Commentary
Turning The Tide On Local SEM Churn -- It Takes More Than Clicks
- by Bill Dinan , July 23, 2009
Online advertising is far more complex than purchasing traditional media. Yet business owners with limited time and marketing experience are getting three to five calls a week - sometimes more - from enthusiastic and talented sales folks selling local SEM. Once a merchant signs a contract, which typically allows cancellation after a short period, the SMB is left alone to evaluate the success of the program. All of this has set a precedent for failure and frustration all around.
Local SEM resellers are driven by volume as SMB budgets are low according to advertising standards, with the majority spending hundreds, not thousands, a month. So, the general focus is on selling not servicing. Combine that with short term or "cancel anytime" contracts, ambiguous results and calls from competitive providers with "a better solution at a lower price" and it is the perfect storm for churn.
In addition to an increased focus on retention and longer contract periods, local SEM resellers must focus on performance. Many SMBs have no concept of what a click means, so business owners struggle to see the value in click-driven local SEM programs.
What SMBs truly want lies beyond clicks: calls, coupons, email inquiries or in-store visits: tangible consumer actions that can be tracked. These performance metrics are the bread and butter for SMBs. Talk to any shop owner and most will tell you that if they can have direct contact with a lead they can convert them to a sale. It's not closing the sale that SMBs need help with, it is getting the warm leads. Most SMBs can't do a whole lot with clicks except wonder how they got roped into a program they don't understand in the first place.
To use performance-driven metrics more effectively, local SEMs must talk more to clients and better understand the merchant's business drivers so they can offer the best solution for their needs. If it is calls the SMBs want, the local SEM has to understand what makes a good call, what type of information the SMB would like to have about a caller: name, address, maybe a recording of the call. Same goes for an email or coupon program. This dialogue helps invest the SMB in the agreement and enables conversations about expectations. Talking about expectations is what helps maintain the relationship.
Shifting the focus of local SEM from clicks and impressions to a range of more concrete consumer actions means SMBs will better understand the investment, as there is a clear definition of value in terms they understand. Once the SMB is invested, the local SEM reseller has a better opportunity to use that value to build a relationship and, ultimately, a stronger and sustainable business.
How about a little less hard-selling and hocus pocus-- and instead, some transparency into what % of spend is actually going to PPC and how many calls are being driven?
In a new market, customers are unable to tell what is real or sham-- a great environment for the snake oil sellers to thrive for a couple more years until the market gets smart about measuring performance. Yes, I agree that call tracking is one great solution, available from many vendors.
I recently read a study by Borrell Associates that stated that even Google has a churn rate of 50% with SMBs.
The trouble is, as Bill stated, that effective internet advertising is hard to do. Compounding the problem, good SEM becomes even harder to do without gathering adequate ad response data in a timely manner. SMB's spend too little in their PPC campaigns for an agency to do meaningful analysis on a small quantity of data.
The click resellers have the advantage that if they target a particular vertical and aggregate the SEM spend of hundreds of local advertisers the problem of insufficient data is mitigated. The challenge is of course to do this in an automated manner and quickly so that the PPC campaigns of the hundreds of individual local advertisers has responded to the ever changing market conditions.
I work for a company called Media Flint and we produce a tool specifically for vertical specific automated data aggregation, analysis and redeployment of creatives (keywords, ad copy and landing pages) from high performance campaigns to lower performance campaigns.
Our tool, Magus, works best in the local internet advertising space and in particular for VAR channels and Frachise Networks. We're also trying our product out at a client who is one of the largest independently owned cell phone distributors (175+ company owned stores.) The logic is that company owned stores that sell in local markets bear a high resemblance to a franchise network and therefore can benefit from a co-op local advertising platform.
Great Article! It will be interesting to see which SEM Resellers figure this out in the both the short term and long term. Having worked sales reps all over the US and Europe (who sell SEM to SMBs), one additional point that I would like to add is...be able to speak the small business owner's language! The more the SMB knows that you (the sales rep) know the specifics about their business, the most trust and credibility you will gain...and also be able to develop a truly customized campaign that will get them the types of customers they want, where they want those customers from (geographically), and the number they can handle and you can potentially help them attract (managing expectations). For more on this subject go to http://blog.matchcraft.com