The inescapable reality of doing business online as a local media company is that Google, Yahoo, MSN, AOL and a host of other pureplay internet companies are our competition. With six of every ten local online ad dollars going to these pureplays, we’re slowly being squeezed into a shrinking corner reserved for local content companies. Local media companies may say they believe this, but few behave as though it impacts them, because we’re convinced we’re in the content business. We’re not; we’re in the advertising business.

A couple of announcements over the past week by Google ought to have the attention of anybody in the online advertising business. Last week, the company unveiled “Google Trends,” an application that helps publishers compare how they’re doing against online competition. This week, Google revealed “Ad Planner,” software designed to show advertisers where to put their money based on where their target audiences visit. Together, these new moves put the squeeze on all of the incumbent players in the online advertising world, include online measurement giants comScore and Nielsen.

At first glance, these new applications seem enormously helpful to all web denizens. After all, the lack of a reliable third-party measurement system is one of the things agencies say is holding back the advertising floodwaters. And since both applications provide information about the whole Web, this appears to be just Google being useful Google. We applaud their brilliance and go about our daily routines thankful for all these tools that Google has provided.

But as I wrote last year in “Google Lifts Only Google,” the company’s efforts are all aimed at positioning itself to win. Google defines itself as an advertising system. To be sure, it’s a search engine, and its mission is to organize the world’s information, but when it comes to business, Google is an advertising system.

Google begins the day with the assumption that people come to the Web, because they’re looking for something. We begin the day with the assumption that people are looking for us. In our minds, we are the ones who control growth, because everything has to happen on what we view as our property. In the collective mind of Google, the people who make up the network that is the Web control the growth by their actions, and Google’s ad mechanism doesn’t care where that takes place. As the network grows, so grows Google. Not so for local media.

When I’ve noted that we MUST work to outdo Google at the local level, the immediate reaction is one of disbelief. After all, the thinking goes, Google already does a fantastic job of organizing local information, and we’re fooling ourselves if we think we can do better. But this argument presupposes that Google’s business is information organization. It isn’t. It’s an advertising system, and this is where we can beat them.

But how? Google knows that the real growth in online advertising is at the local level (so do the other pureplays), but it lacks one thing that local media companies have: feet on the street to sell its advertising system. The company has put sales forces in a few cities, but it needs a ubiquitous sales force in order to reach its goal of dominance. So the matter isn’t one of coming up with a better system or organizing information — or creating information portals — it’s coming up with a local advertising system that treats the Local Web as its platform.

Jeff Jarvis is writing a book tentatively called “What Would Google Do?” The idea came from various writings of his about this very topic. In one of the earliest, he wrote that we shouldn’t blame Google for leaving everybody else behind:

Big, old media handed them this opportunity on a platter. Google was the one company that truly understood the economics of the open network. It understood that it could grow much bigger enabling than controlling. We in media should have followed that model. We should have asked WWGD. What would Google do?

So the announcements over the past week about Google Trends and Google Ad Planner are good insofar as they can be used to help the online efforts we have with our brand extension sites and other content plays. We need reliable statistics, and the Ad Planner is likely to show advertisers that they want to spend money with us.

But let’s not be naïve as to what’s really taking place here, because if we continue to look the other way, we’ll only have ourselves to blame as online advertising continues to grow while our share of the overall market doesn’t.

(Originally published in this week’s AR&D Media 2.0 Intel newsletter)