Can Facebook Crack the SMB Nut? Can Google?

Greg did an interesting article on Facebook’s move into the SMB market. Whether their decision to forgo resellers is the correct one, time will tell. But has Greg points out, the real question is whether they can deliver compelling value to SMBs, in an easy to use package that drives widespread adoption.

Many have dreamed of this as the holy grail, few have succeeded. Google has been at it longer than anyone and still have not yet put the all of the pieces in place. Facebook has much less SMB baggage than Google but Google has a great deal more experience.

Rather than reproduce some of my thoughts from G+ I am embedding them here.

Please consider leaving a comment as your input will help me (& everyone else) better understand and learn about local.
Can Facebook Crack the SMB Nut? Can Google? by

11 thoughts on “Can Facebook Crack the SMB Nut? Can Google?”

  1. Back in the day when Facebook introduced their local “product” (and I was not a very objective marketer) I thought it was funny & unrealistic. I, since then, saw how local businesses that were using Facebook to connect with their audiences were getting easy wins, with little practically effort, and changed my mind.

    Just look at stats that Greg reported yesterday – http://goo.gl/o080ob. I saw this with some businesses last year. Just to illustrate it with reviews alone – one local business I know had 30 Yelp & 20 Google reviews over past 3-4 years and 100+ ratings for 2013 alone simply being active on Facebook few times a week. Not asking for ratings.

    Of course this is too broad of a brush, engagement matters, etc but one thing I know for sure – considering & presenting Facebook as a part of local strategy for a specific local business is a must. Facebook isn’t Google+, which is still struggling with public & mainstream (G+ fan here, BTW). Getting wins with active local Facebook page is no-brainer. MUCH harder with Google+ page at the moment (will be for a while). As you, Mike, asked a few days ago – it’s hard to find examples of active G+ pages doing well. Because… there are not that many of them…

    That’s not to say that Facebook is a place where most people go to find local business. But it’s becoming a stronger competitor in the local marketplace. We must be honest with businesses and reflect this reality – it IS worth it for local businesses to consider having presence on Facebook as a part of their local marketing, not just branding and engaging.

  2. @Max
    Points well taken. You are absolutely right, it needs to be properly explained and positioned. Not that the SMB will always listen. :)

    Facebook is a funny duck at the moment. They have SMB mindshare but deliver little of what businesses want most; leads.

    Google, on the other hand, has less of their mindshare but delivers leads.

    Neither has done great job of helping the SMB take advantage of what the site has to offer and neither has done a good job of moving over to the opposite of side of the equation.

    Part of the reason that there are no great examples of local pages on Google is because Google has not fully communicated the value. They have been so focused on fixing the crap that they created they have done absolutely terrible job on the communication side.

    Likewise Facebook has moved very awkardly toward some sort of discovery opportunities.

  3. Google is about intent. Its the world’s largest directory. Its the yellow pages many times over.

    FB is about friends. Ads there are like ads on the radio or TV. Possibly market awareness…but it doesn’t necessarily hit you WHEN you are looking to buy.

    Therein lies the difference. Its critical. Its why google’s adwords works so well…gathers so much in revenues and leaves everyone in the dust.

    FB works…but the way it works is a fraction of the effectiveness of INTENT…which is bottled into search phrases wherein the customer is focused on a topic or a business or a product or a service.

    These are enormous differences. Its why google’s revenues from ads completely outdistance those of any other entity. Last quarter w/ all their traffic and volume and all their reach…Google had about $10 billion in adwords revenues and FB had less than $2 billion.

    FB…so big…and yet so removed from Google. Google also had another $3.5 billion in adwords revenues from the “partner sites”…but those ads are like display and other ads…they simply don’t convert effectively like ads off of search…and INTENT.

    FB can try a lot of things. But its more about friends. Search is about INTENT. Enormous differences.

  4. Mike:

    One other thing. While you might perceive adwords express as an smb product, I’d suggest smb’s that do advertise look at adwords. Its clearly an smb product, along with being a product for endless other types of services.

    While google doesn’t break down data on ad sales to smb’s….here is a view into a bit of their business: ReachLocal’s financials: http://investing.businessweek.com/research/stocks/financials/financials.asp?ticker=RLOC

    As you know, ReachLocal (RL) is essentially a google adwords reseller. They are a google partner and a group google endorses and promotes.

