Through a convergence of recent events, local small businesses (SMBs) are beginning to flock to online advertising. Businesses and consumers alike are making substantially less use of the Yellow Pages and other print directories to discover local merchants, in favor of more efficient tools search tools such as Google and Bing. Traditional rating and review directories such as Zagats have been bought and aggregated into Google’s Local platform, and other sites such as Yelp!, FourSquare and mobile apps like UrbanSpoon are making it even easier to find qualified leads for restaurants and entertainment venues.
Online marketing however is a big topic and requires an understanding of the online landscape to position one’s small business appropriately. Perhaps adding to the confusion, is the deluge of phone calls SMBs have been receiving from advertising agencies (reports of 4-5 calls per week on average) offering to help with their own brand of online marketing, some even claiming to be acting on the behalf of Google; an exaggeration at best. While these agencies do represent a conduit for local merchants to quickly get online, how does one know if they are offering the right services for your business or that they will receive a positive return on ad spend?
I took a little time to review the more prominent SMB agencies and I found that by and large they fit into one of three categories:
Local SEO (Presence Focus)
These are companies that focus on getting a company listed in Google and Bing’s maps and local search results. You may have noticed recently that if you type in “Pasadena plumbers”, you now see a map and a list of local merchants next to the map. If you search simply for “plumbers”, you will see a similarly local-biased result set on your phone. This is not to be confused with traditional SEO in which optimizers acquire links to establish relevancy for specific keywords. Rather, they are acquiring citations and reviews on behalf of the local merchant, in the authoritative local directories and registering the business as a local entity directly with Google and Bing.
Search Engine Optimization companies are notorious for selling their services over that of paid advertising by saying their listings are permanent and the listings are free, saving a lot of money in the long run. Sometimes it is true that you can save a lot of money by going the SEO route instead of paid advertising, but it is rarely free. There is a lot of time and effort that can go into getting your business listed properly and staying on top of the search results takes continued effort.
These companies also typically provide website development, design and social presence services, since these efforts are largely related to the effort of better online visibility and reviews.
Paid Advertising (Sales Focus)
Paid advertising companies essentially buy ads and search placements (pay per click) on behalf of the local merchant; a practice sometimes referred to as lead generation. Most often paid advertising companies are purchasing text ads from the search engines, and mostly from Google. In fact, it would not be uncommon for 80% of a local merchants ad spend to go directly to Google. There is also value to be found from Bing and Facebook, and perhaps some specialty niche sites and increasingly from ad banner retargeting, if there is enough volume and budget.
For the local merchant, it is worth understanding the eco-system a little bit, if considering working with a lead generation company. Google AdWords can be rather complicated and some spend years perfecting the art and nuance of managing keywords and maximizing ROI for campaigns. Google however does offer the Local platform for SMBs, a simplified and watered-down version of their standard AdWords interface. Local merchants can in fact run their own campaigns and save the premium that is being paid to agencies to work on their behalf (sometimes as high as 40%!), but its not as rosy as it first appears. First, many of these larger agencies get reseller discounts allowing them to source for a lower cost right off the bat. Second, if you don’t have the skills, you will likely pay more and get less qualified traffic than you’d pay the agency, and third, if can take more of your time that you’d think it should, even using the simplified Google Local platform.
These agencies often do offer a website but it is typically a very simple 1-5 page site, focusing on a sales landing page and a prominently displayed 800 phone number for ad-to-call tracking purposes. Some companies such as ReachLocal may even insist to mirror or overtake your site in order to be effective at running their ads.
Lead Incubation (Relationship Focus)
Finally there is a third type of marketing agency which works with longer-term relationships that may not convert into a sale immediately. For example, Realtors, B2B sales, and other high-cost transactions may first be introduced to a prospect months before they buy. Compare that to the nearly instant transaction of someone looking for a plumber. In these cases, lead incubation experts may use a blend of SEO, paid search, and perhaps even social channels to generate the leads, but take an extra step of staying in contact and following up with the leads periodically, to ensure that business prospect is not lost through the course of the longer sales funnel.
Lead Incubation is typically achieved using a Customer Relationship Management (CRM) system that tracks relationships and stays in touch via email, following up at strategic opportunities to check in with the prospect and potentially provide more value. In the case of real estate, the CRM may be integrated with the IDX data feed which provides a listing of houses for sale and email alerts can be sent to prospects, when a new listing is added that matches the search criteria of that prospect. This is typically referred to as a Drip campaign. Some companies such as TopProducer for Realtors and Eloqua for B2B sales, provide the tools for sales professionals to orchestrate and manage their own “auto responder” follow up emails, while others may automate and manage the effort as a service for their clients.
These companies typically provide a backend CRM and/or DRIP campaign system. There is often a front-end website option or website integration form, to facilitate lead and email capture. Frequently additional information is provided in the form of whitepapers or deeper search query reports to incentivize completion of the form, which enables later follow up by the CRM/Drip system.
As you can see from the above descriptions, these companies and their strategies may very significantly. How does a local business know which is right for them? Fortunately, a lot of this translates to the real world and may be self-evident with a little analysis. For local merchants considering working with an online marketing agency, be sure to understand their focus and if it is a correct fit for your business:
Companies for whom their product or service is generally not differentiated by quality (aka a commodity), will tend to be more sales-oriented. For example, if I am the local seller of bicycles or the local locksmith, people need not qualify me, and so its more of a sales game to get the business. For these companies, a paid averting specialist (lead generation) may be the right fit.
For companies that are a lot more discernible by quality and reputation, paid search may not be effective, since customers are interested to see ratings and reviews first. Examples might include restaurants or doctors. And finally, for real estate agents and B2B sales professionals selling expensive product that typically would not be a cash transaction for a consumer, lead incubation is a must.
At the end of the day what you are really looking for is the best Return on Ad Spend (ROAS). Your ROAS will vary by (a) having the right strategy to match your business, (b) how much you paid for the advertising, and (c) how effectively it was executed. Fortunately most small businesses should already have a sense for the right strategy based on what’s already working for them in the offline world. It may be tempting to reduce cost of ad spend by doing it yourself but remember there is not only opportunity cost in having to learn this stuff yourself, but you likely will not execute as well as experts of the field, if you are new to online marketing. That’s not to say you shouldn’t learn about or dabble in it yourself but those are two counter-weights to consider.
No matter how you choose to proceed, just get started! And plan to set aside 10-20% of your marketing budget for testing and exploring new online opportunities such as social or mobile marketing. There are always new opportunities popping up online and invariably, the largest bounties go to those who are early to the party.