Earlier this month, Google launched a test of a new advertising program called ‘enhanced listings’ in two U.S. cities. This past weekend, the New York Times wrote about it and profiled a local business owner who has purchased an enhanced listing.

Jason Cowie owns a store in Houston, Texas that sells skateboards and snowboards. According to the NYT, Cowie was previously spending upwards of $1,500 each month on AdWords in an effort to compete with “deep-pocketed national chains“.

With enhanced listings, Cowie spends just $25 each month and when his store appears in the local business results Google serves up, it sports a ‘Sponsored‘ highlight with a ‘View Website‘ link that other, non-enhanced listings don’t have, as seen below.

While there is a debate to be had about Google is blurring the line between paid and unpaid results, Google’s experimentation with enhanced listings is a clear sign that Google is looking for new ways to expand the ranks of its advertisers by recruiting local businesses. Plenty of local businesses are already advertising with Google, of course, but the majority aren’t. And that means that Google is potentially leaving billions of dollars in advertising revenue on the table.

One of the big reasons AdWords isn’t yet the Yellow Pages is that AdWords is relatively complicated for those who aren’t as technically savvy. From finding the right keywords to tracking ROI, many local businesses aren’t in a position to get started with AdWords on their own. Those who manage to may spend thousands of dollars in vain, and hiring someone competent to manage campaigns effectively is often an untenable expense. Google knows this; John Hanke, who is VP of product management at Google, admitted to the NYT that AdWords can be “really complex” for some business owners.

By allowing business owners to attract more attention through a service that costs only $25/month, Google will make it easier for local businesses say ‘yes‘ to online marketing. In the process, Google will also help SEOs and other marketers who work with local businesses. After all, local businesses will still likely need assistance adding listings through the Local Business Center, taking advantage of extras like photos and videos, and monitoring performance.

Obviously, Google isn’t going to become the Yellow Pages of the web overnight, but simple services like enhanced listings could eventually get it there.

Photo credit: Jamiesrabbits via Flickr.