As much as $500 billion in local spending in 2007 was internet-influenced, according to Forrester Research. What's more, industry analysts report that people spend approximately 80 percent of their income within 50 miles of their home. That's a lot of cash circulating locally.

If your business relies heavily on a local customer base, you need to welcome local traffic to your website. It's time to use the wave of geographically enabled websites, services and gadgets that allow customers to find you not just by keyword, but by location as well.

To help separate the wheat from the chaff, however, it's important to understand what's driving this trend, what steps you can take to leverage local search, and the best way to stay focused and avoid common pitfalls.

What's Driving the Hyper-Local Trend?
The trend in hyper-local search is being driven by greater internet connectivity and use of the internet to find information. Consumers are spending tons of time online, have high-speed internet connections and are adept at using search engines. The move to hyper-local is one of convenience.

Recall the process of locating a local business circa 1990, when everyone still used a phone book or directory assistance. First you had to find the phone book and fumble though it to find the business you were looking for. Then you had to call to find out the hours of operation. You also had to determine which business was closest to you.

With internet access, you can find not just the business you're looking for but, by looking at a map, many similar businesses closer to your location. And a couple more clicks typically will take you to a website that offers more information, such as hours of operation and return policies.

Local search also is proliferating because of the explosion of user-generated content online: Rating, review and social networking sites are popular ways for consumers to share information about favorite haunts and garner other feedback from one central hub. Add to that increased mobility, with smart phones and Wi-Fi enabling consumers to access local business listings and content anytime, anywhere.

There's also a clear link between increased local searching and the ROBO (research online, buy offline) phenomenon. Consumers are using search engines to research a planned purchase and then turning to local search engines when they are ready to buy. A full 82 percent of local search users follow up with an in-store visit or phone call, and 61 percent actually make a purchase, according to a comScore Networks study commissioned by TMP Directional Marketing.

But there are challenges--serious challenges. According to Silicon Valley-based internet local advertising and marketing consultant James W. Delli Santi, the average user can use the internet to find out about an earthquake in China, a tsunami in Indonesia or a financial crisis on Wall Street, but she can't use the internet to save time, money or make a high-quality decision about a good pediatrician or a trustworthy mechanic.

"The average overworked family experiences life coming at them," Delli Santi says. "They need better services and tools to help make life easier in their hyper-local world--not globally, nationally or even regionally. Useful internet services that help us save time, save money or make quality local decisions are much needed."

Capitalize on the Hyper-Local Need
For many businesses, the solution to being on the receiving end of hyper-local web traffic has been PPC (pay-per-click) or PPA (pay-per-action) campaigns. Because many PPC/PPA campaigns localize ad rotation based on a searcher's known ZIP code, these services have been seen as the only solution that doesn't involve retrofitting websites for keywords and meta tags.

But buyer beware: The average PPC/PPA search service has a fairly steep learning curve and can take as many as 30 hours to 40 hours per month to manage properly. Before committing your business to a do-it-yourself PPC/PPA effort, be sure you can afford to commit the time to doing it right.

Vinicius Vacanti, co-founder of deep local search engine YipIt, insists that business owners should leave PPC/PPA out of the picture, at least initially. He maintains that entrepreneurs should focus on providing the search engines with as much data about their business as possible, such as pictures of the store and products. Also make sure that search engines have the most up-to-date company information. "It's absolutely shocking to me that a business's phone number is often times incorrect in search results. Companies should be all over that," Vacanti says.

Mark Josephson, CEO of Outside.In, the hyper-local news and information service, stresses the need to consistently monitor listings, ratings and reviews from bloggers and content creators, as well as on sites such as Yelp.com and Local.com. And if your company isn't listed on the major local search sites and directories, you should add your company's information. Many of the major local search sites allow businesses to add and update their listings for free. This will ensure that customers searching for your product or service can find your business--and it doesn't cost a thing.

Other hyper-local tips:

• Implement geo-tagging. Geographic tagging is the act of adding geographic search terms to your company's website or online content to organize the web geographically. Frazier Miller, general manager of Yahoo! Local, recommends geo-targeted advertising, which lets you target your ads to potential customers located or interested in particular geographic areas. Geo-targeting can be applied across online advertising units including search and display advertising.
  
  
• Go old-school. At least, that's what Hynek Stehno, director of interactive services at SMG Directory Marketing, advises. "First and foremost, respect your customers. Treat them the way you like to be treated. Present them with your relevant products and services in the territory that means something to them. Only a few people will drive 80 miles to save $5 on a standard oil change." He also warns business owners not to assume that everyone knows them. No matter how established your business is, consumers migrate, people don't always associate service with the brand and their loyalties often change.
  
  
• Invest some time. Lee Gientke is the director of partner development at OrangeSoda, a company specializing in local online search marketing for SMBs. He suggests adding business listings to the local sections at all the major search engines. "Submitting company information to these places is a minimum requirement for any business to take advantage of local search trends," he says. To help with this process, use a product such as OrangeSoda's InLocal, which submits your business's information to major search engines and 50-plus local search directories from one easy-to-manage location.
  
  
• Consider your market. Local online guide Citysearch provide ways for merchants to communicate with their customers. Are you looking to get in front of late-night diners or folks who want the early-bird special? Do you want to reach just the people in your small community or in neighboring communities as well? Based on your goals, be sure to choose advertising platforms or websites that help you reach your target market.

The bottom line: Hyper-local is here to stay. Last time I checked, oil changes couldn't be performed online, dry cleaners still need actual shirts to clean, and drive-thru windows don't translate online.

Hyper-local search simply makes the virtual distance between the business and the consumer shorter. Businesses that recognize how to engage consumers searching online gain an advantage over those relying on traditional means of capturing new leads.