This is the ninth installment of our Deep Dive Into Local series. For the week ending 10/26/15, David Mihm, Mary Bowling and Mike Blumenthal shared their thoughts about the previous week in local. The complete video 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 we cover small business satisfaction with SEO services and tech companies.
David: All right, I've got two surveys. The first was done by Latitude White and Bing, and it was presented at the European Directory Publishers Conference. Greg Sterling made note of it on the LSA blog which said that only 20% of small businesses trust their SEO and PPC firms.
Mike: Big surprise there, huh?
David: Hopefully, none of your clients were surveyed as part of that. Yeah, it certainly speaks to the continuing uphill battle that those of us in the entire digital marketing space, I think are going to have in selling to SMBs, because the trust level is just not there. They've obviously been taken advantage of by snake oil salesmen at least one too many times. It's unfortunate, but I think that's potentially one of the possible reasons why some of the Google channel partners have had less success than Google would have liked, in terms of getting AdWords embedded in the marketing mix of small businesses.
Mike: I thought the comments on Greg's article of people he interviewed at that meeting were interesting. They were all about pre-sale trust. They weren't about post-activity trust. The real issue is that people establish trust in the pre-sale process, close the sale, but then don't deliver on the goods in a way that the business perceives they were promised. And none of that was discussed in the article, which I see is the real core of the issue, is delivery of actual value.
David: Sure. I think the incentives in those kinds of companies are heavily skewed towards sale rather than retention, which I think is completely inverted. If I were building a sales organization, it would be...you would be beholden to your support team for your commissions, in my opinion.
Mike: And/or long term commission structure that gave you more commission, the longer the client was with you.
David: Right, exactly. Based on the lifetime value of the customer, exactly.
Mary: Unfortunately, Google is not innocent in all of this.
Mike: They're not.
Mary: Because their Google partners are some of the worst offenders, as far as sleazy sales tactics.
David: I can't disagree with that statement. I'm not going to name any names here.
Mike: I'm in such a good mood, I won't name any names either.
David: The other interesting survey, which I think we can pivot to our deep dive section at this point, was a survey by Alignable which is a social media community of small business owners. It basically asked about 20 tech companies or so. They asked small businesses about their opinions of 20 tech companies. Lo and behold, Yelp came out at the bottom of the list with a net promoter score of minus 66, which is kind of interesting given that Yelp makes money from business owners. Unless you're Comcast and you have a government supported monopoly, it's hard to see how you're going to actually be profitable with your customers feeling that way about you.
Also of interest, Google was at the very top of that list. I don't know if that's...I can't imagine that the experience with AdWords has been that great, but I do think that a lot of the efforts that Google's been putting into support around My Business and related products, back when it was the local business center dashboard, that the support has gotten much, much better. And so, I think that has bought Google a measure of goodwill, at least according to this survey.
Mike: Yeah. The survey didn't offer any context. And as Darren pointed out, GoDaddy ranked high, which raises some question about...
David: Right. Actually, I can believe that. Their customer service is actually quite good.
Mike: That's true.
David: As a business owner, you can talk to somebody for a couple of hours, if you're looking for that.
Mike: That's true.
David: We are going to switch to talking about Yelp, and you noted a couple of things about Yelp this week.
Mike: One of the interesting things, at least two people who should know better sent me the 'Yelp Sues South Park for $10 Million' article which was clearly satire, as indicated by the American Anti-Masturbation League, or whatever it was. But it was fascinating to me that two very knowledgeable folks would find this article...and it's a meme that circulated in Reddit and elsewhere...that would find the article that Yelp would sue South Park, which did do a very blistering cartoon about them in typical South Park poor taste. It's interesting to me because people believe that Yelp would do that. That's why that meme was successful or interesting, right?
The other related piece was just today. Amazon announced that Alexa, their voice interface for home, their voice assistant for home, was going to integrate Yelp results. I find that fascinating on a number of levels. One, it's a headless search. There's no visuals associated with it. It's strictly verbal. I don't see what value Yelp gets from that. In fact, I see it as a detractor because the [consumer] loyalty there is really to Amazon.
