This is our Deep Dive Into Local from November 6th, 2017. In our Deep Dive series, we take a closer look at one thing in local that caught our attention and deserves a longer discussion.
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Mike: Hi, welcome to the "Deep Dive into Local" with Mike, myself, Blumenthal and the ever-shrinking Mary Bowling. So this week, we wanted to talk about the recent roll-out by Google of what are called Local Services Ads. They essentially are a re-branding and a more stable final state of what they were calling Home Services Ad. And, just at the highest level, they've actually rolled out two programs. One is the Local Service Ads, which was the Home Service Ads. And it's in, I don't know, five or six verticals in up to 30 cities by the year end.
And then, the other part of this, though, is they spun off what is called Advanced Verification into its own program. So, there's a Local Services Ad program, which is for professionals that go into the home...at this point, plumbers, locksmiths...that requires an extra level of vetting. And they vet not just the company, its licenses, but all those individuals, to make sure there are no felons, child molesters, whatever. And then there's a separate vetting program called Advanced Verification, which is for people who want to do AdWords in local market. And in that, they just vet the company to make sure that it's a real company.
This evolved over the last two and a half years. It started out in San Francisco and it's morphed over time. And they've tried different things, refined it, but it does appear that it is finally really rolling out very broadly. So, what's your thought about the Local Service Ads, Mary?
Mary: Well, it looks to me like they're aiming towards some sort of advanced-type verification for all local service businesses, at least. And...
Mike: Certainly, the naming expands the horizon from Home Service Ads to Local Service Ads. So, there may be businesses that are not necessarily in the home -- for example, car window replacement -- that they do it right wherever your car is parked, those kinds of things. I suppose moving might be one, but mobile notaries, those types of things, could potentially qualify. Yes, I think they do intend to expand beyond just people going into the home in super high-spammy industries where there's a lot of risk, like locksmiths. But I think you're right about that. Certainly, the name implies they're going to be expanding.
Mary: Right. So, they're calling this Google Leads, and there's an app called Leads that allows you to manage yourself with it. And instead of a typical bidding auction, like in AdWords, leads are priced by Google for each job type in each area. And then, when you sign up in the app...and I'm not sure you could sign up any other way, but when you sign up in the app, you see the price of a lead. And what you do is you decide how much money you want to spend every day, how many leads you would like to get that day. And that's your budget. And it seems like they're encouraging people to turn it on and off when they're busy and when they're not busy, which makes total sense to me.
Mike: I think it's available through AdWords Express, through the desktop dashboard, is it not, if you're approved? One of the things about it is you have to be approved into the program, right, which requires this vetting. So I think it only appears once you've been approved. The other is there's, at this point, no agency interaction, no ability of an agency to interact with these ad types on behalf of their clients. It's strictly business to Google, which is interesting.
Mary: Well, and then, the Product Director for small and medium business ads at Google is Kim Spalding, and she said there's a focus on quality, ratings and reviews, the ability to connect right away, location, and a number of other factors.
Mike: In terms of who gets ranked, you mean. In other words, how responsive are they, what kind of review quality do they have, exactly.
Mary: Yes, so it...
Mike: And then there's the refund part of it as well. It's guaranteed, I mean, Google doesn't want to be giving money back, but it's guaranteed up to $2000 by Google, which ... it creates comfort for the user, it puts the business in the position where they darn well better do it right because I'm sure Google's going to really bring down the hammer if they have too many of those.
Mary: Yes, they'll probably kick them out of the program.
Mike: Right. Yes, I would guess. But, like everything with Google, there's a ranking, and as you pointed out, it's based on quality signals, as opposed to other things. Although, I would assume relevance...because they're going down to the job level, obviously, that will limit the amount of competition. Also...
Mary: And I believe that each business gets to choose which types of jobs...
Mike: They want to bid on.
Mary: ...they want to bid on, as well.
Mike: Joel made an interesting point in the article at BrightLocal where he noted that part of this, obviously, may be to expand to other services, deal with spammy industries, but also to avoid brand confusion with the Google Home device, so...
