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Local Search - The Business Model

When I look back at 2007 I will probably regard it as one of my favorite years. I love to learn and in 2007 I learned HTML, CSS, SEO, SEM a little Photoshop and enoughLocal Search For Morons javascript and php to understand what it does and grab some free code when I need it.

I spent on average 4-8 hours/day learning this stuff and have used this to put together a couple of search marketing campaigns that have exceeded my own expectations in terms of ROI, so I have tremendous belief in what I’m doing.

I came into the year proficient in local advertising having spent 12 years in this industry. I understand the products that are now being presented to local businesses, having helped put together quite a bit of the material in the presentations.

The objective of all this was to decide 3 things:

  • Is there a viable business model for a local seo/sem boutique? And is it lucrative enough for me to leave the security of what I have?
  • If so, what would that business model look like?
  • And should I do it on my own or join/partner with an established firm?

At this point I believe there is a business model that is lucrative and at the same time can provide outstanding value for local businesses. This post details that. It’s long enough that it probably should be done as a white paper, but I hate down-loading and printing those. So, think of this as a white paper that does not need to be clicked-through-to, downloaded or printed.

Local Search – The Business Model

Sales & Marketing

The biggest problem at the point of sale with a local business will be the perception of risk. There is almost nothing that can be guaranteed, that shifts all the risk onto the business owner (though you could argue, doing nothing is a bigger risk). To overcome this, I would bill monthly and have no contracts… (other than… no money everything reverts) now I take the risk. But I am so confident in my ability to provide an ROI over and above what they could get elsewhere, that it’s a risk I am willing to take.

Content Development

The 3 essentials of content development as it relates to the site’s ability to convert in the local space are: Web Design, Layout (usability) and Copywriting. I believe that if a local site gets these things right it can produce conversion rates that are 5 or 10 times the rates of their competitors. Understanding what drives conversions and continual split-testing should produce results like this in time on a consistent basis. It also more than justifies the continued monthly billing past the initial set-up phase.

Not being a website designer and learning that knowing HTML & CSS and calling yourself a web designer is like knowing some musical notes and calling yourself a musician. I have been experimenting with templates that allow me to leverage the talent of some wonderful developers, while including what I know about usability and copy. It could end up being a powerful and low-cost solution; but I am really at the beginning stages of this. I have come to believe good website designers are worth their weight in Gold. This is something I am not sure I fully understood a year ago. The same goes for good copywriters.

SEM (pay per click marketing)

The 2 keys to success in SEM are to know what sites to target and than fully understandComscore Report Local Search Share
how to get the most of out them. The study to the right clearly outlines the sites that should be targeted. By targeting just the top 5 or 6 I can reach nearly 9 out of 10 online shoppers.

Once the sites have been identified, my goal is to get the ad to the highest position for the lowest click price with good copy writing and continual split testing. In many but not all ‘local circles’ I think this will be fairly easy to do because of the lack of competition. However, that’s
changing everyday. I recently deleted an ad with a 13% CTR because it was an ‘underperformer’, I am not sure how far into the future things like that will continue.

Local Seo (on-page)

Local SEO is mostly regular SEO with a longer tail and some specialty knowledge added in terms of maps and IYPs. The fact that it has a longer tail makes it simpler to rank for any given query. The challenge lies in the fact that a business owner may serve hundreds of locations.

I have wrestled with this challenge for most of the year and have only recently begun to really understand how to resolve it in a way to maximize a site’s search optimization and its ability to convert.

What finally opened this up for me and got me thinking in the right direction was a post written
by local seo guide Andrew Shotman as he was doing an analysis of Seomoz’s work on Yelp. The conclusion: separate pages for the most significant geographic locations.

This will allow me to leverage the title tag to rank for the given query, but more importantly, to get clicked on and most importantly, given what I know about the factors that drive actual phone calls to a local business, get the most conversions. This set-up should create a genuine symmetry between seo and conversion.

The challenge will then be to keep the pages indexed. The burden for keeping the pages indexed will fall on content development (the pages need to be useful), good internal/external linking and ye olde sitemap. All this while maintaining the home page’s credibility (with all those links), which will ultimately need to be solved with good website design.

I am of the theory that a small number of geographies will be responsible for a great amount of traffic. So, this needn’t be as daunting as it initially sounds . This too should continue to provide enough value to the advertiser to more than justify the monthly payment as results continually improve.

Thanks Andrew for unlocking that door for me. Testing is required of course… but at least I have the foundation on which to build.

