Video Deep Dive: What Parts of the Local Pack Will be Monetized? - Local University

Video Deep Dive: What Parts of the Local Pack Will be Monetized?

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This is the 15th installment this year of our Deep Dive Into Local series. For the week ending Monday, April 25th, Mary Bowling, Ed Reese and Mike Blumenthal shared their thoughts about the previous week in local. The complete video, including links and commentary on critical happenings of the previous week is posted in the Local U forums (paywall). In the second half of that video, they take a deeper strategic and tactical dive into one interesting area that caught their attention during the week.

In this discussion, Mary, Ed and Mike discuss the future of local search and the implications of Google's increasing monetization.

Mike: So with that, I just want to switch over to the Deep Dive and talk a little bit about four recent developments at Google that I think are a sort of drive towards the future.

The first is only and tangentially related and that is that they released the feature which had been in beta of allowing people to play Android games directly in their search app. I see this not so much of an importance in local directly, but as part of Google's move to turn their search engine into an application platform where you actually will interact with the data and the inputs and outputs right there.

The second, as Mary mentioned it briefly, was that they seemed to have released full-on ads into the local finder which don't look like ads. They, of course, look like logo listings.

Thirdly, they changed where Google AdWords -- and Mary mentioned this -- is in their scheme of things. It's no longer part of their other partner's networks. It's now integrated into Google. So an ad, if it has location extensions turned on, could now appear in the local finder and look like a local listing.

Then finally, last week we saw them push out special deals, like the old tags of old on hotel listings. In the last little bit of news, which we don't have a link to yet, but Lisa Kolb who works a lot with bed and breakfasts, did some research which indicates that they're not showing bed and breakfasts in the pack that don't have a current listing with one of the online travel agents. If they do have a current listing, and they were ranking, they will show, and if they don't, they won't.

The implication of that is that you have to have a listing in an OTA with availability to not be shown in the pack, which, on the one hand, makes some amount of sense, right? Google wants to show listings that have availability. On the other, if you don't use OTA because they charge 30%, 40%, 50% of your take, you're going to be penalized. So all of that leads us into our Deep Dive which is, is Google going to be monetizing the whole local pack, which they seem to be doing in hotels, or is that just in areas where they're going to see high returns and they're going to leave some of it for free or not? I'm curious of your thoughts.

Mary: On the local extension ads, from what I understand, they've made it so that those will only appear in maps now. That makes perfect sense, as you say, because those are the extensions, the ads with extensions that are going to look ... they can make them easily look just like a free listing in the local finder. That almost seems diabolical to me, that not only are they going to put ads in the local finder, but the fact that they are designing them to look exactly like a free listing other than the little tag that says ad on it.

Mike: Right. I mean, advertisers have long struggled with the idea of how to get close to that boundary of not deceiving and have enough information that somebody can tell that it's an ad versus a free listing. Google clearly is pushing that boundary, particularly with hotel listings, because effectively, between the OTA, the booking information there, and the notice of deals with the tag, virtually every listing effectively has to be paid in what was at one time a free pack, right?

They're really pushing the boundaries, the legal boundaries, of making these in fact ... that this is truly a paid environment clear. I don't think they're doing that at all. Obviously, they have an interest in obfuscating this a little bit and consumers have an interest in knowing they're going to continue to push it for income.

The other thing I heard or read at, I think it was GeoMarketing, was that Google is coming out with a new travel app just focused on times when you are away from home, which is clearly when you use their stuff the most. It's going to give them more hotel inventory, for example, be able to attack that market more on the go. Again, they've done a lot of development of monetization in hotels. The question I have is, will they monetize equally lawyers or sporting goods stores or... We're seeing some effort to make pack-like results in San Francisco with locksmiths, home services, and plumbers. Those are all monetized. You think that that's really where we're going?

Ed: That makes it really tough for local regional players, too. You know, the local hotel that I work with, they're a 250-room place, but it's only one hotel. We've discussed the OTA side of things for years, and it just doesn't pan out, because they can't make any money. The only people that it helps out are national chains. If you don't have multiple hotels to absorb that hit -- you need that kind of volume to make it work -- and it just makes it really tough for regional and small-town hotels.

Mike: Right.

Mary: Yeah, and you could imagine, like Mike said with the bed and breakfast crowd and the little inns and guest houses, that they're just being completely squeezed out of that space.

Mike: Yeah.

Mary: You know, their local pack was the one place that they could compete in travel. Now that's been taken away from them.

