In the third edition of the Local Search News Podcast Steve Espinosa sits down with Steve Stukenborg from Google TV and discusses the success Google TV has had with national and local advertisers. They also talk about the future of Google TV and the plans for YouTube and Google TV.
Facebook has had a hard time in attracting advertisers to their site. Mostly because advertisers have not figured out how to monetize or receive as high an ROI as they do when they advertise on Google with AdWords. As it sits right now, Facebook really only offers display advertising without the demographics guessing game so it is not really a surprise that Facebook has not attracted as many local advertisers as they would like.
You might be asking “Why the heck would Facebook want to attract local advertisers?” The answer is simple: user experience. Not only do users not want to see ads like the ones you see below, but in the conversations I’ve had with people at Facebook, they don’t even like them.
Besides the fact that Facebook is trying to tell me I need to workout and go get my teeth whitened, it isn’t relevant, and therefore I can guarantee that they have poor click through rate. I don’t know about you, but the last time I checked poor click through rate and lousy user experience doesn’t usually equate to great revenue. So what should Facebook do? The answer is simple, make it easier for local advertisers and search marketers to target relevant users.
Data is King
Facebook is an information company just as much as they are a social networking company. Their biggest attraction as a company, from a marketing perspective, is the fact they know everything about their users. They know what kind of music they like, where they live, how old they are, where they went to school, who their friends are, and much much more. In fact, they could potentially be the most valuable market research company out there because users are volunteering this information and have no reason to lie about their answers. It is real time information where we can actually see and predict trends amongst demographics before they happen. They even track their users click paths, navigation summary, and as you can see below, if there are two ways to get to the same destination on the same page they track that too.
It starts with categorizing
Currently when advertisers go through the process of setting up a Facebook campaign they are not asked what kind of company they are, only what demographic they service. So why wouldn’t Facebook categorize their advertisers? Wouldn’t it make sense for advetisers to categorize themselves when they sign up or before they create a new campaign? Instead the only real categorization Facebook can make of its advertisers are amount spent, targeted demographics, and keywords. But that is not enough. Completely different companies could be targeting me (i.e. teeth whitening and free stimulus check companies) and two different companies could be targeting the same keywords.
If and when Facebook starts categorizing all their current and future advertisers they will be able to track performance across specific verticals, whether they are small businesses, national chains, or just scams like this ad:
They will be able to utilize this by implementing the my next suggestions: keyword and demographic information clouds.
Information Clouds
Yes I know, we all have had about enough of the hype about information clouds, cloud computing, or cloud anything for that matter. However, now that Facebook has all of its advertisers placed into categories we can take real advantage of that by letting advertisers help each other out. We now have the ability to let a small business with a $100 per month budget take advantage of information and data that would have cost 10’s of thousands of dollars to put in place. You may be asking how do we do this. It is simple, store all advertising data by advertiser category, demographic, economic, and city population.
Facebook first needs to overlay the United States with population data, demographic data, and economic data such as median income. All of which they can easily get from the census bureau. Yes,the census bureau data is a little old but it is a great starting point. After they do this they will easily be able to place Facebook user data over those information layers and determine their market shares per neighborhood, cities, etc. So what does this give us? This tells Facebook where their advertising will be most effective compared to other advertising sources due to market share.
Now that we have our data layers in order, let’s bring this all together. Let’s say that I am Widget, Inc. and I sell blue widgets to people . I only have a budget of $125 per month to advertise on Facebook and I can not afford anymore because of the recession. Why should Facebook rely on that user to know what demographic is going to work best for Widgets, Inc? You have no way of knowing that the current demographic Widgets, Inc is currently targeting will be more profitable or successful than any other demographic. The answer is simple: let the users tell you, and no, not by the little thumbs up and thumbs down icons, but by tracking click data and conversion rates.
