Fixed Fee, Guaranteed Clicks: Turning Search into Yellow Pages

Event: Kelsey Group Drilling Down on Local Search 2005

Session Title: Fixed Fee, Guaranteed Clicks: Turning Search into Yellow Pages

Session Date: April 19, 2005

Session Time: 2:45 pm – 3:30 pm

Session Description:
The various “simplified search” products increasingly being offered to the local marketplace through small-business aggregators (e.g., Yellow Pages, verticals, Web hosts, local SEMs) have been hailed as the right product at the right time. But what’s happening “on the ground”? What is the level of demand, and will these products ultimately generate more business/leads for local advertisers? Are they the key to unlocking the revenue potential of “local,” or will they ultimately collapse under the pressure of rising prices and shrinking inventory in a rapidly changing online/search marketplace?

Session Participants:
Kirsten Mangers, Chief Strategy Officer, SME Global Solutions
John Keister, President, Chief Operating Officer, Marchex
Michael Kline, COO & VP Products, ReachLocal
Michael Sack, EVP & CTO, Inceptor
Neil Salvage, VP, Sales,
Todd Walrath, CEO,

Related Posts: buzzhit!’s Drilling Down on Local Search 2005 Index Page

Session Details[*]:

Q: If you over simplify SEM, you take away some of the efficency (someone pays more, someone less). Can you give pros and cons?

Mangers: This is a fluid model, not necessarily a long term model. What we’ve found is that this is a way to efficiently enter the market and gain market adoption. The more you make it like something they understand (e.g., print), the faster the adoption.

Kline: Need to distinquish between flat fee, guarenteed clicks, and monthly budgets. All have a place, and you need to offer the right solutions to the right vertical/category.

Sack: We don’t believe that we should make guarentees about clicks; like yellow pages… they guarentee presence. The way to reduce churn is to return valuable information back to the customer. We give them a private web site where they can see their advertising presence, traffic, results, etc. Now in the process of implementing call tracking.

Walrath: We have a lot of advertisers that can’t handle all of the volume we can drive. Click volume/fixed-price allows them to control the volume they receive.

Keister: Really a trusted source issue; who do you trust to provide leads, in the right package, etc.

Q: Is there demand for this product, is it being pushed. What do you hear from the merchants themselves

Salvage: The real question is, is the product efficient; does it reduce the time merchants have to spend on advertising so they can focus on the business. That’s an indication of customer satisfaction. Bigger indication is, does it get them found.

Mangers: Largest, most readily adopted product since 1996 in the local space. Resembles mediums that advertisers are already familiar with. Logical sale: How are you promoting your web site?

Q: Average time on sales call

Salvage: Usually takes 10 minutes to explain it and make the sale.

Q: Any change in where the sales process takes place

Salvage: Yes. If you see laptops, ask them about how they buy themselves. Explain that we help you get found

Q: Does this product need to be sold over the phone?

Walrath: Conflict in incentive models, prints, etc. Focus on inside sales. Takes about an hour over 2-3 calls. Lots of education. Getting better, but still needs to be /sold/. Local is not a self-serve model at this point.

Sack: We don’t sell directly; partners sell. Different models. In one vertical, it’s a face-to-face meeting. Those doing it over the phone aren’t as successful. $600 fixed fee to be “visible in Overture and Google”

Q: How are you incenting reps

Salvage: Traditional reps have the best interest of their clients at heart. Not worried about their comission, but whether the client will be happy and renew. [Ed: Selling Internet + print in this case, relationship risk if there’s underperformancec]

Q: When Bellsouth + Google was announced, there were concerns about agencies being pushed out. On the other side, how do you look at the scarce inventory on the SERPs

Kline: Lots of competition between locals and national advertisers. The answer is to give them the reporting they need to make smart keyword choices at the right price point. Publisher diversity is also important.

Keister: Very important to have a stong mix of distribution, not one or two providers. We offer Paid Inclusion in addition to SEM.

Q: What about quality of leads? Different engines provide different quality.

Keister: Having a distribution mix allows you to compare quality of leads; allocate spend (and bidded PPC) appropriately.

Sack: There’s a perception issue. Merchants want to be visible in Google and Overture, maybe FindWhat. Want that “association”.

Walrath: At a local level, the Tail is long. A child custody lawyer in Wilmington, VA is a great lead (providing too much ROI). Very shallow market, will take a long time before these deep markets are liquid.

Mangers: We don’t sell position; what’s important is that the clicks occur.

Q: What other channel options are out there?

Salvage: doesn’t do print; all online.

Audience Q: Customer ownership… who owns the customer? What’s the long term dynamic?

Mangers: [Laughing] This is the ultimate defensibility question. Lots of people could squeeze us out. We don’t go merchant direct, we leverage existing channels with relationships, billing tech, etc.

Keister: Who has the resources. Who has the technical expertise. Hopefully there will be millions of SMEs online and we’ll all have a piece of the action, knowing that some advertisers will eventually go direct to Google, etc.

Q: Pick 1… What happens when multiple groups are selling in the same geography, or, Do calls have to become part of the package

Mangers: Less than 18% redundance in the same market amongst verticals, level of players etc. And yes, calls have to be part of the solution

Sack: SEs won’t allow multiple listings (from different vendors) linking to the same site; whoever gets there first wins.

Salvage: Calls? It depends on the client. Requires merchant training, education. They need to learn how to convert

Walrath: Click reports monthly, call reports weekly; showing value is key. Most merchants convert 30-40% of calls into customers. Not sure that it has to be billed on a per-call basis; might be monthly, etc.

Kline: First question: best product wins… retention is the name of the game; lots of transparency in reporting, accountability, etc. Not sure if you can charge per call; seems like sticker shock at $10-$15/call.

Keister: The company that wins will be the one that can grow with the customer.

* These are raw, unproofed notes taken in real-time. Nothing attributed to any speaker should be assumed to be an exact quote. Rather, my goal was to capture and communicate the essence of what was said. If there is a significant mistake, please post a comment or email me; I will make a correction at my earliest opportunity.

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