Elizabeth Gage of PCM International posted a well thought out blog on the challenges small and medium-sized businesses face when purchasing search engine marketing campaigns, either on their own or through Yellow Page publishers. After reading her thoughts on the subject, I couldn’t help but realize that the focus of current SEM efforts has been on getting the appointment and making the sale. Gage’s post, however, highlights the challenges after the sale is made.  

As more SMBs begin to experiment with online advertising, the problem of supporting and informing them of the progress of their online campaigns increases. Based on my own experience in the back-office side of supporting SEM sales, I can attest that new online advertisers simply require more communication on how their campaign is working, numbers of calls generated, how to effectively improve keyword performance, and how best to update their profile or Web site to generate more leads. New online advertisers are in the experimental mode and are not yet sold on the value of SEM, which requires constant reinforcement of the ongoing value delivered by online advertising.  

While gaining appointments and educating SMBs on the benefits of online advertising is important in selling SEM, continually communicating the value of what is being delivered is what will help maintain SMB online advertisers. Failing to reinforce the value to new SEM advertisers ultimately leads to higher advertiser turnover in the second or third year, meaning the sales force will have to continually replace advertisers with more new advertisers rather than work on developing existing advertiser campaigns. 

The first day of the Kelsey Drilling Down on Local conference included a somewhat unusual panel with four entrepreneurs in verticals. They talked about the nuts and bolts of building truly local verticals. These vertical pioneers shared their war stories and loads of practical advice. Some of the commonalities to their experiences:

• They worked hard to get advertisers — against heavy odds, in most cases.
• All are now in a heavy growth mode.
• Their expansion tends to be “node by node” (market by market).
• They each took great pains to understand the business models and requirements of the SMBs in their vertical. Most of them have had to adjust THEIR model, as they’ve learned more about the needs of their SMB advertiser clients.

Their stories reminded us that being an entrepreneur is rarely glitz and glory. Real entrepreneurs have calluses and dirt under their fingernails. You could feel their pain, when they told about pounding the pavement and dragging some of these SMBs, practically kicking and screaming, into online advertising. It’s a long, arduous, time-consuming process (which may be monetized someday in the form of a handsome multiple of revenues paid by an acquirer like, say, Yahoo! — or not).

Summaries of the four presentations:

Mark Britton, CEO, Avvo

Avvo is a legal vertical, used by consumers to find attorneys. (The litigious-minded among us probably already have it bookmarked.)

The legal industry is a $225 billion industry in the U.S. The industry spends about $4.5 B annually on marketing. (In print Yellow Pages alone, attorneys spend about $1.3 billion annually, making this the largest single revenue category in print Yellow Pages.)

Avvo provides profiles and ratings for every lawyer in practice (in the states in which they operate). It obtains basic content from its Web crawlers. It also permits individual attorneys to upload information to embellish what is obtained by crawling.

One of its more clever approaches to obtaining content is this: It poses a typical legal question in the “Avvo Answers” section of the site, and several attorneys will post their answers. Of course, this is a “win-win-win” for Avvo, the responding attorney, and the consumer. Avvo gets free (and quality) content, the attorney gets “free” exposure (quasi-advertising), and the consumer gets his or her question answered.

“We’re tearing a page from Expedia’s playbook,” Britten said.

This is also the same thing that Zillow is doing: Going into a highly inefficient market where there is an inherent “asymmetry” of data between the service provider and the consumer, and creating a more level playing field by providing abundant, empirical data to the consumer.

Steve Cissel, CEO, 10-20 Media

Cissel is the CEO and founder Lawn & Garden Search (LGYP.com), a vertical for everything about lawns, gardening, landscaping, etc. He said LGYP.com is the first effective vertical in this space.

He pointed out that the lawn and garden vertical (which includes 11 categories in print Yellow Pages) is a $200 billion industry (total annual sales of products and services). It’s the only major vertical that hasn’t yet been really “Webified.” A key reason for this is the fragmentation of the lawn and garden industry. (Arguably, this fragmentation is driven by the inherent localization of the “raw material” for this industry – flora.)

