No question about it - the new type of SERP for queries that contain a location or geographic name have significantly changed the traffic picture from Google search results. The fall off in clicks as your listing gets pushed down the page can be major.

I'm happy to hear that you're seeing an increase from image search - not everyone with this problem is so lucky. Most people I know in this situation have had to take a hard look at their business model as it relates to search traffic. Where revenue is on the line, this is an adapt-or-die situation, and each business needs to find it's own solution.

This is google's solution for local businesses
[google.com...]
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Its a killer for sites with a city wide coverage.

Goodbye to most websites that use a city-based directory model. Some very established, notable websites that do not have brand presence yet will have some very hard years ahead of them.

Hi Tedster,

Thanks for your response. Can you let me know approx when google started inserting the local results at top of page? I would like to drill down and see if there's a correlation to the drop in web searches. These other posts seem to imply that any city-based search is going to be affected. All of the most important search phrases for my business relate to cities...i.e. "new york photos", "Washington DC photos" etc. So these types of searches are most impacted?
As for image search...it's been a long time that image search traffic has outweighed web search traffic on my site. I think it's that people have caught on that it's a more efficient way to look for images. However, more isn't always better. Very few image searchers ever convert to buyers. They are mostly looking to grab free images for whatever purpose without asking or thinking. Thus, copyright infringements are way up. If they are looking to buy it's always at a very low price point which I can't help them with. Since they go straight from the image results page to my contact page they rarely if ever read anything on my site or check the public price lists. I get a lot of junk inquires like "I like this...how much does it cost?". The web searches are much more targetted and since they are looking for a site, not a specific image they tend to be serious buyers. Thanks again

This kind of search results page went into limited testing in August 2010 [webmasterworld.com] and was fully rolled out around October 27 [webmasterworld.com]

It's killing some of my pages more by accident I think.

Say I have a widget site with widgets being shops people visit. If the widget shop has a real name of Oxford Widget Shop, Google now returns a whole pile of results at the top of the page about widgets in Oxford. Most of the time it completely misses the real purpose of the query which was to return results for The Oxford Widget Shop.

Unfortunately for one of my sites, the major widget player has decided to name almost every one of it's Widget Shops as 'Place Name' Widget Shop. I'm lucky to get on the first page now never mind the top three.

How is placement in the local results being determined? Solely by the address used in the Google Places acount, or also by the name of the business and/or keywords used in the URL, etc?

Everybody in Local Search is trying to understand that - it's a discussion better held in our Local Search Forum [webmasterworld.com].

The kind of SERP we're talking about here Google has called a blend of organic and local. For example, the listing may be the organic one but enhanced with a map marker or Place information. It's something that is currently changing faster than you can type up your observations. Google's Marissa Mayer was put in charge of it, and she seems to be stirring the pot regularly.

I did a search for Brisbane Flood on Google today. Didn't find much about the flooding, but if I happen to be in Brisbane one day and my carpet gets damaged by water I now have a number of addresses I can get it repaired in Brisbane.

I hate Google local search.

Well, I can see how local search can be useful to people, even if it's hurting me...but how does it benefit Google's bottom line? They have to keep stuffing the page with more and more links to keep revenue growing, but local searches are not sponsored searches and occupy prime position on the page. It doesn't earn Google more money, or does it?

Sure there's revenue for Google in the local space. The program is called Tags [google.com].