Mary: Ah, that's...
Mike: ...which I think is a good point, I mean, how many homes can you have in your brand line? So, I think that the...
Mary: How many names can you give to Google Maps or Google Places?
Mike: Ask for a Google Home Service Ad to the Google Home and ask for home repair. It can get confusing quickly.
Mary: It could get ugly.
Mike: It could get ugly. But clearly, I mean, it appears that they have resolved the...the verification went through numerous tests. In San Diego, they kicked everybody out of the Local pack and ran them through Advanced Verification. Subsequent to that, in Philadelphia, they didn't kick them out of the Local pack and they decided, ultimately, to only use the verification methodology for AdWords advertisers. They felt that they could control the situation enough without imposing the extra burden on the regular local listings.
They found, I think...in San Diego, they lost 90% of their local listings, many of which were legitimate listings. Because people just didn't have the time or weren't aware, they didn't go through the vetting process, so Google ended up having to restore all those back into the database.
Mary: Well, and another thing that I think's really interesting about these ads is there's a nice, bright green shield with a check mark in it that says, "Google Guaranteed." And that's gotta have a lot of oomph behind it.
Mike: Yes, absolutely. So, obviously, they've formalized the program into the types of vetting they're doing. They're expanding rapidly across the United States, which appears...I mean, one would anticipate a worldwide rollout of this. I think the other side of it that we haven't talked about is this pits them very directly against Houzz, and HomeAdvisors, and even Amazon, to some extent, in this nascent market, sort of ... I mean, it's been around for a while with things like Houzz and HomeAdvisor, right, and Thumbtack. But it strikes me that this both validates the market and will, to a large extent, drive adoption of booking of these services, at least in urban areas.
Mary: What's kinda funny, though, is that they were very hurt by all the lead gen services that appeared in Local packs, so now they've become a lead gen service, too.
Mike: Yes, that's true. Although I would think...yes, obviously, this could be, at $25 a lead, it's a little hard for me to know what the economics are like and how many you've got to close. And I suppose it depends on the type of job that you're quoting on. But I do think that it should be a cautionary tale for everybody in the services industry, that they want to maintain their own customer relationships, they want to build their own email lists, they want to stay in touch.
If they have a great email list, and if I were a plumber and I had a little bit of time coming up next week, would I rather blast an email out to 500 existing customers to have some time, or be in a competitive bidding situation on Google against other plumbers in my market for new customers? I mean, you need to find a balance between those two, but I think that it's really critical that businesses remember to do the basics...particularly in that industry...of email and communication and staying in touch with your customers so that you're not renting them back, as it were, like you do with Facebook.
Mary: And when you look at some of the existing Home Service Ads that are being displayed, there's nothing distinguishing between them, other than how far they are from you and what their star rating is. So if you don't have a five-star rating, I'm not sure how you're going to prosper in that environment.
Mike: I don't know. That's a good question. So, it'll be interesting to see how quickly it rolls out internationally and how quickly it expands beyond the current categories of high-spam industries, and as you've speculated in the past, whether it goes beyond that. I don't think it will, just because I think that Google has other ways of getting ad money out of these businesses, which we're seeing, I mean, there are ads everywhere. There's ads in the Knowledge Panel, there's ads in Local Finder, there's ads in Maps, there's ads in the pack, there's ads above the pack, there's ads above the pads above the pack, It's like, there's ads everywhere. There's no...
Mary: I know. They've even got it so that if somebody searches for your brand name, your local product inventory shows up in your local Knowledge Panel, so you'd have to pay for an ad.
Mike: There you go. There you go. Maybe we could...
Mary: The brands...
Mike: Maybe we could start a business taking out ads on ads, In that little white spaces we could have little... Nevermind. Bad joke. Anyways, interesting development. Keep us posted. If you folks in the field working with these learn anything new, let us know. Have anything else to add, Mary?
Mary: No, I don't.
Mike: Well, with that, we'll say goodbye to this week's "Deep Dive into Local." Thanks for joining us.