Will Local Market Ultimately Reject PFP/PPC?

Picture 10There are two things that got me thinking this morning about . . . whether the bulk of the local market/SMBs might ultimately reject PPC or performance-based advertising in favor of a fixed-priced product: the Borrell report on Local SEM churn and a vFlyer announcement about another syndication partner, Kijiji.

For those who don’t know vFlyer, the company enables sellers in key categories to publish once to many different sites in the classifieds/vertical universe. There are free accounts and then subscription products that offer more capabilities.

While many in the SMB world clearly like pay-for-performance ad products (clicks, calls), the majority are not used to paying on a per-lead basis. They’re historically used to fixed-rate, predictably priced products.

Yet, like everything in the SMB realm, there’s no one-size-fits all offering; subscription products (like vFlyer’s model) and PPC offerings for those that are more sophsiticated and aggressive will probably live side by side. However at the low-headcount end of the spectrum a vFlyer-like product is probably a better model than paid clicks. That product ultimately includes a mix of traffic sources as well as other tools and services.

But there’s another (radical) performance scenario in the mix too: YP publishers simply selling calls derived from whatever source (print, online, mobile). This product is being tested right now in certain markets. That makes the traffic sources more of a black box and the publisher manages the delivery of leads or calls from any/all of them. It also means that under certain circumstances “organic” calls can potentially be counted as well (ethical caveats here). This has the advantage of no required education and no analytics to understand, pay attention to or optimize against.

The fixed price product I’m talking about above probably doesn’t yet exist, but GetListed provides a model for at least one component of that product. But there are a range of other components that include directories, search, (potentially) display — and social media tools of various stripes. Nobody has yet to put this package together but I’ve heard a number of things that suggest it’s emerging.

I believe that paid search will be just one component — not the killer app — of the online products that are sold to the bulk of the SMB market in the future. Third parties and intermediaries remain critical to the segment. Traditional media companies (absent the radical calls scenario) are under increasing pressure to justify some of their traditional ad fees as those products see continuing usage losses over time.

The local market is messy and remains a mess for the medium-term.

10 Responses to “Will Local Market Ultimately Reject PFP/PPC?”

  1. Rich Rosen Says:

    Greg – Great post. Calls are a difficult deliverable for many SMBs. As you previously wrote when FastCall411 launched, consumers expect *immediate availability* when hiring a local merchant.

    https://gesterling.wordpress.com/2007/09/12/fastcall411-seeks-to-remedy-ppcall-problems/

    Problem is that merchants don’t always answer their phones or are not available and don’t want to be billed for leads they can not fulfill. In this case not only is the call not billable when the plumber “is under the sink” and not available when the consumer needs them, but the consumer has not been able to make a *decision* in hiring a plumber.

    Until we can better match consumer demand with merchant supply – PPCall pricing will be discounted and margins for calls will be lower than clicks.

    The phone call not only proves ROI, but can help fix this consumer experience by matching ready to buy consumers dynamically with ready to sell merchants. For PPCall to work, the focus must be on merchants who best serve their consumers, rather than the highest bid for calls.

    For example, knowing a consumer is looking for a 2001 Honda Civic (based on the call), a call routing application can offer a redirection to a 2nd seller if the first car is sold, or if the caller wants to keep shopping after the first call. The consumer can also review the interaction with the seller right from within the call. These types of voice applications will help fix the PPCall lleakage and, in my opinion, will drive mobile local search.

    So I respectfully I disagree with your statement regarding PPCall: “there are no analytics to understand, pay attention to or optimize against.” I believe there is significant opportunity for innovation in analyzing the interaction between calling consumers and merchants. I also suspect that Google with the relaunch of Google Voice, and Skype are headed in this direction.

  2. Tim Cohn Says:

    Messy = opportunity to cleanup…

  3. Greg Sterling Says:

    Richard:

    If you record the calls there’s lots of information there too. What I should have said is there’s less interpretation: impressions vs. clicks vs. inferred conversions.

  4. Greg Sterling Says:

    Tim:

    Indeed the opportunity remains because of the consumer behavior. Consumer usage of the Internet for local info is very real and SMBs realize that in most cases.

  5. Chris Travers Says:

    We see clear evidence of your point about a more blended and balanced approach for local search. Businesses and even interactive agencies themselves lack confidence and are confused about what is an appropriate “performance” model. Some agencies however are telling us they are now getting over 20% of their clicks from the natural business listings results versus paid search, and have even been able to cut their costs to achieve the same results for the local company they represent. They did this by making sure the listings were distributed with enhanced details to all the major search engines, online yellow pages, 411 directory assistance and now mobile/gps navigation devices – all of which generate clicks and calls. Of course they did this by using http://www.universalbusinesslisting.org.
    The other factor here has been the difficulty in getting tracking numbers and tracking links to replace those that already exist in databases – if you cannot get these phone numbers embedded into the system, the performance is going to be under-measured. We have had to work hard with the database providers to make this happen and businesses are now seeing positive results. Effective tracking numbers are key to the blended listing/PFP/PPC model.

  6. predictabuy Says:

    Yellow Page publishers have always sold their print product on the basis of ROI – with proof coming in the form of surveys rather than actual tracking. There is the promise (perhaps implicit) that if a merchant buys the ad, they will be rewarded with a certain number of well qualified leads each month.

    SMB’s are simply looking for an digital products that provide a similar level of simplicity coupled with a guarantee of performance. And they rightly expect that in a digital world they will be provided with actual proof of performance — rather than just survey based results.

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  9. PPC Management Service Says:

    yellow pages have no clue how to track ROI. I don’t care what they say.

  10. ppc consultant Says:

    No, I’m probably not typical as far as internet or web marketing experience compared to most plumbing companies. And yes, I do enjoy a good web position due to the years of efforts and tens of thousands of dollars spent developing and maintaining that position.

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