In an opening session to TKG’s part in the ILM/SES Local Show, Neal Polachek, Matt Booth and Peter Krasilovsky presented some groundwork data for the rest of the conference and the rest of the decade.

Verticalization is a trend we’re seeing all over the local search space, as search aggregates and pushes traffic into vertical categories. As this happens, many online models such as Zillow will continue to develop to utilize and monetize this traffic.

Down to more granular levels of verticalization, Krasilovsky points to Steve Cissel at Lawn & Garden Search who has utilized a knowledge of a specific category to attract qualified traffic that converts at a much higher rate. Nuances to this category, in addition to search driven traffic, have meanwhile attracted advertisers, who are doubling and tripling their online conversion rates.

What about the Yellow Pages?

Through lots of growth in online usage as well as advertiser interest, the Yellow Pages industry can’t be forgotten as the local 800 pound gorilla.

As we’ve pointed out many times, the conversation here centers on putting a higher emphasis on the sales channel as the asset needed to capture a piece of this growing online ad pie. 89 percent of online ad dollars are currently pushed by the Yellow Pages sales channel, according to Booth.

An important part of this recognition of the sales channel as a valuable piece to this puzzle, are strategies we’re starting to see around moving advertisers across multiple platforms including print, online, video, and mobile. Sensis is doing this to a large degree in Australia, points out Booth. And AT&T — given it’s assets across disparate media — is moving in this direction. This is represented by AT&T’s acquisition of Ingenio.

This, Booth points out, will allow AT&T to integrate call tracking across channels and move towards value based pricing. This will be an ROI based Yellow Pages ad product based on the leads that are derived through a combination of calls and clicks. We’ll get the inside scoop on this tomorrow from an unannounced speaker.

Soft Landing

An important part of this is the development and optimization of templatized landing pages that contain call tracking and more calls to action. The lacking quality of many SMB websites make this a big area of opportunity and development. The call tracking developments at AT&T, (and Marchex, via Voicestar acquisition) will be a big part of this.

SEM resellers and fulfillment firms will meanwhile be an important part of this value chain as is explored in a TKG report that will publish tomorrow. Recent investments in ReachLocal and Yodle are a testament to this.

Lastly, mobile is characterized as the next frontier with a great deal of usage and rising advertiser interest. Combine that with recent developments such as Google (Android) and Apple releasing SDK’s for their respective open source mobile operating systems. This will open up a great deal of third party innovation as we move beyond the carrier controlled world, and lack of open standards.

We’ll get to see a representative sample of these third party mobile app developers this afternoon in a Demo by MobilePeople, and more in a mobile panel on Friday. Keep coming back here for ongoing coverage of the show.