allowing clients to “reach the right person with the right message at the right time,” and then measure how well they’re doing this.

Advertising can assume several formats (Web, mobile, audio, video, banner) and create multiple consumer experiences (branding, direct response, engagement, multi-screen). For instance, businesses can direct audio commercials to consumers, coupled with companion banners that allow them to simultaneously act on it (including unlocking local offers). The net effect, Lucanegro said, is pushing a message in front of consumer “more dramatically,” and at a price point that is competitive with its traditional broadcast rivals.

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