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Location based SEO, also known as geo-targeting, is the practice of optimising your content to appear for your target location. It's fair to say that Google is getting better and better at creating location-based search results on more generic topics, where searchers are looking for something.
For example, if your in Los Angeles and searching for "plumber", Google knows to display me local results. A desktop search will return restaurants in the wider local area, whereas a mobile search will show restaurants in close vicinity.
Google believes the intent is different between desktop and mobile search; those on a desktop are more likely to be researching while those using mobile search want more immediate results.
Although location-based search terms have far fewer search volumes, they carry a lot more intent and can deliver traffic to your site that has a greater chance of converting. Those searching locally are far more likely to convert to a paid customer.
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