Google’s $10 Local Search Pipe Dream: Slave Wages to Squeeze Yellow Pages
Google is a $160 billion market cap cheapskate: First, the number one search engine seeks to recruit engineers for outsourced Google Gadget development at junk CPM rates, then it attempts to lock-in a $4.6 billion low-ball bid for the FCC wireless spectrum auction, NOW it believes all it takes is a crisp $10 bill to lure U.S. adults into drumming up business for Google.
I underscored Google’s local dilemma one year ago: It has the product side of the local advertising equation figured out, but is unable to turn millions of elusive local merchants on to the Google self-service AdWords auction machine.
The strength of a traditional Yellow Pages publisher is its vast sales force network of “feet on the street” calling upon local small businesses. A “feet on the street” sales strategy does not come cheap, but it is the key to reaching, and acquiring, local merchant accounts. While Google’s advertiser self-provisioning system is cost-effective, it has not gained critical traction among the millions of small businesses in the U.S.
Google has announced various partnering schemes with the goal of piggybacking on small business sales force and distribution assets of other companies, such as 1) a Verizon SuperPages.com partnership to “marry its “sales channel opportunities with Google’s vast advertising network” and 2) a Intuit QuickBooks referral button deal to “help small businesses to attract new customers.”
Despite Google’s efforts to leverage the sales efforts of third-party companies, however, the local ad market remains elusive. Not surprisingly, Google can’t even garner sufficient “freebie” Google Maps listings it offers local merchants.
Google is undeterred. Sheryl Sandberg, VP Global Online Sales & Operations, said of the local opportunity last year:
As people do more local search on Google, we provide greater opportunity for local advertisers. In that area we think the market is widely under penetrated, it sounds surprising to a lot of us, but even in the United States, arguably the most developed market in the world for ecommerce less than 50% of businesses even have a Web site, or let alone advertisers, so we think there is tremendous opportunity to bring those people online and bring them into our advertising product.
Is Google biting the “feet on the street” sales force bullet, then? NO! As usual, Google believes it can get away with playing by its own business rules. The “Google Local Business Referral Represenative Program”
You’ll visit local businesses to collect information (such as hours of operation, types of payment accepted, etc.) for Google Maps, and tell them about Google Maps and Google AdWords. You’ll also take a few digital photos. After the visit, you submit the business’ info and photo(s) to Google.
You can earn up to $10 for each approved, verified referral you submit. This includes $2 when a business referral is approved by Google; and $8 when an approved business verifies that the information you submitted is accurate. Referrals are approved by Google based on the completeness and quality of data supplied by representatives. Businesses verify their information either by sending us a response postcard or verifying their information online. As long as your earnings total at least $25 a month, you’ll receive a monthly check.
If Google were to pay market wages for a national sales force calling on local businesses, it would not have the super-duper profit margins that make it the darling of Wall Street, and serve to finance its multi-billion dollar acquisitions.
The Googley local ad sales solution is to offer slave wages to U.S. residents: $2-$10 for hours of labor intensive one-on-one cold-calling, prospecting, ad creative development and sales closing.
What is the going local ad sales market rate? Erron Silverstien, former Citysearch exec and founder of local search play YellowBot recently told me a successful close of a local merchant entails, on average, a $500 investment.
Does Google know better? NO! Google believes it can get away with solicting U.S. adults with a pennies on the dollar pitch: That is the Google Local Search $10 pipe dream!
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