AI Overviews Are Eating Local Search: What Small Businesses Need to Do Now

The familiar three-pack of local business results that sat atop Google for nearly a decade is being compressed, replaced, and in some cases eliminated by AI-generated summaries. Local SEO is facing a massive shift: a new feature, the AI Local Pack, is quietly replacing the traditional 3-pack and cutting business visibility in some cases by more than half. If your phone has been ringing less from Google despite holding the same rankings you had last year, you are not imagining it.

Sterling Sky partnered with Jepto to analyze call data from 179 Google Business Profiles and found that even businesses holding top positions are seeing a year-over-year drop in calls. According to data from Places Scout, AI Local Packs are already appearing on roughly 8% of keywords - and rising. That 8% figure understates the threat because it only measures a new AI Local Pack format. When you factor in standard AI Overviews appearing for local-intent queries, the picture grows far more urgent. A local-specific analysis published by Whitespark in Q2 2025 found that AI Overviews appeared for 68% of local searches overall, while local packs appeared for only 39% of queries.

This article lays out what is actually happening to local search, what the data says about where it is heading, and what a small business owner - not a marketing department with a six-figure budget - can do about it this week, this month, and this quarter.

The Anatomy of an AI-Powered Local SERP

Understanding the new search results page is essential before adjusting any strategy. Traditionally, local searches like "best coffee near me" or "dentist in Brooklyn" returned a familiar three-pack showing a map and three business listings. That format has been the standard for years. Now, a different structure is emerging.

With AI Overviews, Google presents an AI-generated summary at the very top of the page, sometimes replacing or pushing down the traditional local pack. These overviews typically include a short paragraph summarizing top options, thumbnail images, links to external sources like Yelp or Tripadvisor, and highlighted businesses based on unclear criteria.

Beneath that summary, paid ads claim increasing space. Local pack ads were visible on only 1% of mobile reports at the beginning of 2025. By January 2026, almost 22% of reports were showing them - a massive increase. Then comes Local Services Ads, which expanded from 11% to 31% of tracked queries. The organic local pack - the free visibility that small businesses built their lead generation around - is being squeezed from every direction.

Fewer Slots, No Call Buttons

The AI Local Pack format does not merely rearrange the old three-pack. It fundamentally reduces access. These AI packs often show only one or two businesses instead of the usual three, and many versions remove the click-to-call button entirely.

Sterling Sky's analysis of 322 local markets found that AI-generated local packs display 32% fewer unique businesses than traditional local 3-packs.

For a plumber, roofer, or dentist whose new-patient pipeline runs through Google calls, losing the call button is not an aesthetic change. It is a direct revenue hit.

The Query Intent Split

Not every local query triggers the same SERP features. Informational queries are now more likely to trigger AI Overviews, while transactional and local queries still favor Maps Packs; rarely do both appear together.

A DAC study of over 700 search results across four major industries revealed that only 1% of queries triggered both AI Overviews and Maps Pack results simultaneously.

What this means practically: someone searching "emergency plumber Austin" still sees the traditional pack. Someone searching "how to fix a leaking pipe under my sink" gets an AI Overview. The concern is that the boundary between these query types is moving. In January 2025, 91.3% of queries triggering AI Overviews were informational in nature. By October, that figure dropped to 57.1%, while commercial queries grew from 8.15% to 18.57% and transactional queries from 1.98% to 13.94%.

The informational-only era of AI Overviews is already behind us.

What the CTR Data Actually Shows

The headline numbers are stark. Seer Interactive's September 2025 study reveals organic CTR plummeted 61% (from 1.76% to 0.61%) for queries with AI Overviews, while paid CTR crashed 68%.

An Ahrefs study from February 2026 found that AI Overviews now reduce clicks by 58%.

But context matters. Only 7.9% of all local searches trigger an AI Overview, according to Ahrefs data from November 2025. The higher 68% figure from Whitespark covers a broader definition of "local searches," including longer-tail informational queries. Both numbers are correct; they measure different things. Pure transactional local queries - the ones that put money in your register - are still relatively protected. The more alarming Seer Interactive finding is one that receives less attention: queries without AI Overviews are not increasing in CTR - they're just declining slower. While they still outperform AIO queries significantly (1.62% vs 0.61% organic CTR), they've lost 41% of their click-through rate year-over-year. The decline is structural, not isolated to AI Overviews alone. Users are seeking answers in other places - ChatGPT, Perplexity, social platforms - or going directly to trusted brands.

