My friend Mike Boland (BIA/Kelsey) discusses check-ins, geo-location startups and monetization over at SearchEngineWatch:
(…) But in all of the excitement, there’s still something missing; a clearly defined path to monetization. Some of the players mentioned above are exceptions with national advertisers, and other revenue streams such as carrier deals. (…)
The problem is that this ignores what those in local space have known for years; self-provisioning ain’t that simple. But the line is still the same from newcomers to the geo-location game: “Why wouldn’t any SMB want to sign up for something that drives foot traffic into their store or restaurant?”
In theory, I agree. But the thinking falls apart with the reality that most SMBs don’t have the time, technical competence, and inclination to launch and manage these promotions. Plus, don’t forget the complexity of countless sales reps and new digital options flying at them from all angles. (…)
via Mobile & Location: Checking in on the Latest (Part 2) – Search Engine Watch (SEW).
What it means: Monetizing online “local” is very difficult. Even Google has had difficulties with it. The only ones who have been massively successful are directory publishers but they forgot to take care of users all these years. It’s difficult to monetize but not impossible. Just look at Groupon. And I think we’re starting to see savvier small merchants out there, who are starting to use the Web in a very strategic fashion. But it will take time.
Seb Provencher's Blog 
In fact the view expressed in the excerpt quoted is somewhat outdated.
At one time monetization was in really a question mark across much of local (beyond YP). Now CityGrid, Where, LocalAdXchange, Groupon et al, LSN, Verve Wireless and a range of others are monetizing local in a way that was not true even a year ago.
Is there 100% fill? No. But the networks now exist to better monetize local for publishers and developers broadly.
In terms of SMB self service . . . they’re not doing AdWords but there is a great deal of self-provisioning happening. SMBs are confused. However, more than 2M have claimed Google Places and something approaching 2M SMBs have set up Facebook pages. These are not “advertisers” per se. However they are doing self-service and other things online that the “conventional wisdom” would have scoffed at a couple of years ago.
The fact that scores of local bars and restaurants across the US (not just in metro areas) are using Foursquare — which could not have been predicted — is a metaphor for how the world has changed.
Yes . . . local advertising is still largely “sold not bought.” But the world now is much more nuanced and complex than it was when that cliche was routinely repeated at local conferences.
I’d agree with Greg, things have evolved drastically over the last 12 months, but we are far from 100% coverage.
Local monetization will grow through mobiles, but for this to happen, personalization will need to be embrace, simply because there are far too many places to monetize.
Our thoughts on this here:
http://www.likecube.com/blog/2010/6/18/where-next-for-location-marketing.html
PS: LikeCube is the leader in recommendation engines and personalization solutions for locations.