Seth Gardenswartz, VP, SpaBoom (of BoomTime)

The day spa industry has about $10 billion in revenues. About one-third of its revenues come from gift certificates. SpaBoom makes it easy for spa owners to offer their own “private-label gift certificates” that they sell from their own Web sites.

Spas, of course, are a luxury, high-end business, with a high level of personal service. Perhaps because of this, spas “don’t give a damn about online.”

Through sheer tenacity and shoe leather (at least major change in its business model) SpaBoom has achieved about 12 percent penetration of day spas in the U.S.

It plans to take its format (gift certificates) to additional verticals as well. Gardenswartz announced that the next vertical it will enter is the restaurant vertical. It will be focusing on higher-end restaurants, where gift certificates are likely to resonate with the clientele. It is partnering with Zagat (which was announced today, at this conference).

Robert Johnsen, Director of Sales and Marketing, Mywedding.com

The wedding industry is about $66 billion this year. Mywedding.com is the No. 3 online wedding site. The company is 6 years old, and now has a total of 54 local wedding guides. Revenues were up 43 percent over last year.

It serves a variety of local SMBs related to weddings (florists, photographers, bakers, wedding planners, etc.). It took Mywedding.com about 3 years to build its current base of advertisers. On average, its advertisers spend about $600 on the site annually.

For couples typing the knot (let’s hope it isn’t a Gordian one), Mywedding.com provides a free wedding Web site to handle those oh-so-important details of the modern wedding.

Speaking this afternoon at at The Kelsey Group’s Drilling Down on Local conference in Seattle, Kurt Weinsheimer, GM for Local Marketing Services at Spot Runner, offered a simple set of rules for effectively selling to small businesses. 

• Target the right customers. 

• Keep it simple. Get the sales message through quickly and clearly. 

• Manage expectations. “You have got to tell them what to expect. If you do not manage expectations, they will set them for you. And I guarantee you won’t like what they expect.” 

• Do as you say, and say what you did. “If you say you will hit results, you better do it. Otherwise they will be gone. If you don’t let them know you did it, it didn’t happen.” 

Weinsheimer was speaking on the panel “The Local Resellers: Taking on Goliath.” His company helps small businesses create and distribute affordable television advertising. 

The panel explored how media resellers interact with small businesses and channel partners. Much of the discussion centered on how to effectively manage relationships with partners, including how to effectively manage customer expectations without direct control of the sales force. 

Carey Ransom, VP of business development at WebVisible, acknowledged this challenge. 

“Yes it is impossible. We do spend a lot of time working with our partners to make sure they understand. We talk about how to compensate salespeople so they care, that it is not about selling it and walking away.” 

WebVisible works with a wide range of channel partners, including newspapers and Yellow Pages publishers. 

There are a number of new or re-energized hyperlocal efforts out there, trying to crack the code. New efforts are expected shortly from Outside.in and SmallTown. Ongoing efforts are being made with AmericanTowns, which counts Idearc as a lead investor, and Dallas’ Pegasus News, which is owned by Fisher Communications. CitySquares in Boston continues to build its model. Topix has also remade itself into an aggregation of local news and hyperlocal commenting.

And that’s just a rundown of the hyperlocal efforts that have regional and national aspirations. Some of the best hyperlocal efforts, of course (BaristaNet, WestportNow) are actually tied to specific communities. We also count some well-funded newspaper efforts in that category (LA Times, Boston.com, Washington Post, et al).

This week, The Online Journalism Review covers OurTown, a new hyperlocal chain based in Cincinnati. The site proclaims that it represents “America’s Local Websites. Neighborhood by Neighborhood. Local and Regional Content, Chat, Weather, Maps, Personal & Family Calendar and Community.”

OurTown’s primary business concept is that local editors will sell the local advertising, keeping most of the revenue; $100 monthly contracts for advertising are envisioned. The site will also have paid classifieds (but free classifieds for individuals).

In addition to local ad dollars, the editors will also get 40 percent of national ad dollars. It is suggested that local editors covering two ZIP codes can make between $45,000 and $60,000 per year.