Where Yelp needs to be going, which is towards transactions, seems like Amazon is never going to give them even one speck of space to go towards a transaction marketplace. Really, Amazon sees that as their core, both capability and core value and where they make their money. And so ultimately, everything at Amazon revolves around marketplaces. That's what Yelp needs.
I find it fascinating. I predicted in 2009 that Yelp would syndicate their reviews. It didn't happen. I was curious about why. As I think about it now in retrospect, they did start syndicating in 2013. I think that really correlated with their topping out of being able to extract clients out of Google search, so they started syndicating Apple. But with Apple, the use case is clear. They can drive somebody over to their app and increase app adoption. I see their move with Amazon as more of a desperation move, not as a really strong business dev move. What do you think?
David: Mary, what are your thoughts?
Mary: It doesn't seem like Yelp has very much to gain. Yelp has been playing this game of partners for years ever since it went head to head with Google and wouldn't allow Google to buy it. So, I think Yelp just keeps trying all kinds of different things to see what might work for it. It's just trying to shove its footprint out there as wide as it possibly can.
David: Yeah. I was actually having an interesting discussion this weekend with somebody not in our space, but around...looking at the Wall Street scenario... what is Yelp's future there? We both agreed, until they have a product that they can actually sell that works, even if they have a net promoter score of minus 66. Until they have a product that actually works and delivers ROI across the board for small businesses the same way that Facebook ads do, or in some limited cases AdWords, I don't see how they are going to be a profitable company.
Mike, to your point, they're not going to sell ads. They're not going to be able to sell ads on verbal results from an Amazon device. I think that their only exit at this point, until a new product comes out, would be a data acquisition, just somebody like Google or Facebook or Yahoo, somebody buying them exclusively for the reviews. But, I'm not sure that that's going to get them the acquisition price that they're looking for. I'm not sure what their long term play is. They're in a dark spot right now.
Mike: They're in this chasm, right? They used to be a boutique firm, where they were everybody's darling.
Mike: As they tried to scale towards Facebook or Google size scale so they could drive their ad prices down, they're caught in the middle, right?
Mike: Where their ad prices are high, they have difficulty building the customer base to get to the scale they need to achieve those lower prices. Their real play, which is in some sort of marketplace, for whatever reason they didn't enter early or strong. I don't either. I still see a short sell if I were in their stock. I don't hold their stock, but I would see a short sell even as low as their price is now.
David: Yeah, yeah.
Mike: I don't know. Interesting. Where do you think they'll go, though? What do you think they'll do?
David: I really don't know. I don't have any...I think that talking to this guy, he's sort of in the financial space, the one thing that he mentioned is that it's hard to sell the stock short at this point because it is so low and that any acquisition would probably drive the price up. If that's their only option at this point, then it's hard to place a bet one way or another.
Mary: It almost seems to me that the easiest thing that they could do is sell enhanced listings, at this point. At least they'd have something to sell, and there would be some value there for the small business owners, and then what...
Mike: Well, that's effectively what they're doing with their ad product. They allow you to enhance the listing more than somebody who doesn't buy the product. It is essentially that. I mean, that's what you're getting, right?
Mary: I know, but I don't think they're framing it the way that...
Mike: No, they aren't.
Mary: ...it makes sense to SMBs. SMBs still feel like they're being squeezed.
David: They are also trying to make too much money on that enhanced listings product, in my opinion.
Mike: Right, but they need the money because their cost of acquisition is so high.
David: So high, yeah.
Mike: They're caught in this bind with their limited scale.
David: Yeah, yeah.
Mike: A very tough place to be. Did you watch the South Park?
David: I haven't yet. I have it queued up on Hulu.
Mike: It's mostly about obnoxious Yelp reviewers walking into a restaurant and extracting fear and loathing in the restaurant. Well, with that note on Yelp, do you have anything else to add?
David: That's it for this.
Mike: Or, are we done beating up Yelp?
Mary: I think we're done.
David: I don't think we beat them up. I think we're just presenting the...
Mike: That's true.
David: ...facts as they're reported by the media.
Mike: With that, I will say goodbye to our weekly deep dive. We'll see you again next week. Thanks for joining us.
David: Thanks everybody.