Why is Facebook the Secret Weapon for Local Online Advertising?

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Let me just say it:
I have been taken by social media marketing and the killer opportunities that now exist because of it. (and, been darn busy lately, not much time for writing).

Yeah, you know – Facebook, Twitter, LinkedIn, YouTube, WordPress and another bazillion (I counted) other platforms, tools & technologies popping up every week, it seems. Add to this my enjoyment of it as a SEO (link building, visibility) friendly activity, and there’s no wonder why you see so many SEO companies developing strategies using it. If you have, you are probably familiar with this systematic social media strategy?

Facebook itself has amassed well over 400,000 million users, and growing at (Google listening) an (alarming) rate.  Add this the incredible capability of Facebook demographics targeting, fast rising (over 35 years old) demographic, and possibly highest conversion rates (more on that another time) using the rapidly growing (still underused) Facebook ads.  Imagine how easy it is — running a website (your competitors?) through Quantcast.com, getting familiar with their/your market, and building hyper-targeted ads in Facebook! It gets even better, as you’ll see below.

I asked an esteemed professional to talk about Facebook, business impact, and specifically, Local. It’s the premise for this article. And please give a Tweet – if you like this post. Thank you Dennis Yu!

P.S.
A big event for social media enthusiasts in Los Angeles, CA is taking place next week, and I’ll be covering it here.

Cheers, Jon

Let’s begin.

Small businesses want simplicity.  It’s hard enough running a business that drills teeth or repairs cars to worry about Google AdWords, SEO, Facebook, Twitter, or whatever the latest tools are.   Add to that, all these companies trying to sell you the next greatest thing.  Who is a snake oil vendor and who is real?   It’s too hard to sort through the jargon and complicated mess of black box technology, so most local firms just give up.  We’ll spend some time discussing how other companies have failed to attack the problem and why Facebook has a killer strategy to beat everyone.

First, let’s cover two examples of failing to heed the KISS rule of “Keep It Simple Stupid” in selling and managing to local clients:

  • When I was at Yahoo!, we did market research that showed local businesses wanted “value meal pricing” and that our attempts to cater to every possible feature request turned our product into something too complex for anyone to use. To be fair, even Google faces the same issue. Does that cosmetic surgeon understand broad versus exact match or what the right CTR and CPC should be on his ads?
  • An executive at a major yellow pages publisher laments how they have a large base of advertisers, but can’t get these folks to add online advertising to their print offering.  So he investigates what’s holding things up. Their hard-charging sales people don’t have the patience to fill out several pages of forms needed to get these new websites set  up.  The small business owner is too busy to sit down and write pages of text about who they are. The folks in India who receive the faxes and attempt to configure the websites do a terrible job. Three months later, the client wants to cancel, since his website is not up and he’s been billed $100 a month. Meanwhile, the sales guy is long since gone– he’s out selling others.  Between the client, sales rep, and offshore IT contractor, nobody could collect and configure the information necessary. True story– at one point, he opened a desk drawer somewhere and found hundreds of signed contracts that had been shoved in there– the documents never made it to India, so the clients didn’t get a website and the sales teams didn’t get their commissions.

These examples above illustrate two extremes– the software-based approach and the hard sales approach:

  • The software-based approach has the allure of low monthly pricing and high margins.  Being a ‘do-it-yourself’ solution, they can offer packages at even $10 a month.  The venture capitalists love how this model appears to be scalable, since software can be resold infinitely at little incremental cost. But small businesses don’t want to become technology experts and the self-serve approach is too hard.
  • The hard-sales approach is scalable quickly and requires limited technology investment. Dial enough folks and you can run the numbers on what a call costs, what percentage of calls become clients, and how much revenue a client generates.  Firms in this space set up sweat shops to just auto-dial the yellow pages.  It appears to work– small business clients willingly sign up under grandiose promises. But later, the clients churn as high as 90%, according to a recent Borrell Research report, due to inflated expectations and not enough of the client’s dollar being actually spent on advertising.  Most firms spend between 20 and 50 cents of the client’s dollar on advertising, given the heavy sales cost.  These sales guys are aggressive and want a commission. True: we monitor client phone calls and even hear competitors claim to be from Google.