Eventually, OurTown expects to charge a license fee to the local editors, but as a come-on, it is offering a one-year license for free to the first 1,000 takers. Seventy thousand sites are expected in Year One. The site is being advertised on Google, Yahoo!, Craigslist and other Web sites. While an illustrious advisory board of “top journalists” is claimed, there is no link to such a board on the site, or names of management, for that matter.

The Yellow Pages Today April workshop featured a divergent view of how best to sell the White Page product line. While some differences exist, due in part to the products offered in the core White Pages product such as those published in Germany, most companies agreed that White Pages needs its own unique sales approach and marketing focus.  The real difference lies in the publisher’s view of White Pages as a major revenue component, a supplemental revenue component or a complement to the core Yellow Pages product. For those with a view of White Pages as a revenue driver, major product development and sales training have focused specifically on the unique aspects of what White Pages offers advertisers and the product sets that are particularly attractive.  

Vincent Thibaut, print product manager for Truvo Belgium, pointed out that White Pages is often overlooked as a vehicle for attracting new business. As consumers are given recommendations of businesses or products or are exposed to them on other media, they often turn to White Pages online or in print to get the contact information. Thibaut also supported the idea that salespeople need to outline the unique benefits of White Pages to ensure advertisers clearly understand what they are buying.  

Sensis has taken a renewed interest in building its White Pages product that has centered on retraining and refocusing White Pages salespeople on the value of the product, since it is a different sales proposition that is less reliant upon size and position. The renewed approach seems to be paying off, delivering 10 percent growth in the first half of 2008.   

I’ve spent quite a bit of time over the Easter holiday talking with friends and family about the economy and how they are dealing with the budget crunch we are all experiencing. One of the common threads of all these conversations has been the need to stay close to home, combine shopping trips and call ahead so you don’t waste time and fuel going to multiple stores. 

More and more people are scaling back vacations and long car rides to try to save money. The next logical question is how people are adapting to this need to stay close to home and make every trip more efficient. Many of my friends and family admitted to using the print and online Yellow Pages more frequently as well as local search engines such as Google, Yahoo! and Citysearch because of the mapping features and more detailed information about the stores they were searching for. One friend admitted that if the ad or online profile page content was not specific enough, they moved on, which shows how valuable content is in driving leads. 

Almost everyone I spoke with was calling stores more often to check on availability, price and specific location before they left the house so they had a better plan of where to shop and how best to combine trips. One family member was even reserving merchandise on the phone so they could just pick it up to save even more time. Mapping, it turns out, is becoming a key advantage for online sites as was location specific information and maps in print. 

What does all this mean to Yellow Pages? If the trend is toward more local shopping and the need for directions, local business information and local contact information, then directional media such as Yellow Pages and local search are best suited to address these changing consumer behaviors. These suspicions were confirmed by a more scientific study conducted by Vertis Communications that focused on changing buying habits of grocery shoppers. The study echoes my less than scientific conclusions.

“Economic factors, such as gas prices and the housing market, are changing shoppers’ habits drastically,” says Scott Marden, director of marketing research at the Baltimore-based Vertis. “More than 90% are affected, and many are shopping closer to home, stocking up more and combining shopping trips.” 

Perhaps there is a silver lining for Yellow Pages and other local media in this new economic environment if they can get their reps tuned into this new phenomenon and effectively communicate the opportunity to local business owners.

More and more, people are looking at what Google can’t (or won’t) do. One thing Google isn’t doing is selling a lot of ads on a hyperlocal basis. If you look for a plumber in Tribeca, you are likely to get ads for all of Manhattan. That might simply be an issue of making sure it has enough ads to fill the inventory.

But Google also doesn’t generally get a read on information within a map itself. That’s where LAT49 sees a market. The service, from IDELIX Software, a Vancouver-based company, looks to work with providers of customized maps, leveraging Ajax and Flash, and then sell inventory against it. The company has 20 people, including a five-person sales team for selling travel/tourism, sports and recreation, real estate and local (generally).

