Could Google Get $1B per Year from SMBs?

Google said last night that 4 million local businesses has claimed listings in the Local Business Center (now Google Places). Half of those were in the US.

As part of the announcement Google said it’s extending “enhanced listings,” now being called Tags to new cities:

For just $25 per month, businesses in select cities can make their listings stand out on Google.com and Google Maps with Tags. As of today, we’re rolling out Tags to three new cities — Austin, Atlanta and Washington, D.C. — in addition to ongoing availability in Houston and San Jose, CA. In the coming weeks we’ll also be introducing Tags in Chicago, San Diego, Seattle, Boulder and San Francisco.

Effectively this is advertising within organic map results. Regardless, as an exercise, let’s imagine what it would look like for Google if all two million US local businesses that had claimed listings were to advertise at the highly affordable $25 per month (or $300 per year). It would represent new revenue of $600 million.

Google has said it is going to bring back Local Listing Ads, which can cost considerably more (up to $300 I believe), but also operate on a subscription or flat-fee basis.

Methinks there’s a lot of low-hanging revenue here for Google with just a little additional effort. That revenue could exceed a billion dollars in the near-to-medium term.

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9 Responses to “Could Google Get $1B per Year from SMBs?”

  1. troy Says:

    Google will stop at nothing to get a piece of every advertising medium’s pie. The Yellow Pages industry generates over $10B and Google can easily shave 10-20% off that.

  2. Greg Sterling Says:

    Like the use of the phrase “stop at nothing.” Like an evil genius.

    Yes, I do agree that Google could claim as much as 20% to 25% of YP revenues over time. It would have to add marketing and support costs to truly do it right however.

  3. Earlpearl Says:

    I suspect this is a terrific application. Hey its good for Google, but it should be effective for the businesses that apply it. I’d love to get feed back from businesses that are applying it in the test areas.

    Of note we have several businesses, including several in the Washington DC metro region. None are immediately within the borders of Washington, DC. As of right now the rollout to Washington DC is restricted to SMB’s within DC itself and not its suburbs. Big mistake IMHO, at least for the time being. The DC metro region has a population of about 5 million +. Within DC itself there is a population of about 600,000. By far the majority of businesses in the region that would or could use this are currently unable to access the new feature as it is limited to a specific DC address and/or businesses outside of DC that have “spammed” the address aspect of Google Maps or its currently renamed Places Page.

    C’mon Google expand its application in the DC region. I soooooo wanna pay you the extra $25/month (x the number of businesses). :D

    Actually, I like the application. I’m eager to give it a try.

  4. Tim Cohn Says:

    Profits…

  5. MrOpinionated Says:

    100% True Greg…those profits are just sitting there for the taking and you know that people will jump on them ASAP once they are available.
    My plumber in San Jose is already experiencing a modest increase in calls based off of his enhanced LBL. Google is obviously weighing the concerns with providing accurate and believably non-tempered results to the masses. For some reason…some people refuse to click on relevant and local PPC ads that show in the person’s respective area. Some claim that they refuse merely to not click on something they know to be a marketing ad…regardless of the ad’s relevancy to the search.
    Google walks a fine line with the perceivably “pure” Local Listings if people start seeing “sponsered” next to the business name. As always..there selective test markets (please pick Dallas next time!) help them gauge public opinion on these enhancements and changes.
    I would love to see the results of the Local Listing Ads that we saw earlier and what type of traffic they produced for the sites affiliated with the listing.

  6. Chad Burgess Says:

    Great post! I agree with you that this is going to be huge for Google. They will indeed “stop at nothing” – isn’t it common knowledge that they are an evil genius :).

    In regards to the $25/month pricing, this still seems way to high for a lot of Micro-businesses (SOHOs) at $300 spend per year just on local advertising (I am thinking along the lines of Vistaprint type customers). Of course Google is aware of this in their strategy, and this does represent a smaller segment of the market, but with Vistaprint acquiring over 1 million new customers/quarter, it is still pretty significant. I wonder if a company could convert these to paying online marketers, I know Vistaprint themselves are trying with a local search offer they launched a few months back which focuses on organic improvements, but not PPC, etc.

  7. Scott Mosteller Says:

    Google has placed tremendous emphasis on Local businesses. So, a biz better be on the Google map. Google is no dummy. They know how to make money and they can help you make money as well. Get on the MAP!!

    Thanks,
    Scott Mosteller

  8. Greg Sterling Says:

    Chad:

    Yes, the Vistaprint offering is like paid inclusion. If $300 seems high that’s why google positions it $25 per month. And I do believe that lots of businesses will spring for that. In fact, it may make other offerings in the market seem very expensive by comparison.

    The question to be answered is will it drive additional response to those businesses.

  9. Dentist Office Says:

    Bill you are obviously extremely passionate about your position. I commend you on your passion and urge you to keep it up. Thanks.

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