The Local Search future is rosy, but it will also be rocky for many small businesses unless the complexities of running ads in this medium are laid out in advance.
Google’s latest high-profile deal, announced last week, is with Verizon SuperPages, a prominent IYP (Internet Yellow Pages) business directory. The deal makes Verizon an Adwords reseller, which will let SuperPages’ tens of thousands of small businesses run their PPC ads through Google’s various online products and those sites it distributes ads to, including Ask.com and AOL.
The deal makes sense for both Google and Verizon: while SuperPages is a popular site, its thousands of local advertisers often want to buy more clicks than its traffic can support. And while Google rules Search, it lacks a sales staff large enough to serve the thousands of “mom-and-pop” businesses listed on SuperPages (nor is it economically feasible to service smaller advertisers with a dedicated sales force. Conversely Verizon has a 3,000-person sales force with long-standing relationships with these same small businesses.
From a mom-and-pop perspective, the deal also looks pretty good, especially in light of a recent comScore study of SuperPages advertisers which showed that Local Search advertising offers impressive ROI, especially for businesses in verticals such as Hospitality (ROI of $22.54 for each ad dollar spent, Retailing (ROI $18.85), and Real Estate (ROI $13.60).
But the comScore data also showed that many SuperPages advertisers seem to be struggling to maintain positive ROI in certain verticals. For example, businesses in the Automotive category got back just $1.93 for every ad dollar spent, Professional Services eked by with $1.21, and Trade Services did the worst, with an ROI of just $0.31.
Why are these verticals underperforming? Well, the comScore data isn’t granular enough to make any conclusions, but differences in advertiser AOV (Average Order Volume), plus the special characteristics of each vertical likely account for the differences.
Regardless of the specific reasons for these differences in ROI, it’s clear that small businesses with tight search marketing budgets can’t afford to run wasteful PPC campaigns. Here are two issues which any mom-and-pop contemplating a PPC campaign, on SuperPages or elsewhere, should consider before hitting the “Start Campaign” button:
1. Post-Click Issues
For big and small businesses alike, it doesn’t make sense to start paying for clicks if these clicks don’t result in conversions: leads, purchases, or whatever one’s success metric is. Unfortunately, even a casual survey of small business sites running campaigns on SuperPages shows that many of these pages haven’t been optimized for conversions.
It’s unrealistic to expect that Verizon’s salespeople will stress the fact that “landing pages count” to new mom-and-pop clients (the job of a Verizon salesperson is to sell advertising, not to sell conversions). But unless this point is made forcefully, it’s likely that many mom-and-pops will not have a happy initial experience with Paid Search.
2. PPC Isn’t Set and Forget
Google has done a lot recently to make its Adwords platform more accessible to mom-and-pops by launching Adwords “Starter Edition”, a scaled-down (some would say “dumbed down”) version of Adwords that lets advertisers begin running a basic PPC campaign by simply filling out a couple of forms.
Making PPC campaigns easier to run is a laudable goal, but there’s a real danger here, which is to make a process which is complex and difficult look automatic and idiot-proof. It takes expertise, testing, a fair amount of monitoring, and plenty of analysis to run a profitable campaign: this is why businesses with deep pockets provide a dedicated staff to handle PPC campaign management or outsource the process to a SEM. Unfortunately, the search marketing budgets of typical mom-and-pops are far too small to justify investment in an in-house team, which leaves them vulnerable to committing expensive errors.
Will Verizon and Google do their part to make mom-and-pops aware of these complexities? Well, if you mean offering online tutorials, FAQs, and perhaps a few moderated message boards, the answer is probably “yes.” Will this kind of arms-length help be sufficient? Only time will tell.
3. Limited Screen Real-Estate & Clicks
In both Google and SuperPages, there is a limited amount of screen real-estate that the users notice and heavily engage in. Even fewer listings get clicked. This means if there are ten local pizza restaurants in a zip code or city joined by Dominos, Pizza Hut and Little Caesar’s all biding for the keyword pizza. Only one or two will get the click.
Will Mom-and-Pops Take the PPC Plunge?
As increasingly smart mobile devices proliferate, expanding Search past the fixed-site Web browser, the size of the Local Search market will grow: the Kelsey Group, which studies the field, predicts it will grow from 2005’s $3.4 Billion to $13 Billion in 2010 at an annualized growth rate of 30 percent. Much of this growth will be fueled by mom-and-pops for whom Search advertising has hitherto seemed irrelevant, and IYPs such as SuperPages will serve as a broad gang plank for these businesses to jump aboard the Search juggernaut.
It is my hope that Verizon, Google, and any other company which will be primary beneficiaries of this growing revenue stream regard their mom-and-pop customers as partners, even though these advertisers might only be spending a few hundred dollars a month on Search. I hope Verizon’s salespeople are as upfront about conveying the risks of advertising in this market as they are about its upside potential, and that a high level of customer support is provided to answer the inevitable questions and concerns these mom-and-pops will have after their Ad Groups have been activated. Because running search campaigns that work is a task far more complex than placing an insertion order in a Yellow Pages phone book.
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Mr. Frog is a leading Search industry visionary. Mr. Frog is a member of the Did-it Search Marketing team which accompanies him to most major
marketing conferences.