In December, the company started working with MapQuest Gas Prices to place advertising along with the regional gas quotes. It also works with various vertical sites, such as mapmyride.com, runningmap.com and oobgolf.com to provide customized maps — and relevant ads — for people seeking a good bike route, jogging path or golf course in Southern California, or wherever they are. The ads also aren’t restricted to specific subjects, typically brands (i.e., Trek bike ads). Instead, they can be for a local bike shop, or a favorite watering hole for bikers.

One of the company’s unique attributes is the ability to place ads on top of maps, rather than having them run alongside as with most sponsored search. Chloe Morrow, vice president of operations, says that with most sites, maps are “too small because they have to make room for the ads” — a lose-lose situation.

The ad placement also frees the advertiser from a specific location. With LAT49, for instance, an REI ad is merely placed near a park, because it has an outdoor context. It doesn’t have to be at REI’s downtown location. Starbucks has similar efforts.

The company also says it benefits from being able to move the ad context as people mouse up the map — north, south, west or east. Many people who are planning a trip might take in huge swaths of geography, but always see the same ads from the origination of the search — something that may have become irrelevant (by the time they get to Phoenix).

Do you really need to have raised millions of dollars to succeed in selling search solutions to small businesses? It is a question that I often ask myself.

Dan Hobin’s G5 Search Marketing in Bend, Ore., is profitable without having raised outside money. Hobin’s secret is initially focusing the five-year old, 17-person company on a specific vertical category: self-storage

Hobin’s brother is in the self-storage business in Southern California. Consequently, Hobin, a veteran of numerous dot-com start-ups such as CyberSource and Beyond.com, knew enough about their needs to try to transition their large marketing budgets to search. These companies typically take out full-page ads in Yellow Pages, and spend $1,500 to $2,000 per month on the Yellow Pages programs, he says.

G5’s search solutions typically run $300 to $500 per month. The money provides a full range of search engine optimization and search engine marketing programs, trackable coupons, dedicated call tracking via VoiceStar, and graphically rich reporting tools. The combination of SEM and SEO is critical, says Hobin. Other companies have focused too much on SEM and miss entire groups of customers.

Currently, G5 serves 30 self-storage companies with over 600 locations. These companies recognize that search is far cheaper than Yellow Pages, says Hobin.  With G5, Hobin estimates that they’re spending $5 to $20 per lead, or $30 to $50 per self storage rental. With Yellow Pages, Hobin estimates it is $150 to $200 per lead, or $300 to $400 per rental. Yellow Pages shouldn’t be abandoned, but other kinds of marketing should be added, he believes.

A typical client profile shows that search efforts lead mostly to phone calls. Sixty percent of users make a call, 20 percent want to use a coupon, and 10 percent seek a price quote.G5 provides search solutions on a wide range of services. But most of the action is with “the Big 4,” Hobin notes: Google, Yahoo!, AOL and MSN. The IYPs and classified service providers, meanwhile, are all described as “second tier.” “If you are an IYP, the only way you get traffic is if you are listed on Google.”

G5 is also doing some advertising on Facebook. It is a good way to reach college students, who tend to be very big users of storage facilities. But it is also very seasonal, based mostly on school semesters. Texting quotes on demand is also popular with college students.

Currently, G5 is adding a set of new verticals to its initial focus on self-storage. The criteria are that categories are dominated by companies with multiple locations — ideally 20 or more. It has already added a focus on apartments. Assisted-living facilities will be next. “The key is they have a high lifetime value, and that we can manage their transition” to online, he says.

The CBS-TV owned and operated stations are making a pitch to local bloggers and hyperlocal sites to add value to their sites with various news headline and video widgets, and take a share of ad revenues.

The CBS effort to land bloggers and find a way to compensate them is part of a growing trend among traditional media sites. Several newspapers and social sites are also looking at ways of incorporating (and paying) bloggers.

Mostly, the CBS package is designed to extend CBS’ local (and vertical) reach on the Web. That is a key thing for CBS and other local sites that don’t have enough premium inventory to go around, but still tend to under-perform on the Web due to lower online rates.