You might be thinking “but we only have $125 spend and thats not enough for a good test size”. You’re right, it isn’t, but remember that Facebook’s strength is in its numbers. The entire crazy valuation it received was based on the number of users and the information it had about its users. So wouldn’t it make sense for Facebook to combine all their advertisers into one information cloud, into one database. If Facebook implemented the categorization method they would be able to track all companies that sell blue widgets and treat them as a whole. Now, instead of $125 in spend data we have $20,000 in data. Each company still holds unique traits such as economic climate, geographic are, etc. but now each advertiser can learn so much more and therefore they can earn so much more from their dollars. This new data set can go much further than any one widget company’s data could. In this solution, the advertisers help Facebook find out what demographics are perfect for specific verticals and users tell Facebook which companies and ads they like best.
Imagine if advertisers had a feature similar to the current “You might also know” section where Facebook suggests other people on Facebook you might also know and have not yet run into. Well what if we had a section similar to this entitled “Demographics you might also like” where advertisers will receive suggestions from Facebook itself based on data where Facebook has noticed great performance amongst the demographic and the category of the advertiser.
Template Ads
Ad copy and content is one of the biggest things that hold up marketing efforts for any company. So if you leave that to the advertisers to figure out, you are leaving money on the table. Not only are you leaving money on the table but you are also assuming that the advertisers ads are so good they will see ROI and spend more with Facebook. This is not a good strategy. Google recently launched templated display ads where users can simply pick out the ad they like and fill in the text right in the Google UI. This increased both user involvement and the number of ads made.
Facebook could come up with ad content and ad pictures that captivate their audience and encourage users to click through. This obviously would be done for each vertical and eventually specific verticals within geographic areas. Now we won’t stop there, after the ads are made we will help distribute them to our advertisers; letting them know we have completed tons of market research, design, and testing on there behalf, for free. We will then let the audience determine which ones they like best by analyzing click through rates and if they became a fan of that business on Facebook. The more hands on and easier it becomes for the advertisers to take advantage of the jump start that Facebook has provided the easier it will be to implement A/B tests internally without relying on the users to do so.
A/B Testing
A/B Testing is something that every company should do for every part of their marketing, but they don’t. So what does that tell us? We should not rely on customers doing this. Once companies utilize the tool above we will have a large enough amount of ads being used that are based on the same template framework to where we can now calculate internally which ads are performing best (i.e. Computer ad #1a or Computer ad #1b) without having customers individually run these A/B tests themselves.
This same type of internal testing methods can be used across all aspects of the advertising campaigns, not just the ads. It can tell what geographic areas respond to specific industries best, which education level becomes fans of businesses the most, and so on. With this testing being done and the amount of users Facebook has, they can easily become the smartest advertising platform around, and dare I say even smarter than Google once implemented .
Math doesn’t lie
The data really does go much deeper than click through rate and fan conversion rates. When referring back to demographics, population sizes, and economic data we can determine that in situations like 22-35 year old mothers with an average household income of $150,000 ads with a coupon offers are not necessarily the best, but where the median income is $75,000 it actually is the top performing ad based on click through rate. Math will not lie to us. Math is not opinionated and it is not emotional. Facebook will soon be able to say they provide the maximum amount of ROI possible to each user because Facebook will continue to grow and learn itself as advertisers spend more and more on Facebook. With the combination of best possible Maximum ROI, ease of use, and a built in marketing expert (the new system that is created) the question won’t be will advertisers spend money on Facebook, but how much.
Mike Boland and Steve Espinosa discussed Mike’s latest column on Local Search News entitled “Mobile Local Search: Where to Begin?” and discussed mobile search trends and where the market is going. Among the topics in the discussion was how long will it be until the majority of phones consumers have full HTML browsers.
Over the last couple months we have heard many different ideas on how Twitter can successfully monetize their surge in popularity, growing user base, and overall traffic. The ideas range from charging for an account, charging for premium accounts, simply adding AdSense, and the list goes on. What we haven’t heard is how Twitter could add local search into their business model, monetize it successfully, and create more user generated content.
