GUEST POST BY DENNIS YU
Dennis runs Blitz Local, a company dedicated to helping local businesses get real customers in through their doors. Yeh, Dennis is competing directly against some of my projects. Why would I let him guest post? He’s a good friend, a helpful guy, and that’s how we roll. 😉

The cynics would add a 4th C for “charlatan”, given how poorly companies selling local Internet advertising are performing. However, that overlooks how hard it is to deliver new business to local service firms and how new this market is– more on that in a bit.

I recently met the CEO as well as the founder of yodle.com, a fellow company in the local space– stand up guys, I must say. They have 6,000 clients– way more than BlitzLocal.com, but not as many as ReachLocal.com or WebVisible. There are 6 million small businesses in the US that are at least a quarter million dollars in revenue, so 6,000 is only 1/10th of a percent of the market. Nobody has even a percent of market share.

Recently, Yodle has been hit with some criticism for aggressive sales techniques. They have 110 full-time sales folks who call lawyers and doctors repeatedly. Though perhaps irritating to some prospects, the model is quite effective in generating sales. And Court Cunningham, their CEO, tells me that they are 2 weeks away from hitting profitability.

They want to be the #1 brand and you can’t hit that growth curve by word of mouth. In 2-5 years, small business owners will go with the recognized brand– and Yodle wants to be that brand.

Some challenges:

• Internet searches are low, but growing— You face a chicken and egg problem. People aren’t going to search online for services unless they know such services exist online. Rural areas or geos with low broadband penetration will often have no businesses online for a given category (“cosmetic surgeons in Enid Oklahoma”, perhaps). The concept of search requires that people know it exist to ask for it. Thus, advertising dollars and consumer sophistication go hand in hand. The market is early.
• Clients want new business generated, not clicks— Don’t tell me how many hits my site got. I want to know how many referrals my site generates. Calls generated is a better measure than clicks, but not as good as confirmed clients. Advertising companies such as ours cannot control whether a prospect will no show for an appointment, but we can try to target what search terms are more indicative of a good lead.
• The market is not educated— “Sales” alone won’t work, since you have to educate the client about how to operate their site, to answer the phone quickly and effectively, to use email marketing to drive retention, and to set realistic expectations on what Internet marketing is capable of. How much do I need to spend and what I can truly expect to generate in new business– not clicks or calls?
• nascent technology platforms— The beauty of search is that based on the search term, you already know what the searcher wants and where they are in the process. If they are looking for “denver liposuction“, then you better show them exactly that– content on Denver Liposuction. If they want to know the side effects of liposuction or the pricing for such procedures, you better show them a different set of information. Most of the local internet advertising companies send users to the same page, no matter what they search on. At up to $10 a click, that’s a lot of waste.

BlitzLocal doesn’t believe in first mover advantage, which is the “winner take all” philosophy. This type of thinking is that whoever reaches critical mass first in a market will win. Yet Yahoo! pre-dated Google in search, Friendster pre-dated Facebook in social networking, and the list goes on…

We don’t see the other players as “competitors”, since nobody has a dominant position or has even developed a bulletproof platform. Rather, we are together trailblazing in this developing market– working to educate clients about what is realistic about Internet marketing and that it’s not turnkey. Clients have to put forth effort to reflect their unique selling proposition on the web– and that must come from them, not us. And together, our group of companies must develop best practices on generating quality referrals for our clients. Judging by the churn rates in our industry– up to 90% in 6 months, according to the recent Borrell Research report, nobody has it figured out yet.

It’s easy to decry the “end of the yellow pages“, but the reality is this is years away and a slow death. It may be a few years before consumers are getting smarter about seaching online for local services and doing so in sufficient volume. The question for companies such as ours is when to really step on the gas for marketing and to what extent we can rely on aggressive outbound sales versus working towards an awesome product.

Back to clicks, calls, and clients– it’s easy to do the first part, medium difficulty to generate calls, and very hard to generate clients. If local Internet marketing companies are having trouble doing it for themselves, then caveat emptor on whether they can do it for you.

There’s no denying the potential of the opportunity in local.

If you want to get in touch with Dennis, you can reach him at: [email protected].