The CBS deal has been put together by SyndiGO, an arm of Seevast — an ad services holding company that is a direct descendant of Kanoodle. SyndiGO already has local deals in place in various markets with AT&T, Honda dealers and Liberty Mutual Insurance. Examples of participating bloggers include Urban Spoon, The Landry Hat and David Eisenthal.

Seevast exec Jaan Janes (who I consulted for when he was with NFL.com), says the new network takes all the pain out of putting ads on blogger sites. Built on Doubleclick’s backbone, the network recruits the sites, automates the service and provides customer service. It also screens blogs and other sites for suitable content — an important consideration for TV stations.

Another important thing about SyndiGO is it takes care of all payments, and provides a much higher CPM than the networks, according to Janes. He estimates the CPMs will climb above 50 cents –far higher than small local sites would receive from national ad networks such as Advertising.com, Blue Lithium and ValueClick. These sell remnant advertising for CPMs as low as 2 cents.

In our estimation, some sites are likely to get pretty good money from this that may go beyond subsistence. The vast majority of local sites, however, receive little traffic and would get less than $100 a month.

Janes adds that Martha Stewart has gone the same home grown route for Martha’s Circle (although that was done by Adify, a competing ad service). Looking forward, he expects to be working with a wide range of vertical sites in addition to local sites. He is specifically focusing on health, financial services and travel.

The small-business advertising arms race has gotten hotter in recent weeks, as companies eye a chance to add Google and Yahoo! search solutions, and other services to small-business marketing budgets once totally contained by Yellow Pages.

First we had ReachLocal’s $305 million valuation based on a $55 million round of financing, sparking the whole marketplace. In early March, Spot Runner entered the game, acquiring Weblistic in an all-stock buy to power its 30 local sales offices with solutions that go beyond its core strength in video. At the same time, Orem, Utah-based Orange Soda got on the map with Freedom Communications, the publisher of The Orange Country Register. Previously, New York-based Yodle got $12 million in funding.

Today, Irvine, California-based WebVisible, a six-year veteran of the reseller space with 60 employees, reinforced its own position with $12 million in new series B funding from Sutter Hill Ventures and Redpoint Ventures, an existing investor. WebVisible partners in the U.S. include AT&T, Earthlink and McClatchy. Internationally, it works with Yellow Pages Group of Canada and British Telecom.

WebVisible CEO Kirsten Mangers says the new money is going to be used to flesh out its offerings and “fully support the customers we have.” The company’s focus is all about “innovation for reaching local businesses. At the end of the day, “it is never a money race.”

A major part of WebVisible’s vision is to provide a 360-degree set of solutions for SMBs. Search solutions are an important part of the equation. But “there comes a time when the sales channel needs more display, more marketing needs. Advertising always follows the audience,” she reminds. “And the paradigm changes over time.” The key is to not tie yourself to a single channel. WebVisible strives to be “Switzerland.”

“Statistics show that conversions will rise with an integrated media campaign,” adds Mangers. “Customers have been asking for it.” Video is not “fully baked,” right now. But it “closes the loop on the brand story,” and is undoubtedly part of a solution that also includes SEO/SEM, banners and location-based services. All of it needs to be “scalable by geography; scalable by vertical.”

With so many players in the market, one would think that the resellers would begin running into each other, much like the third parties in the automotive space that besiege auto dealers, four or five at a time. But Mangers says that almost never happens. “It is a problem I want to have.”

WebVisible’s approach, as a white-label provider of solutions, is to partner with the community players that have brand equity, ranging from Yellow Pages to newspapers to chambers of commerce. “They need to own the relationships,” she says. “It is a more sustainable customer base.”

But the local partners should “put a body in place” dedicated specifically to the extended SMB solutions — not just Yellow Pages or the big-three classified verticals. “They need to go out and tell an excellent story, and show new ways of using online as their lead product.” At the same time, they should “never discount the value of their brand” with bundled discounts, etc.

The (Minneapolis) Star Tribune, for instance, has worked with WebVisible to have a dedicated account rep, resulting in a tripling of bookings in the past two months. “Newspaper reps have so many products in their bag that recommendations and fact-finding become difficult,” says Mangers.