When you think about it almost everything that is on Twitter is inherently local. The simple question “What are you doing?” implies that because, unless you are at home watching TV, you are doing something that is local, whether that is local to you or to someone else. The obvious example of this is when you go out to a restaurant and write about that on Twitter, whether you say “Going out to [insert name here] with @stevemcstud” or “Just had a great dinner with @stevemcstud at [insert name here]“. If you simply perform a search on Twitter for “restaurant in”, the point being to see how many people tweet “I am going to restaurant in [insert city]” or “Anybody know of a good restaurant in [insert city name]?” you can see that with just that one phrasing there are tons of results of people talking about local restaurants.
With restaurants being one of the biggest categories in local search as far as traffic and advertisers, it would be easy to roll out a beta test for this to justify whether local would work for Twitter or no. So how do I propose Twitter take advantage of this? Create Business Twitter pages. Just like Facebook, where the page does not have as much functionality as a real Facebook but simply serves the purpose of people being able to connect and talk about a subject. Twitter can simply buy the data of all the restaurants in San Franscico and publish them with static pages so that people can actually say “I just ate @lunchbox with @stevemcstud and it was great!” instead of actual tweets like this:
@dudeman718 could of actually told @SoulPSuperstar where he went rather than a “sushi restaurant in Maple Shade, NJ” and they could of actually clicked on @[restaurant name] and gone and looked at a Business Twitter page. What would a Business Twitter page look like you might say. Like this:
Traffic
With this type of page it requires absolutely no action by the restaurant owner or anyone at the restaurant. Twitter would easily be able to kill it in the SERPs if they structured the business pages into a well done SEO friendly directory which would help users find restaurants in their city. Sooner rather than later you would see twitter showing up for searches like “Restaurants in San Francisco” with all that link juice and fresh content it is no question. This would drive an amazing amount of traffic to Twitter, my guess would be about 4-6 million more visits via search engine traffic with this fully deployed.
Small Business Accounts
Besides the new traffic this would allow business owners who don’t know about Twitter to sign up for it. Business owners always at some point perform vanity searches for their business name, in which Twitter would show up in the results in Google and then they would sign up after seeing all the reviews people are writing about their business. Twitter then could charge for business accounts and then monetize the business account that are not claimed by featuring claimed businesses on other related business accounts that are not claimed, something like a “You Might Also Like” type feature.
User Experience and Advertising
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By implementing this you get a huge double benefit. You get to charge businesses for accounts which would generate revenue. Then you also get to rank the directory by Twitter buzz, allow users to tell other users what they are doing more accurately and with less characters, and create more user generated content overall. With people doing nothing but saying what is on there mind on Twitter, they can easily pass Yelp! as far as content is concerned while keeping their original model as a web app intact and not selling out but rather adding a needed feature, the website.
Partnerships
Partnerships will come flooding in with the likes of Superpages.com, City Search, and others. Twitter will not have to complicate their business with a sales force, but just partner with the giants in the local industry who already have the customers, their credit cards, and revenue coming from what exactly small businesses want, more customers. With traffic coming in from local searches, reviews, and buzz, companies with have to partner with Twitter just to keep up with the industry.
It’s All Bout The Dolla Bills
So how much money can this actually bring to Twitter? The current valuation has Twitter worth about $250,000,000, last time I checked, and that was based solely on the buzz and the amount of users they have on the site. With an estimated 6,000,000 visits a month coming from this program and a majority of them will no doubt be recovery searches (people or business owners searching for business names, phone numbers, addresses etc.) this will get Twitter in the public eye to consumers and businesses owners doing vanity searches. There is no doubt that a percentage of those new visits will end up signing up for the service.
With the current valuations, the actual worth of each Twitter user is debated to be between $73 and $42, so let’s just say $40 to be safe. If only 2% of my estimated 6,000,000 new hits per month actually sign up for the service that will total 120,000 new users every month. So what is 120,000 users worth at the current valuation? $4,800,000. And that number grows every month with new sign ups and new visits. Now I realize that not every single one of the 6,000,000 visits every month will be brand new every time, but without a doubt from my experience of working with Local Search Destination Sites the majority of them will be.
The number above does not even take into account the monthly residual they could make from small businesses that they sign up through partnerships. From pure revenue stand point they can easily get 50,000 small business clients spending $6 per month. So let’s assume that they have a 50/50 revenue split. They receive $150,000 per month and growing residual income from partnerships. Now if we apply the math we did above with each user worth $40 then these 50,000 new paying customers add a value of $2,000,000 to the company as well.