It would seem that there’s no happy medium between the software approach (low price and self serve) versus direct sales (high price, poor results).  But if you look at the underlying problem, it’s that small businesses don’t want to jump through hoops to have their products and services be online.  If building a website is any more difficult than one click, you’ve already lost them.  If you have to fill out a ton of forms to get a campaign set up, you’ve lost them.  If you have to read a thick user’s manual or attend a training seminar, you’ve lost them.

Enter Facebook.

400 million people already are on it and Facebook accounts now for 1 in 4 pageviews that occur in the United States. That’s an order of magnitude larger than Google on both a traffic and unique visitor level. They’re doing something right to encourage people to create profiles on the site and also encourage repeat usage.

And the creation of a personal profile is really no different than creating a website– whether for yourself or your business.

All Facebook has to do is tell these 400 million people: “hey, want to create a page for your business in one easy step?”  No need to create a new account, as we already have your information.  It’s fast, free, and easy– plus, you already trust Facebook with most of your information already.  So why not?

Now compare how much Facebook knows about you and your friends versus what Google knows. While Google may read your mail (if you are using Gmail), what they don’t have is your profile information– the necessary foundation from which you begin adding in details about your business.  And the collection of this information is what hampered the yellow page publisher in the above example. A yellow pages sales rep typically has one shot per year of getting your information.  With Facebook, it can be daily or even multiple times per day.

Have you seen the suggestions on the right side of your homepage?  Imagine that section prompting you every few days to add one more piece of information about your business.  Over the course of a few weeks, they could painlessly collect what would otherwise be an arduous process to fill out forms all at once.  They are making this fun and social, as opposed to dreadful, like filing income tax returns or pulling teeth.

So now you can see why Facebook is going to be the secret for local advertising — they already have your data, you’re comfortable using it, and you visit the site nearly daily. Quantcast shows that 66% of Facebook visits are from “addicts”, folks who visit more than 30 times per month.  You can count me in that category, as I visit multiple times per day, but can claim that as part of my job.

Here are my personal predictions for how Facebook is going to dominate local:

  • Free listings: Come get your free business page.  What does it cost Facebook to acquire a new business user?  I’d argue that it’s pennies.  Compare that with the direct sales approach that costs a few hundred dollars per new client.  If you assume an average sales and marketing cost of 25% of clients that average $1,200 a month in budget for a 8 months lifetime, that can easily be a couple thousand dollars.  Good salespeople are not cheap.  But if you have the trust of the user already– and his or her friends are already there– then you can avoid all those costs.  For those who want to complain that my comparison is not apples-to-apples, then I’ll agree that we can include some general marketing overhead in these numbers, plus that the value of unsold inventory (reserved for house ads) is hard to quantify, but also not free.  Regardless, it’s still almost nothing compared to direct sales.
  • Free listings lead to viral exposure: So you have made a page and naturally followed the suggestion to tell your friends about it. Now you’re locked in– in a good way.  You have to keep your page updated with coupons for your restaurant, the new steam cleaner you got for your carpet cleaning business, and before and after pictures for your Invisalign practice. Your friends and customers naturally see these updates in their feed, so there’s peer pressure for you to keep your information current, as well as for them to create a page for their business as well.
  • Points: Add in a points-based system or some sort of ranking and you have an unbelievably fun game. LinkedIn only took the first step, which is to give your profile a percentage complete score in the upper right.  That alone has driven millions of people nuts– to complete their profile only because they can’t stand to have that 95% complete mock them each time they log in.  Facebook will likely have to implement their version of a Quality Score, whether it be a more advanced version of their Post Quality Score or something more interesting- perhaps closer to a frequent flyer program where you can earn and redeem for inviting friends.  I’ve personally been a big fan of network marketing, just not the people and products that run through it.  Think of Amway or Mary Kay, but on a massive level and without the “multi” part.
  • Free upsell to paid: Also called the “freemium” model or “Would you like fries with that?”  Now it’s time to upgrade your free website and start paying $10 a month for the premium offering– to have your information distributed to Google, Yahoo, CitySearch, Yelp, InfoUSA, Acxiom, and 200+ other directories and providers.  That includes 411 directories and sources that are not just on-line.  You’ve already given us all your information, so why go through the hassle of re-entering it again and again?  It would take you 30 hours to list yourself at all these places, plus another 20 to go through each of their verification processes.  And that’s not to mention having to back and update your listing each time your information changes– maybe your office expands, you have new client testimonials, or your product offering changes.
  • Single paid service to package selection: Now that you’re on our listings product, why not add PPC for $30 a month– only a dollar a day?  Since you already have your information with us– you told us that you’re a massage therapist– we just happen to have a pre-built campaign for massage therapists.  No sense in you building one from scratch when we have experts that specialize in this and have built thousands of campaigns, plus have the data from all the other massage therapists to learn from.  In fact, why don’t you sign up for our package that has our listings product, paid search campaigns (across Google, Yahoo, and Bing, too), and call tracking for only $50 a month?

