As the name implies, Local.com (NASDAQ: LOCM) is a provider of local online advertising services -- primarily for small business. And based on its Q1 results, the company continues to get traction. Revenues came to $11.1 million, up 16% over the past year. There was a net loss of $2.9 million or 20 cents, but the company was able to post positive cash flow.

In the quarter, search traffic reached 60 million monthly unique visitors (from both network sites and Local.com). This represented an 18% increase over Q4 and 32% spike over the past year. True, revenue per thousand visitors was down 11% to $246, but this is to be expected in the slow economic environment.

Actually, Local.com is using its cash to pick up customer bases. For example, last month the company acquired 14,200 local business customers for $3.1 million. There was also a purchase of 11,800 web hosting customers in February (for $1.2 million).

Every month or so, it seems that I get a new phone book. But I throw them away. When I need to get information on a local business, I go to Google (NASDAQ: GOOG) Local.

According to a research report from the Kelsey Group, about 54% of consumers have substituted internet search in place of phone books. "Users are searching local information from the desktop as well as mobile devices," said Kirk Crenshaw, who is the CEO of RevCatalyst. "Apple (NASDAQ: AAPL)'s iPhone should also accelerate these trends."

So how can your business capitalize on local online advertising?