Would search
drive more traffic?
Almost 50% of the businesses that buy search ads directly from Google and other internet search companies don't come back the following year, according to research on local search advertising (via the Wall Street Journal).
The study from research firm Borrell Associates and funded by Clickable – scheduled to be released on Monday - found that the churn rate for businesses like Yodle, ReachLocal, and LookSmart — sites that purchase search ads on behalf of local advertisers — is around 60%, in stark contrast with cellphone or cable providers where the churn rate is a few percentage points per quarter.
Local advertisers' spend is a fraction of the roughly $11 billion US advertisers will spend on search ads this year, but this raises questions on how well the local search market is doing or how accurately projected its growth prospects are.
One reason for this is that many small businesses don't have websites to drive traffic back to or help determine how their ads perform. What's more, the affiliates that mark up search ad prices charge local advertisers to increase their commissions, says Borrell CEO Gordon Borrell. As a result, advertisers do not make enough to justify extra spending, causing them to drop out.
Also, resellers charge local advertisers based on how many thousands of clicks they can drive to their Web sites. Many such clicks do not bring in revenue because they aren't from the right kinds of customers, prompting Borrell to state that search advertising has been over-hyped and oversold to local businesses.
Meanwhile, companies are convinced that local advertisers will come around and follow the trend where consumers continue to search for more local businesses information online.
One example is Clickable, whose campaign management software is used by big and medium-sized businesses. It is now targeting the local market with a new service called Leads, a software that helps advertisers figure out which keywords to buy and how to customize ads to generate a greater response, giving advertisers an idea of how the ads perform in a language they understand (e.g. calls to their store or visits to their web page).
And to make local businesses more enthusiastic about search, Google began providing businesses with updated and verified details about their company, including data on how many times people searched for their business, as well as what search terms they entered to find them.
Last month, a Yellow Pages Association report found that a surge in annual growth of local search far outpaced growth of overall Web search. Local search grew 58% in 2008, reaching an annual total of 15.7 billion searches.
By comparison, core US web searches grew at a smaller rate of 21% year-over-year, nearing 137 billion searches by the end of 2008.