Linkbuilding

This is probably the single biggest challenge in the local space. The advice I read most frequently is that one should do a link analysis on competing sites in order to find good links. Doing this is in the local space most often reveals a sea of spammy links to websites that exist for the sole purpose of linking. I think Google will sniff these out in the future and they will become worthless. Thus my link building strategy for local sites will involve 3 steps:

1) Links to local search sites… the IYPs. Although, they don’t provide link juice. I believe they are a signal to Google of legitimacy and location. I also believe it is the link on the business profile, (not the link at the listing level) that is most important. Many IYPs don’t allow the site to be spidered but they do allow the business profiles to be spidered by search engines.

2)Links that a business owner would be proud to display on the home page. Membership to local chambers, organizations, BBB etc.. The theory would be that if the link would help convert a human, Google would consider it a legitimate vote for the business. These will be the most valued links because they can help you rank and offline studies have shown that such affiliations can help conversion. Again, setting up a nice symmetry between SEO & conversion.

3)Make a genuine contribution to the online community and leverage social media to get the message out. If the content is good, the links should develop naturally. More on this below.

Blog/Social Media

A small business owner with a blog attached to their domain and making a genuine contribution to their community would need to do little else to rank. The small business owners tend to be experts in their field and as such are in a position to really enhance the quality of information found on the web. It could be in the form of how-to articles, or funny what- not- to- do articles or tips from businesses such as lawyers, accountants etc.. The small businesses that I see that legitimately blog are also ranked high on the first page of Google for their important keywords.

Here again this algorithm makes sense from the human perspective as well. A small business owner that takes the time to join their community online and exchange knowledge and information thoughtfully is in a pretty short time going to get better at what they do professionally. It’s almost unavoidable. So in Google’s quest to provide the most relevant response for any given query, returning these businesses’ makes real sense. I think this is the best long-term strategy and will provide the most value to the business and the web at large.

Again, I need to test this to state it factually, but I believe that a business owner using these strategies and developing good content should put them so far ahead of their competition that ranking for their geo/keyword combination should become almost matter-of-fact.

The key to getting this done will be to resolve the ‘how much time will this take’ issue for the firm and the business owner… I need to find a way to have the content developed while tapping into the natural expertise of the business owner but using as little of her time as possible (and mine). I have some ideas on this how to get this done but nothing in stone yet…
but if done effectively, it may lead to a site ranking in the natural results beyond it’s geographic service area which could lead to…

Affiliate marketing

I have a lot to learn in this arena but I do see an opportunity for small business with their unique ability to build certain types of links, their inherent credibility and the real value they could provide searchers in terms of information to rank for keywords nationally. Rather than waste that traffic from geographies outside their service area, I believe there will be opportunities to use affiliate marketing/Adsense to set up additional revenue streams to be shared by the local seo firm and the advertiser.

Review Strategy

A simple step-by-step process for getting customers to review the business on-line will be an integral part of optimizing for local search sites as well getting the most conversions. Here, again I find symmetry between SEO and conversions.

Video

I’m not sure if video is a necessary part of the business model for local yet, but it may be in time and certainly provides an opportunity for improved content on the website as it affords the business owner the opportunity to ‘introduce’ herself to her potential clients and thus should improve conversions. Getting the video to rank in the engines would be a nice bonus. This would probably not be part of any initial ‘package’ but would rather be an add-on later on just because I would enjoy learning more about it.

The Market

So much of this is theory right now, but what fun it will be to learn the parts of these strategies that prove to be most effective. And what value can be brought to the advertisers!

I know that there is $10s of million being spent on local advertising just in the county in which I live. If I expanded that to a radius of a one hour drive from where I live. I would guess that number goes up 5-fold. So, I’m confident the market is there.

Here is an estimate of cash flows in the first 5 years broken down by month if I am able to sign up 3 new advertisers per month, while charging an insanely low $200/mo.. (The advertiser would be required to pay for clicks charges, a pricing model that bundles the 2 is being considered)

My Final Question

So, now the question remains for me… Do I go on my own or join an existing firm or even partner with an seo/designer?

If you have any advice or are aware of some great opportunity, please let me know. You can comment below or contact me directly through the form on the ‘about’ page.

 

8 Responses to Local Search – The Business Model (Beware: Long Post)

  1. Convert offline, excellent concept. Online media must be built to stand up offline. Offline is about branding and today, too many websites think traditional media(of which majority are local media entities), are DOA. Why? Because the Internet has removed all need for geographical barriers? Nonsense. The concept of geography itself is premised on the limitations of the human race. We aren’t yet at ‘beam me up Scotty’. For the most part we shop, work and play local. The Internet has not and will never change this fact. And because of this fact, local media will never die.

    I actually contend that just the opposite will in fact happen. The Internet will become more ‘localized’ so as to accommodate how people actually exist.(as local creatures subject to geographical limitations).

