Local newspapers and traditional printed business directory have been dying for more than ten years, leaving small businesses less options for local advertising. In its place, Internet companies like Groupon, Yelp, and ReachLocal came to reinvent local advertising online, but none has proved to be the best digital place for local businesses, since they do not provide a convenient and measurable way to connect with consumers who have a real-time need for their services.
First, let’s take a look at daily deal sites such as Groupon and Living Social. These sites, actually, are good at taking advantage of local disposable income. However, they don’t particularly help small businesses to grow a base of loyal customers who are not just interested in the next lowest offer. On the other hand, consumers that have an emergency need will not be able to wait until an interesting offer is available.
While directory sites such as Yelp and Google Places may help local consumers in the event of a real-time need, most of them mainly focus on listings and reviews, which means consumers may need to look through dozens of reviews to find the right service provider that they truly need. Reviews also may or may not be from a real customer. More often, these reviews are getting posted by reputation management companies, friends or family.
Business directory sites just provide raw information, thus add limited value to consumers. They don’t offer a meaningful opportunity for small advertisers that will turn into a profitable method of building a business. The small local advertiser has bigger challenges in order to make a business profitably marketed on Google or Bing. There are complexities of building the database of right keywords, addressing low quality scores and page ranks, investing in website optimization in order to be able to turn expensive clicks into buyers, and many other things.
So how is a business supposed to generate reliable leads from these services? Does it need to run display ads on Yelp just to be displayed on the site at a cost, which is arguably one of the most ineffective ways of generating leads on the internet? Is the agency supposed to become a search engine marketing (SEM) expert and know the thousands of keywords that it needs to bid for in order to get just the right local customer who is in need of his services at the right time? While companies like ReachLocal try to make this process less, the inexperienced support staff assigned to these accounts simply takes an ineffective solution for local advertising and make it less effective by adding their overhead and markup.
Moreover, all of these ineffective offerings makes local businesses try them all for a short period of time, and then stop using them again. These services in return keep on hiring more sales people to sign up more new advertisers to make up and hopefully grow. The bigger they get, the bigger their problem. Here is what every business owner really needs to have a successful local ad:
1. Perfect Matching
You need to create the next generation of Google AdWords specifically for local. It should be a platform that is designed for perfect matching between a consumer’s demand and the advertisers capacity to offer the specifically requested services in the specified geography. No more guessing, but rather perfect matching in order to avoid wasted ad dollars which has turned SEM into an ineffective solution for local.
You need a simple online marketing. Local advertisers are intelligent entrepreneurs who are active on social sites such as Facebook and LinkedIn. If they are given the appropriate tools, they can do their own advertising on the internet without the need to get ReachLocal’s junior staff involved. However, the tools need to be designed for them and allow them advertise profitably.
3. Digestible Formats
You need to sell traffic to local advertisers in a manner that they can digest such as leads, calls and appointments. Sure, some local advertisers are able to monetize their website traffic, but most cannot. Most small business owners are interested in real opportunities to offer their services. They are not interested in something abstract such as purchasing clicks or display ads.
4. Auction Based Pricing
Lastly, you need auction based pricing for units of traffic digestible by the advertiser. After all, performance based marketing has always been the promise of the internet. Until online marketing companies treat local advertisers in the same manner they would treat large advertisers, small business owners will not commit to spending significant money with them and do so for the long-term. Local advertisers can no longer be an exception but rather we need to build platforms ideally designed for them.
Local represents a massive opportunity. It represents an opportunity ignored by most major players, and many of the early solutions in the space have mistreated and misled local advertisers with their gimmicky offerings and solutions that make no economic sense. The local market is ripe for companies that are willing to extend the promise of online marketing to businesses of all sizes.