Conclusion
All and all this is what you get:
So that is my 2 cents. For all I know I could be completely wrong. Oh yeah, by the way, in the hour it took me to finish this article there have been 65 more people who had “restaurant in” in their tweets.
So we finally got around to putting together a podcast for Local Search News! It has been in the works for some time but it finally is here. We will be trying to put one out every week from now on. In the first episode I had Mike Belasco join me to discuss recent happenings in the local search world and a couple seo tips as well.
Here is a brief overview of what we disucssed and some screen shots for you reference of what we are talking about in the podcast:
Google Onebox Change
Google no longer requires a geographic modifier inserted into the a users search for some broad phrases and will show a Onebox result based on the users location when the search is conducted. We had noticed an up tick in referrals from Google with no geographic modifiers and wrote an article on it here.
Google Doesn’t Know How To Work Adwords
We then ventured a little off subject and discusses how Google is now placing Adwords for local searches as seen below:
But when you click on the ad they take you to a search for “pizza” but it is for San Francisco. They probably should have a lower quality score because of this 
Microsoft’s New Onebox
After Google we discussed that Live.com now has a Map next to their local map and pretty much received no recognition for it as we talked about it here .
Twitter Mobile
Mike Belasco pointed out that on the Twitter mobile profiles have dofollow links.
We talked about much more. Listed to the podcast for much more. Have an idea you want talked about or an idea for the Podcast? Drop us a line in the comments and let us know.
Ockham’s Razor is a scientific principle that basically states, in layman’s terms, that all other things being equal, the simplest solution is usually the best.
Local search is not complicated. We make it complicated. OK, the technology behind local search, and all of it’s various nuances and offerings, may be complicated, but the market itself, the opportunity, is not complicated. We only make it complicated.
Local search insiders, pundits, analysts, SEO and SEM gurus, entrepreneurs, vendors, and service providers are all contributing immense value to the local search sector. Innovative ideas are sprouting out of the ground every day. Some will stand the test of time, some will not. Those that seem to build the most momentum always seem to be the simplest ones.
It’s no mystery as to why there’s so much innovation too - it’s a huge market opportunity, big problems need to be solved! The earthquake is coming! The money is on the move. It’s just a matter of time until the tectonic plate ceases it’s tremors and finally starts the earthquake that we’re all holding our breath for. We’ve all got our instruments in hand, our gauges, measuring tools, sensors ready for the next tremor, anticipating the big one. It’s a comical vision, yes, and some of the naysayers think we’re all a little nuts, running in circles, waiting for the shift to finally happen.
However, and this shouldn’t come as news to anyone, the “local search market” is not a new market, the only thing that’s new is the delivery mechanism. It’s the same market that’s been under our noses for the last 20 years, 50 years, 100, even 300 years! It’s the same market that paid for advertising in the first American newspaper in 1704. It’s small businesses, it’s local merchants! It’s your neighborhood barber, the accountant down the street. They are the market.
Offerings like pay-per-click, SEM, SEO, call tracking, mobile search, etc, are all fantastic offerings that make complete sense to me and to you, the local search insider, and they work. But sometimes I think we all need to remember that those offerings are buzzwords to the typical advertiser and sounds like techno-speak to 98% of the market. National advertisers, ad agencies, CMRs, sure - they know what you mean, but the vast majority of the market has no idea what you’re talking about. It’s total gibberish - sort of like listening to Wall Street analysts talk about derivatives!
The only thing that these ~17 million local merchants are concerned with is how you can help them obtain and retain customers. Period. That’s it. That’s their only priority! Doing that solves all their problems. Doing that helps them pay their clerk, their rent, their electricity bill, make their inventory payment, their tax payments, and sometimes even themselves.
With every market there’s a need. With every need there’s a solution. It’s up to us to identify those solutions and build them. But selling them is the real test. It’s not a solution until you’ve sold it and proven that it works. So remember, keep it simple - the simplest solution is usually the best.