    Today’s Internet is based upon 2 main but TEMPORARY principles that will not last 5-7 years.

    First: Technology, national players have it, local players don’t. Add some trickle down economics to the situation and things move towards ubiquity. And no, the VC backed national players will not be just that much farther ahead. Technology doesn’t work like that. Horse and buggy to automobile was a big jump. Chevy to Lexus is a very minor detail.

    Second: Content. Syndication and other technology will allow content to be free. Don’t think about as though the information is ‘pushed out’ to other distribution sources for that’s not how information propagates. Information is static. What happens is that technology allows more mediums to grant access to stationary information. And what types of mediums are going to take part in creating better access? Local mediums.

    Pizza joints are a type of vertical restaurant because the vertical concept works. The Internet changed to accommodate people rather than the other way around. Local vertical is the ultimate destination of the Internet.

    As to answer your question about joining or striking out on you own, VideoHomes would love to hear from you. We have a network of over 500 local websites. Pick most any major US city, region or state and they all follow the http://www.ChicagoDirections.com and http://www.ChicagoVideoHomes.com branding scheme.

    Convert(online content) offline. How about offline in Orlando? Print OrlandoDirections.com and people know it’s purpose. Does it sound like an online map of Orlando? Mention it in a coffee shop. How about a shopping cart? Branding must be purposeful and geographically specific. This is easy to do in one market. Trick is to get total market coverage without breaking the commonality of the brand. The best websites will allow consumers to shop local…anywhere.

  2. MiriamEllis says:

    Wow, wow and wow. This is a marvelous summary of everything you’ve learned in the past year, Tim. Just terrific (and thanks for the link juice!)

    We’ve taken the approach that we want to be very good at a specific number of tasks. Those are Web Design, Copywriting and SEO for small businesses, including local
    SEO. That sums up what we offer, in a nutshell.

    What we don’t get into: heavy programming (PHP, ASP, Coldfusion, etc), Link Building, high levels of Marketing, most Social Media. Being a two-man shop means there is a limit on what we can handle in-house. What we do means we can put together a complete designed, written, optimized website for most small businesses, but if these other skills are needed, we parter with someone we trust to do them. That enables us to expand our offerings where necessary. Makes sense, right? At the same time, some of our colleagues partner with us for the various things we are good at.

    If you are going solo at this, perhaps the best thing you can do is determine which areas you have the greatest affinity for, and work toward getting known for these skills. For example, you might simply work as a Local SEO consultant. You might not even do any of the on-page work yourself. You might simply consult. Or, it might be some other area you love best.

    I think the thing we’ve seen over the past few years is that different folks are thrilled by different aspects of the web…it really shows in their blogging. Your strong love of local seems, to me, to be pointing the way for what you might do!

    Good luck, Tim, and thanks for the lovely read.
    Miriam

  3. Joe, you make some great points. I hear people talk about vertical directories being the rage. But I think they have been with lackluster results – see Judy’s Book.

    I think the future in vertical will be taking advantage of the natural branding that comes from the name of the town, city,county etc.

    After our names, where we live is the “brand name” we recognize most.

  4. Thanks Miriam. This is the type of insight I was hoping to gain from this post!

  5. David Mihm says:

    Tim, what a great read. (and thanks for the link!)

    I agree wholeheartedly that the local / SMB market for online marketing services is still hugely untapped. I am shocked by the number of inquiries I receive on a weekly, and sometimes daily, basis, and there is simply a shortage of people who provide quality services at affordable prices. The impending foray by NetSol and Intuit/Homestead is only going to increase our value as people become disenchanted with their templated websites and horrendous customer service.

    My .02 would be to at least try things on your own for awhile. As Miriam said, there are plenty of people you can partner with for things that you are not necessarily an expert in. I am starting to do that with link building & social media for my clients.

    You’ve got a great voice & brand going with your blog, and if it hasn’t happened already, I would expect that your own network will start to grow. It only takes one or two clients to start seeding your client list to the point where it grows organically. Stay broad with respect to the topics in the industry that you follow, but figure out what you enjoy doing the most & really develop your expertise in that.

  6. Thanks David… Great advice. I feel like I knew it someway but just had to hear it from professionals like you and Miriam.
    Thank you both for taking the time to comment.

  7. Fred Waters says:

    One of the biggest obstacles to local online marketing, are local businesses and their understanding of the media. You’ll find few have even a basic understanding on how to reach local customers on the net.

    Unfortunately, the only people who read the kinds of excellent articles as the one above are fellow Internet marketers.

    However, once we can educate local businesses on the advantages of marketing online, then the market will take off.

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