The Citation Advantage

Here is the counterpoint worth understanding. Brands cited in AI Overviews earn 35% more organic clicks and 91% more paid clicks compared to those not cited. Being mentioned inside the AI-generated answer does not just maintain your visibility - it amplifies it. Seer's team notes they cannot definitively prove that citation causes higher CTRs; it may be that brands with stronger authority are simply more likely to be cited. Either way, building the kind of presence that earns citations is clearly the right move.

Google Business Profile Is Now AI Fuel

Your Google Business Profile has shifted from a listing to a data source. Google's Gemini AI actively reads your Business Profile to generate answers in AI Overviews. Your profile is no longer just a listing - it's a data source that feeds Google's AI engine.

When it comes to the Local Pack and Maps, Google Business Profile remains the top ranking factor at 32%. And the 2026 Whitespark Local Search Ranking Factors report - based on a survey sent to 47 local search experts reviewing 187 factors - confirms that GBP signals are still dominant. But what counts as a "signal" has changed.

Freshness Is a Ranking Lever

Profile freshness has become a real ranking lever. Businesses that go 30+ days without a photo upload or post update are seeing measurable drops in impressions. Two years ago, a static but complete profile could hold its position for months. That no longer works.

Using GBP Posts to announce new facts, seasonal hours, or specific inventory keeps AI's understanding of your business current - each post is a fresh data point. This is a low-cost, high-leverage action. Post weekly. Include specific service details, not generic announcements.

Reviews Feed the AI

Today's AI models don't just count customer reviews - they interpret them. AI search systems parse review text to extract sentiment, context, and recurring themes. That language feeds directly into AI Overviews and chat assistant responses.

This has a concrete implication: the words your customers use in their reviews feed into how Google's AI matches you to queries. A contractor with a review that says "they came same-day and fixed the leak under the kitchen sink" gets matched to "emergency plumber same-day" queries. A contractor with a review that says "good service" gets matched to nothing specific.

Encourage specificity. Ask customers what service you provided, how quickly you responded, and what the outcome was. Respond to every review within 48 hours using language that reinforces your core services. Review signals grew from 16% in 2023 to approximately 20% of local ranking weight today, per Whitespark 2026. Recency and sentiment now outweigh raw review count.

Structured Data: The Language AI Speaks

Schema markup is no longer optional for businesses that want AI visibility. Businesses with schema markup are cited in AI Overviews up to 3.2 times more often than those without it. LocalBusiness, FAQPage, and Service schema are the three priority types for local service businesses.

Think of schema as explicit instructions to Google's AI. Google triangulates across multiple data points - on-page content, site structure, Business Profile, citations, reviews, and schema markup. When these signals align, Google's confidence in your information increases. When they contradict each other, your correct information might not be pulled into search.

Priority Implementation Order

Start with LocalBusiness schema on every location page. Include your business name, address, phone number, hours, service area, and geo-coordinates. Then add FAQPage schema to service and location pages. Pages with FAQPage schema markup are 3.2 times more likely to appear in Google AI Overviews compared to pages without it. Finally, implement Service schema to connect your specific offerings to search queries. The practical barrier is low. If you use WordPress, plugins like Schema Pro, Rank Math, or Yoast SEO can automatically add structured data to your pages. On Shopify, Wix, or Squarespace, the process may require manual code additions or an SEO app - but even a basic implementation beats having none. One important nuance from Search Engine Land: schema markup is infrastructure, not a magic bullet. It will not rescue weak content or low authority. But it ensures that when Google's AI evaluates your business, it reads your information clearly rather than guessing.

Citations Are Back - and AI Is Why

One of the most surprising findings in the 2026 Whitespark report is the resurgence of citations as a ranking factor. Three of the top five AI search visibility factors are citation-based, including mentions on expert-curated "best of" lists, unstructured mentions in news or blogs, and overall volume of mentions across the web.

This is not the old-school citations playbook of blasting your NAP data to 200 directories. Whitespark's panelists agree: consistency beats volume. Clean up, don't spam. What has changed is that LLMs are now digging deep into third-tier directories for information, making citation accuracy critical not just for major listings like Yelp and Google, but also for second- and third-tier aggregators.

The new citation priority is earning mentions in contextual sources - local news articles, industry-specific directories, curated "best of" lists, and community forums. Businesses featured in "best of" or "top local" listings for their categories see significant impact on both traditional and AI-search algorithms.

Audit your existing citations using Moz Local or a similar tool. Fix inconsistencies before creating new ones. Then focus energy on the mentions that AI systems weight most: authoritative third-party recommendations.

Diversify Beyond Google: Reddit, Social, and Direct Channels

Relying on a single traffic source has always been risky. The rise of AI Overviews makes diversification even more important. The most resilient local businesses in 2026 are building presence on multiple platforms simultaneously.