Mike: Right. I mean, clearly Google is in the era of Alphabet where they're trying to grow the next moon shot. They need every penny they can extract from their successful ad business to do that successfully, right? They need to be wildly profitable in ads to be able to fund these various moon shots, which are robots and all kinds of cars and expensive long term things. Right?

So the question is, and it seems obvious to me that they're going to continue to monetize other areas at the back, although they're going to do it vertical by vertical. They've been monetizing hotels, shit, since 2010, right, one way or another. I think it's going to be slow going in the other ones for them to figure out successful.

Now one of the things they did was ... Here's my hand. I've sworn not to bring it into the frame, but I'm bringing it into the frame. One of the things they've done is put the four ads at the top which, essentially, they don't need to monetize everything below because in mobile, for example, that so dominates the screen, it's got to be capturing much more than the traditional 15% that it used to capture. So maybe that's how they're going to do it. Maybe they're not going to monetize.

Ed: Yeah. Related to that -- sorry to interrupt you -- I would love to go into the forum and see how Google's AdWords change has impacted people. For a couple of our clients in the more competitive space, we've seen an increase of 30% on the low side CPC, upwards of 100% on some of the more competitive ones. We're only about, what, almost two months into it, six weeks into it, whatever it is, but I would be very curious... It would be interesting to throw a survey out there to see how it's impacted other people.

Mike: So the cost per click is up, but what about quality and conversions?

Ed: Yeah. I would love to...

Mike: Are those up for your client though? In other words, you wouldn't mind if the cost per click...

Ed: It's helpful.

Mike: If your conversion are up, right? If you had a better quality of...?

Ed: Yeah. Especially high quality. Yeah, if they're high quality and all that, but I'll start digging into that, but I've been curious to hear what other people on the forum are experiencing as well.

Mike: Yeah.

Mary: Right. I think with the different verticals, they need to figure out how it works with each vertical.

Mike: Right.

Mary: Travel is kind of easy for them, because there's a booking. Information changes hands. Money changes hands. The deal is done. Whereas with a lot of things, like how do you tell when a lawyer has booked a case and take your cut from that? That's a pretty tough one to do. Even with these home services businesses, I can imagine that in some cases there is a lot of after sale BS that needs to go on.

Mike: Although they could monetize. You know, in many professional businesses, they've now... Places Action allows professionals to put bookings right on the site. So you can schedule a doctor's visit. Clearly, that would be fairly easy to monetize, right? You make an appointment through the knowledge panel, and that gets monetized. Currently isn't monetized, be trivial to monetize it.

Mary: Yes, agreed. But they seem to be having trouble with everything else besides hotels. But I do think they very much intend to monetize as much as they possibly can.

Mike: Right. They dropped out of the insurance, local insurance "business." They never could get that off the ground. Some of that was there were regulatory hurdles. Some is just, you know... Whereas in hotels and travel, they own a lot of infrastructure. They own a lot of the flight information databases and that sort of stuff. So maybe... it's hard to know.

But clearly, I think that as a local SEO, one of the things you have to keep your eye on is how much is going paid and preparing yourself and your clients for the fact that Facebook and Google are going to be monetizing, and you have to figure out how to live with it and your client has to figure out how to live with it or play someplace else. I think that's a growing reality, right?

Mary: Yes. Most definitely.

Mike: So I think with that and with Ed's grimacing mug shot, we're going to say...oh, there we go. We're going to say goodbye. Thank you very much for joining us for Last Week in Local. We'll see you next week.

7 Responses to “Video Deep Dive: What Parts of the Local Pack Will be Monetized?”

  1. We have been seeing a gradual shift in the Google core business model from providing a valued service (excellent and reliable search results) to more of an advertising company. Certainly we on the SEO and PPC side are seeing it. If they continue down this path, at some point the public in general will also realize it and start feeling a bit uncomfortable with their search results.

    This could present a great opportunity for a new search engine to increase their market space by adapting those Google core business practices of old and I for one would welcome it. Perhaps the eventual new owners of Yahoo search could turn that business around by doing this. Certainly Facebook and other social media outlets will continue to try but more and more, the advertising aspect of these businesses seem to be running the show. I believe the time is at hand for a new Goliath.

  2. However one realities of the “free market” particularly in the internet age and the network affect is the ability to create a virtual monopoly that prevents competitors from emerging.

  3. First google became a monopoly on search. They dominate in market share at pct of market share that would have been legally challenged years ago. They haven’t been challenged by the govt. They completely control ALL information. Nobody else has the information they have. Without that information its more difficult to challenge anything they claim. Anything. A typical “google response”. Its about positive user experience.

