• by Ross Fadner , October 2, 2004

Dex Media, publisher of print edition Yellow Pages, has designed a new program, which aims to help small- to-mid-sized enterprises (SMEs) establish both an online presence and a search marketing campaign. Analysts say the new product is simple enough to incentivize SMEs to allocate spending, but worry whether the cost-per-click (CPC) model is relevant to their needs.

Called Dex Media Clicks, the program is available in several package options, including search, Web design, and Web hosting. The search package guarantees a certain number of clicks across a network of more than 30 search engines and portals for a flat fee; packages start at less than $100 a month. Dex has partnered with SME online services provider Interland to handle site design and hosting, which includes site updates, management, and marketing. Another partner, SME Global Solutions (SGS), a local market broker of interactive products and services, will broker and monitor search campaigns.

Dex Media, which published 259 directories in 14 Western and Midwestern states for Qwest Communications International Inc.'s White and Yellow Pages in 2003, already has a large and established pool of SME advertisers. By marketing the new product to its existing customer base, analysts say that Dex is in a unique position to introduce a reticent SME market to search advertising. As increasing competition steadily raises bid prices, analysts have called the local market the next frontier for search. However, getting SMEs to advertise online has proven difficult, precisely because 70 percent of SMEs don't have a Web site, according to local market research firm The Kelsey Group (TKG)--a necessity for participating in paid search. Also, the fact that 98 percent of the roughly 22 million U.S. businesses can be classified as SMEs indicates that the market has incredible growth potential.

JupiterResearch Analyst Niki Scevak added that "anything that simplifies search marketing for small businesses is a good thing," but he added that relevance is problem. Scevak noted that in most instances, clicks are not relevant for service-oriented local businesses. "We're most excited about moving away from the CPC model [in local search]," he said, adding that pay-per-call, which is currently being deployed by FindWhat's publisher network, provides these advertisers with a more actionable cost-per-acquisition (CPA) model.

However, Scevak said that Dex Media's existing relationship with SMEs will facilitate the crossover process, but that as CPC prices rise, the same Darwin effect that is currently taking shape in the more saturated areas of paid search will also affect local search categories, which may make it hard for Dex to sustain the relatively affordable package they are currently offering. Scevak says a CPA model like pay-per-call will make more sense in the long run for these advertisers. However, as yet, pay-per-call has only limited publisher distribution through the FindWhat network, which means that a flat fee pay-per-call product is not yet a package option for enablers like Dex.

TKG Analyst Greg Sterling said that "SME aggregators" like Dex Media "are the key to driving SEM/SEO [search engine marketing and search engine optimization] to the SME market." He added that "local businesses are hungry for this simplified version of SEM," because it is priced simply and requires no keyword provisioning by the local businesses themselves.

Sterling has often said that getting these advertisers online is the crucial first step; apparently, according to Dex, they are adopting. "Our advertisers are increasingly eager to market online, but rarely have the time and resources for more complex strategies, such as keyword selections and auctions," said Susan Greenman, vice president Internet Products for Dex Media.

Dex Media is not the only player offering hosted pages for the SME market. Both Overture's LocalMatch and Ingenio/FindWhat's pay-per-call host simple contact and information pages for their SME customers.