Reddit and Forums

Reddit content has long-lasting discovery value - 34% of Reddit posts continue to be viewed more than a year after posting. While Reddit does not offer an explicitly local search function, local content can be prioritized through geolocation, and local subreddits become forums for authentic connections.

AI systems also source from Reddit extensively. Building out your brand footprint on Reddit, Instagram, and other sources AI may pull from strengthens your overall visibility. The approach must be genuine: contribute expertise to local and industry subreddits without overt promotion. Focus on 3-5 relevant subreddits. Contribute value consistently for 4-6 weeks before sharing any branded content. Upvoted posts and comments naturally attract attention to your brand.

TikTok and YouTube for Local Discovery

A 2024 Adobe study revealed that 64% of Gen Z and 49% of Millennials have used TikTok as a search engine. For businesses like restaurants, salons, fitness studios, and home service providers, short-form video showing actual work and real locations feeds both social discovery and Google's own results.

Google has significantly expanded how it surfaces social content within SERPs. Search results now frequently include TikTok videos, YouTube Shorts, Reddit threads, Instagram posts, and forum discussions. A 30-second before-and-after video of a kitchen remodel can appear in both TikTok search and Google organic results.

Conversion Optimization Over Traffic Volume

As click volumes decline, the value of each click increases. It becomes even more important to maximize the value of every visitor who does make it to your site. This means doubling down on conversion rate optimization - improving page load speed, streamlining your mobile experience, and tightening up calls-to-action.

Track conversions, not just traffic. A business that converts 10% of 500 monthly visitors produces more revenue than one converting 2% of 2,000. Install call tracking. A/B test your contact forms. Ensure your website loads in under three seconds on mobile. These fundamentals compound when organic traffic contracts.

Measuring What Matters in 2026

Traditional SEO dashboards built around keyword rankings and organic sessions are now incomplete. The real issue is the widening gap between content consumption and measurable referral behavior. Your expertise may be used, your brand may be cited, your product details may be compared, your business may influence a decision - but none of that necessarily appears as the kind of website traffic most teams use as their primary signal.

Build a measurement framework that includes:

• GBP Insights: Track impressions, calls, direction requests, and photo views weekly. A downward trend in calls despite stable rankings is an early warning of AI displacement.
• AI Visibility Monitoring:

Ask ChatGPT or Perplexity "Who is the best [service] in [city]?" to check which businesses get mentioned. Do this monthly and document shifts. - Branded Search Volume: Monitor whether branded searches in traditional search engines increase - this signals that even if clicks from non-branded queries decline, your brand awareness is growing through AI exposure. - Conversion Rate by Source: Segment by Google organic, Maps, direct, and referral. Revenue per visitor matters more than visitor count when total traffic is declining.

Joy Hawkins recommends that every business track how much traffic they are getting from AI, noting that Seer Interactive has a template businesses can use for this.

A Practical Prioritization Framework

Not every small business has the time or budget to execute everything at once. Here is a prioritization based on effort and impact: This week (under 2 hours): - Audit your Google Business Profile. Update hours, services, and photos. Write at least one GBP Post. - Respond to your five most recent reviews with specific, service-relevant language. - Search your business name and primary service on Google and note whether an AI Overview appears. This month (under 10 hours): - Add LocalBusiness and FAQPage schema to your website. Use Google's Rich Results Test to validate. - Audit your NAP data across the top 10 directories. Fix inconsistencies. - Ask ChatGPT and Perplexity to recommend a business like yours in your city. Note who appears and why. This quarter (ongoing): - Build a review generation system that encourages specific, detailed feedback. - Start contributing to one or two local subreddits or industry forums authentically. - Create one short-form video per week showing your work, your team, or answering a common customer question. - Set up conversion tracking that measures revenue, not just visits. The local search environment is restructuring itself around AI systems that synthesize, recommend, and sometimes replace the click-through model small businesses relied on. The 2026 Whitespark report shows that local search signals and AI search signals have effectively merged. If you want to show up in Google, Maps, ChatGPT, Perplexity, or Apple, the same inputs now determine whether you're recommended or ignored.

That convergence is actually good news for businesses willing to act. The fundamentals - accurate data, genuine reviews, clear service descriptions, structured markup, and consistent activity - feed every visibility channel simultaneously. You are not optimizing for a dozen different algorithms. You are building one trustworthy, well-documented digital presence that all of them can read.

The game is shifting from "get people to click your link" to "become the source Google trusts enough to quote." The businesses that make this shift now will still be answering the phone when their competitors are wondering where all the calls went.