    Hogwash, its about ways to further monetize google.

    Now, as you have referenced its an advertising platform. It is NOT a search engine.

    So if as Lisa Kolb reports B&B’s can’t be found in search because they don’t want to pay an outrageous freight to be in google’s money machine….The google monopoly conversion into an advertising framework….has killed them. KILLED THEM.

    Boy, very tough on the little guys, the B&B’s. They don’t earn much. They don’t have a lot of rooms to rent.

    Its a lot like the mafia…and google is picking on the smallest most vulnerable segment in the travel environment. Find a weak sucker. Take advantage of them

    that is shitty. They are the Trumps of search.

  4. Mike, Mary and Ed – Nice Deep Dive!

    I wanted to share the link on the article that Mike mentions above.

    http://blog.acorn-is.com/2016/04/ota-availability-now-impacting-googles-3-pack-and-local-listings.html

    I also wanted to update something Mike mentioned in the video, “Lisa Kolb who works a lot with bed and breakfasts, did some research which indicates that they’re not showing bed and breakfasts in the pack that don’t have a current listing with one of the online travel agents. If they do have a current listing, and they were ranking, they will show, and if they don’t, they won’t.”

    Placement is still based Google’s original Local guidelines, but as of April 1, OTA availability now has some amount of impact, but it’s not just the OTA availability itself dictating placement.

    We’ve seen in some cities (business center), where there is no OTA rooms available, Google is placing nearby hotels in the bed and breakfast results. These hotels do provide OTA availability.

    We’ve also seen Google showing some Inns that are up to 50+ miles away who do provide OTA availability when Inns in the city (business center) do not.

    And if no OTA availability exists then Google appears to fall back and list inns that typically would have been seen before April 1 in the 3 pack.

    Finally, here are some other observations we have made regarding why we are still seeing some non-OTA participating Inns in the 3 pack and higher up in the local listings (IE: you see “Visit Website” instead of a price):

    1) There isn’t many / any Inns / Hotels with OTA availability for Google to choose from for that filter date and search phrase.

    2) The Inn’s “GMB local listing” and local citations are VERY WELL established – more so than some of those who do have OTA availability. IE: They are following Google’s Local Guidelines.

    3) The Inn is smack dab in the middle of “business center”.

    4) The Inn’s online authority is of high quality for that search phrase.

    5) The Inn participates in the OTA, but they just don’t have availability on the filter dates set.

    Therefore it is possible to see an Inn without OTA availability show up in the 3 pack, it just really depends on the competition and the factors I’ve noted above.

  5. Google has been famous for changing gears on monetizing local for years. Remember the car dealer project (Google Cars I believe) that started in the bay area and lasted for a while before they scrapped it. There was no shortage of participation in that program among car dealers. Like that one, they scrapped most local paid search products for services, but this new one (specifically the plumbing/locksmith lead gen program) has now expanded to Sacramento (and possibly other areas, but I know for certain Sacramento was not part of the initial test). I don’t know if it’s a sign of future expansion for other local services that may be hard to define in terms of lead value and monetize accordingly.

    Mary’s point about lawyers for example is an issue for Google as well. How do you charge for leads from numerous local businesses with different types of transactions – some of which might be very complex?

    Then, you have the PPC cannabilization factor. By driving local search to a new paid format, Google is going to sacrifice the traditional PPC clicks. Will they net an increase in revenue from an ad format change in all local service industries, some, or none?

    And last but not least, what about the risk of users simply disliking the format? Of course, Google is the impenetrable marketing juggernaut, but there is always a level of risk in changing formats. That’s one reason why I believe they may be slow to make sweeping change to monetizing local and the segments they choose to monetize might be limited. Oh wait, did I just say Google cares about user experience? Ok, that’s a bit of a reach.

    No doubt that Google keeps trying to monetize local search, but there is a clear historical pattern of failure and complete abandonment of paid ad programs (how many local product names have they had?) over a period of many years. Google has consistently abandoned failure after failure only to try again on a limited scale. Naturally, every change to local in the direction of pure paid advertising strikes fear in the heart of people like me, and maybe it’s the inevitable future. Then again, if the pattern of failure holds true for another 20 years before they figure out a good way to monetize local, I’ll be ok.

    • Charles those are all good points about Google’s failure to come up with an ad program that is both understandable to SMBs AND gives them a good ROI.

    • @charles and after last week we can see their strategy – go after the billion users in Maps. While the many attempts are tests I think that Google only keeps the efforts that can be viewed by billions and return billions. Anything less to them is an annoyance.

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