GoogleLocal is one of the biggest wildcards in local advertising, with new partners and angles being pursued for AdSense, AdWords and GoogleBase, the new self-serve directory and classifieds product.

From here, Google could take several directions, none of them mutually exclusive. It could, for instance, try to convert local publishers to the GoogleBase platform. In fact, it already has held tentative discussions with a number of major newspapers. So far, however, each has declined, fearing that Google would eventually use the relationship to take over their local customers.

A second path is for Google to add to its existing sales relationships. Indeed, it is already in talks with everybody I talk to. Currently, the company works with Thomson Directories, BellSouth, SBC, Thomson Directories, YPG and Yell. Arguably, this is a “safer” relationship for local publishers, since they control the advertiser relationship, rather than Google. In all of its talks, however, Google apparently reveals next to nothing.

A third option, of course, is for Google to use a small portion of its cash horde to buy a major sales channel, such as YellowBook. Doing so would be tantamount to declaring war against the rest of the industry. But hey, isn’t that inevitable?
(Maybe not).

Whatever it is planning behind the scenes, Google clearly wants to be seen as a bunch of good guys –even though it really isn’t ready to confide in anybody. Keynoting the Kelsey ILM conference, Google Local leader Shailesh Rao’s presentation was almost entirely data-and-content free, focusing instead on the shimmering possibilities of local information and services.

To me, it was a remarkable presentation for the roomful of veteran local advertising executives. Nevertheless, Rao suggested the company is “very open and collaborative” in developing its local services.

“We don’t see ourselves in your business,” said Rao. “I don’t feel your pain.” Addressing the controversial rollout of GoogleBase, Rao said it has simply been misunderstood. “GoogleBase is not synonymous with owning content,” he said. “Google Base is to the benefit of owners of content….it is a meaningful, structured (way to do) content.”

In a way, Rao was presenting a legitimate version of the truth. Coming into the local industry with no “base,” it has been in Google’s interests to provide its services on an Open Source basis and spread the word.

As product manager Bret Taylor noted on a subsequent Kelsey panel, Google has greatly benefited from having its services widely adopted. Its innovative Google Maps program, for instance, has been adopted by thousands of publishers. As Taylor noted, many of these publishers also choose to bundle the maps with AdSense “because it just works.”

A separate version of the truth, however, is the one that the conspiracy theorists seize on – that Google is far more than a simple technology enabler. In fact, it is clear to all observers that Google is already deep into the muck. It has, for instance, built up a Yellow Pages service that is based on licensing all kinds of data and content; and it is already selling against existing publishers via tele-sales centers.

On the news front, Google News and Google Local is probably taking eyeballs away from newspapers, even as it partners with them on contextual advertising. A number of newspapers have caught on to the threat, and have left Google behind as their contextual partners, opting for Quigo instead. In fact, Quigo CEO Michael Yavonditte makes the claim that Quigo has now surpassed Google as the newspapers’ leading contextual partner.

Let’s not distort the reality. To be sure, Google’s eyes are mostly on Yahoo! and MSN – together, the three of them form what IAC Local head Anne Busquet calls “the three horsemen of the Internet.” But whether Google’s eyes are on the prize or not, it would be dangerously naïve to think that Google’s efforts are “coopetition as usua”l for the local players. It isn’t. While local media and directory companies should be open to partnering with Google, they need to do so with their eyes wide open, and establish a timeline for bailing out when –and if– the competitive issues hit home.