In the light of Borrell Associates recent study that showed astronomical churn rates at local search resellers like Yodle and ReachLocal, there has been a lot of speculation about the reasons why. I commented on David Mihm’s Blog that price is a big issue and how much they charge is still unknown.
Andrew Shotland, a a well respected seo, speculated on that same post that cost was probably between 30% – 50% of spend.
Here is what 2 customers of a prominent reseller told me:
I told them I wouldn’t do business with them until they told me how much they charged. I knew they weren’t doing it for free so I pressed. They still wouldn’t tell me and I continued to press until finally they got a manager who told me “We get the clicks at a discount from Google, so you would be paying the same thing as if you did it on your own”
That last statement sent my eyebrows up to the ceiling. The customer asked me if I could find out for him whether it is true or not. I told him that I would put out to the community.
I would like your opinion please help by commenting below.
Do you believe that some resellers get a lower price on clicks from Google and make their money on that spread?
David | 12-Jun-09 at 9:06 am | Permalink
HA! That’s a flat out lie. Ask them to put it in the contract and then run the campaign and have a lawyer press them for answers.
David Mihm | 12-Jun-09 at 11:14 am | Permalink
Tim,
I would not be surprised if Google explicitly gave out discounted clicks to *some* of their resellers, given the recent preference they’ve shown for larger enterprises in Local. There’s also something to be said for an organization that manages thousands of accounts across hundreds of thousands of keywords as far as the possibility of knowing a bid/placement “sweet spot” for their advertisers.
Now, I doubt that those discounts/efficiencies are anywhere near the margin that Yodle or the others are making (and again, as I said on my blog, I am not badmouthing Yodle or anyone else; just not sure about their long-term ability to compete).
Mike | 12-Jun-09 at 12:41 pm | Permalink
Google gives authorized resellers a quarterly bonus if they hit certain sales targets.
However, I don’t think anyone is staying in business just from these bonuses, and it is deceptive to spin these as “we get a discount from Google”.
Local Search Hound | 12-Jun-09 at 3:13 pm | Permalink
This is good info guys… I was not aware that authorized resellers got a bonus— good to know.
Mike, I agree if they are spinning this as not charging a premium for clicks if they are charging a premium for clicks it is really deceptive. In fact, I would say flat out lie works well as a way to describe it.
David, I think if it is true it should be in the contract… good thought. Heck, if I could resell Google clicks at a discount it would be in my marketing!
David M, I’m not sure how much incentive they have to find the sweet spot. And when I say that, it’s not a knock on any company but on the business model, hope that makes sense.
PPC-Pro | 22-Jun-09 at 1:58 pm | Permalink
I was an AR for a awhile, the 1/4ly bonus was nothing to run a business on and never even covered api costs.
Boosting QS does reduce click bids vs. placement and I think a production like environment would factor those metrics in, making sure they hit certain quality goals in their ad groups, saying they can gt traffic for less
Jonathan | 12-Sep-09 at 12:29 am | Permalink
I am a small business owner and just came across Yodle at an expo. The rep described their compensation from Google like this….if the word cost $4, then we add a premium to it and you would end up paying about $4.40
So, after reading as many blogs, reviews, etc…that I could find….is Yodle or any of these similar companies worth the expense???
Local Search Hound | 12-Sep-09 at 8:49 am | Permalink
Jonathan, I am a competitor of Yodel, so my answer may be biased.
In my opinion that example the rep gave you how they charge is hypothetical. I don’t think the reps know the percentage.
The biggest problem is the lack of transparency, you will never have any idea what % they really charge.
With that said they can provide a decent ROI.
But listen to me now, I’m telling you Jonathan, if you are thinking about going on the internet. Go down the list of people in my blogroll and talk to them.
You’ll get no guarantees and I doubt if the sales presentation is very polished but you’ll end up with much more value in the end. PPC is only one part of the equation.
John | 26-Feb-10 at 8:33 pm | Permalink
Through trial of the service and comparision with Google Adwords directly I belive it is over 300% markup. Not really worth it since google and other search engines makes it pretty easy to create your own ads.
Mike | 10-Mar-10 at 10:13 pm | Permalink
John,
300% is really not a true estimate. Yodle will only take on industries that they can actually give a return on investment too. If you have the time to manage an adwords campaign and still conduct business then you are more than likely in a business that does not have many keywords. Odds are Yodle would not take on your industry because they would deem it unworthy at the current time. I have sold SEM for years now and dealt with Marchex, Web.com, and many others. The performance that Yodle offers is far better than the others.