Google Local Listing Ads: Random Thoughts

I was able to capture several variations of Local Listing Ad displays and captured them on a 1280 X 960 screen to get a sense of how many organic listings might show. I chose 1280px screen resolution as it is the display type of roughly 50% of current users. I removed tabs from my browser assuming that many users do not use them and ran the browser screen to full size.

Note that on some ad presentations there are very few organic listings visible above the fold and even with no Adwords at the top only two organic listings are shown.

Google Local Listing Ad Display Variations

A number of folks have pointed out, and rightfully so, that for this program to be really successful Google would need to actively “sell” the ads to SMBs. In a sense I believe that this is absolutely true. However, my back of paper estimates are that roughly 10% of US businesses have claimed their LBC record with NO significant marketing on Google’s part. Let’s assume that with no marketing of the product, 10% of those choose to use the Local Listing Ad. Lets also assume that the average monthly spend is a modest $50.

In the US you are looking at roughly 15 million businesses x 10% LBC take up x 10% Local Listing Ad adoption x $50/mo. = 150,000 SMBs x $50/mo. That would equal $7.5 million per month or $90 million per year. As Everett Dirkson once said, a million here, a million there and it soon adds up to some real money. With Google’s scale a low adoption rate still leads to significant profits. There would be additional world adoption and other benefits and spill over to Google’s Adwords product as well.

As far as I know, while we have seen ad examples, no one has yet seen the LBC tab out in the wild. Either the test group is very limited or Google has placed the ads to test layouts and response prior to releasing the interface widely.

Please consider leaving a comment as your input will help me (& everyone else) better understand and learn about local.
Google Local Listing Ads: Random Thoughts by

9 thoughts on “Google Local Listing Ads: Random Thoughts”

  1. Great coverage and analysis on this development Mike.

    If this works well for those early adopters there is nothing to stop Google from engaging in a much more aggressive sales and marketing campaign. They could run TV ads (wouldn’t that be fun?). They could run a telephone sales campaign (‘Hi, we’re calling from Google – we just want to verify your listing. If you take a few minutes right now to go to…’). They could provide incentives to local SEO and website development partners. They could reward (free advertising!) small businesses for getting other small businesses to sign up (multi-level marketing at Google scale).

    I think they’d be much more inclined to make such an investment once they have a working business model for local search and small businesses. Of course, it remains to be seen how they would reconcile any such campaign with their algorithmic DNA.

  2. Mike,

    Once again, you are on top of it! I was just talking about the implications of this with a friend and you hit the nail on the head.

    Just another reason why you are 1 of 4 blogs I make a point to check regularly. (yea that’s all I check – no RSS feed anymore. What a time suck.). Your blog, Tim Ferriss’, and Zen Habits + 1 family friend.

    Love your insights. Thanks as always.

    -Nick

  3. @Eric
    The marketing possibilities are in fact endless. I assume that the Places campaign, an integrated approach to LBC, Maps & Adwords, will initially be expanded to cover Local Listing Ads…but who knows.

    I also wonder whether the biggest conflict might be with Adwords itself both in a marketing and pricing sense. There could be price differential, placement preferences etc that could cause angina.

    Certainly as you can see from some of the ad examples, organic results are often pushed right off the page….

    @Nick

    Thanks for the compliment. I already read my blog but I will have to check out Tim and Zen habits. Thanks for the recommendations.

  4. Mike,

    Yes, managing the pricing will be an interesting challenge! I’d speculate that the pricing for the monthly fee could be at least partly determined by AdWords. That is, by mining existing AdWords bid data they can establish an average price per lead (or click) in a particular category and location. Then they set the monthly price assuming a category specific ROI (which they might also be able to infer from AdWords data) and some (minimum) target number of leads required to meet the target ROI.

    As a category becomes more competitive Google could either change the fixed price or simply deliver fewer leads for the same fixed price. Both would have the effect of reducing the ROI for the merchant – which is inevitable in a hot category/location.

    (And if you’re a Google Product Manager – here’s an interesting question. Do you restrict the number of leads to a merchant to align with your target ROI or do you reward the early adopters with a surplus of leads but risk disappointing them later as volumes decline. Probably an A/B test someone is running right now ;-).

    Cheers,
    Eric

  5. Well that’s a whole lot of dough! Thanks for the interesting estimate, Mike. I suppose this very discussion happened at Google at some point. They know what they’re doing.

  6. Dropping it down a few notches on the screen resolution, what about the ~25-30% of people using 1024×768 or lower! Testing that resolution using Firefox with the bookmarks toolbar, Roboform toolbar and tabs open, I only see sponsored results, the 4 local listing ads, the sponsored results on the right side and A and B of the map results. Basically entirely ads.

    Now if I remove the two toolbars, go back to the search results and see a version without the top sponsored results, I still only see the local listing ads, 4 sponsored results on the right and most of the G listing in the 7-pack. The link to More Results is below the fold, as well as all the organic listings.

    Did the map actually get bigger with the 7-pack too? I feel like it’s larger now. 311px tall and 250 wide.

  7. A couple of observations, if I may.

    1. From a “visual attentiveness” standpoint, the addition of these ads certainly takes attention away from organic results, and may even take attention away from Adwords.

    2. The introduction of the 10 Pack seems to have expanded the willingness of many searchers to click on something other than organic results. The addition of these new ads visually looks like a hybrid of Adwords and Local. It will be interesting to see if it begins to breakdown the aversion of some searchers to click in the yellow. If it does, this new UI may not only add revenue from local but increase revenue from Adwords.

    3. I can’t imagine Google squeezing any revenue-producing element off the page, which means I can’t believe they will serve up local listing ads where the prospect of income is less than what they expect to see from an Adwords ad. This gets into ad rank, but also into impressions, since LLA’s are bid on a flat monthly charge.

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