And so forth.

Once Facebook gets to a certain size with a product offering– and I would think they’re close, though not sharing numbers, then you will have to work with them whether you want to or not.  This is potentially a bigger monopoly problem than Google for search in the United States, since there are greater economies of scale.  Tie in the fact that mobile, social, and local are converging, and you’ve got an interesting landscape to watch over the next 3-5 years.

The winner in the local advertising space is the player that controls the business information.   It’s not about the device or the format or the website, even– it’s about who controls the collection and aggregation of this information in the eye of the business owner.

And, if you agree that Facebook has the lead here, you should start preparing for it:

  • If you are a small business or geographically-focused service business (dentist, doctor, lawyer, etc.): Start building your pages and campaigns now, while the traffic is cheap and you can get a head start.  Most businesses aren’t aware that Facebook is great for advertising, largely because Facebook has not aggressively promoted this fact.
  • If you are online advertising firm: You should get your people cross-trained, so they understand how to do SEO for Facebook, PPC for Facebook, email marketing on Facebook, and analytics on Facebook.  Facebook is “the other Internet”, as Marty Weintraub likes to say– it’s not a channel such as PPC, SEO, or email. Think about users, not channels.  Not sure where to start?  Try SMX West coming up in 2010, as well as conferences such as Kelsey. Don’t waste your time on books– it’s outdated in weeks.
  • If you are a potential channel partner: Maybe you are a radio advertising network or national association of dental hygienists.  Somehow, you have a base of members or clients that need to drive more business in the local space.  Reach out to Facebook now to help shape their policy and thinking– else they may make decisions you don’t like later.  This is the chance to work with them to build templated campaigns for your user base, help shape policy in your favor, and get an edge on marketing against your competitors.

If you’re still with me after reading 2,300+ words, I want to thank you.  And thanks to Jon Rognerud, SEO Consultant & editor of his SEO World, for allowing me to post a guest article.  If you have any questions, feel free to contact me at dennis@blitzlocal.com.

About the author: Dennis Yu is CEO of BlitzLocal, a company focused on driving online exposure and phone calls for locally-based businesses, whether large chains or individual locations.  Mr. Yu is a frequently sought after speaker and writer, having been featured at SMX West, SMX East, Affiliate Summit, PPC Summit, HostingCon, KTLA, TechCrunch, and other on and offline publications.  BlitzLocal offers templated packages for top categories that include local listings, Facebook advertising, traditional PPC, site development, call tracking, and analytics. Packages start at $10 per month and go up to $3,000 per location depending on ROI achieved.

Disclaimer – BlitzLocal works closely with Facebook, but is not paid for consulting or provided any incentives for endorsements.  This particular article does place Facebook in a highly positive light, while other articles we publish have also been critical.  For this particular article, we wanted to share with you some positive experiences we’ve had using the Facebook platform and explain why.

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Entrepreneur Magazine says Jon Rognerud is one of the most sought-after SEO / Digital Marketing Experts. His clients extend from high-end brands and middle-tier businesses in both B2B and B2C. His SEO website optimization book, "The Ultimate Guide to Optimizing Your Website" from Entrepreneur Press is in bookstores now. Act fast, to get his free SEO traffic checklist here. To receive future updates, Click HERE to subscribe to our mailing list

About The Author

jon rognerud

INTERESTED in working with me on your SEO and business acceleration? Sign up for a FREE breakthrough session! Learn More About Our Online Sessions. === Entrepreneur Magazine says Jon Rognerud is one of the most sought-after SEO / Digital Marketing Experts. His clients extend from high-end brands and middle-tier businesses in both B2B and B2C. His SEO website optimization book, "The Ultimate Guide to Optimizing Your Website" from Entrepreneur Press is in bookstores now. Act fast, to get his free SEO traffic checklist here. To receive future updates, Click HERE to subscribe to our mailing list

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