    Think of it. RL had sales of about $540 million last year. Its basically all from reselling google adwords. They tend to mark up adwords by 2 or more times.

    So just consider: One relatively smallish, reseller (among many many) had a “feet on the street” salesforce, reselling google adwords to smb’s and generated $270 million last year.

    ReachLocal’s efforts are of course a teeny teeny drop in the bucket for adwords. BUT it is representative of an SMB advertising product.

    I merely suggest that you have decided not to address it in your blog…but it is very definitely out there, its active…and the gross volume is monstrously large. Its just that google won’t publish any data on it.

    If I were them I wouldn’t publish it either…but the size of their revenues and its effect is so significant there is a public value to seeing this data be further broken down.

    I wouldn’t discount google’s advertising reach into the smb world. Its huge. Its beyond huge.

  5. @Dave
    Right you are. A huge amount of Adwords is SMB money. And as you point out, it is likely coming through Resellers like ReachLocal and other Google resellers.

    I was responding to Greg’s article noting that Facebook was not going to use resellers and he was speaking about self serve.

    So the other question is whether Facebook can really make significant inroads with just del serve. Seems like a tough road.

  6. Yeah, Mike. In that the only sense of what the total adspend is in adwords, let alone more detailed breakdowns we have zero sense of what smb’s are spending or how they are doing it. We don’t know the revenues from adwords express. We don’t know the spend by business types or verticals, the spend by smb’s spending less than $500/month, spending between $500-$2000/month and so on. We don’t know if the smb’s are using outside sources, what they are being billed to do so, if they are doing it inhouse, etc etc etc. Everyone but google is completely in the dark about this type of data.

    Various marketing reports give us a sense of volumes. That is it. Google knows this information in detail and its not offered the information, nor is it required to generate it in a context that would be insightful from a context of smb spend.

    FB is so different from search. There is a lot of literature and analysis, and suggestions about using FB for advertising and in regard to smbs. But it is primarily about a social phenomena and is scarcely used in a context of “intent”. Accordingly so much of the literature and analysis and suggestions end up pointing to analysis about “social phenomena and metrics.”

    Those metrics aren’t dollars. They are different. So that makes their ads similar to billboards, and drive time radio, and tv late at night, where ads are floating everywhere…but they aren’t directed at intent….more at product, brand, and awareness.

    Its very different.

    I suppose we’ll see over time how FB does.

  7. @Dave
    In consumer research that I have been doing, the use of FB for discovery is low compared to other means but increasing regularly and significantly. This seems to be particularly true in products or services that are perceived to be complex (ie car repair) and/or require long term technical relationships (specialty lawyers).

  8. That is interesting. Good luck with the research.

    This past week I saw a relative who I think used FB and the referrals from friends and family and those she knows and trusts in an absolute superb manner. I saw one of those experiences and she described a second.

    She was considering buying new items, one a complex kitchen appliance and the second a bed.

    In both cases she posted on FB and asked questions. I saw the responses on one of them and she further described elements of the second instance.

    The responses were detailed and terrific. Ways to use the appliance, best applications, different details, where to buy the appliance at best price, etc. Nobody panned the appliance, all the respondees loved it, and she got tremendous advice from a very trusted group.

    What a great referral system!!!

    In the second case buying an expensive bed with all those new fangled adjustable elements she got similar quality responses. She referenced that one respondent gave her very specific advise that flushed out an issue with which she was unaware, and was later confirmed by at least one salesperson and affected where she purchased the item.

    That is an example of a huge advancement in getting very expert trusted advice on bigger purchases that are both more costly and involve more elements.

    Possibly that usage fits in with your research results to date. FB does provided for that interactivity and it allows one to get assistance from a very specific network where your personal trust level is naturally higher. Interesting.

  9. Interesting article. I agree on many points. It is so hard to increase followers in Google+. No easy way to do it that I can find. Even with a prominent call-to-action on page with heavy traffic to follow on Google+, people tend to +1 (instead of follow) and not many +1. With Facebook, it’s easy to get likes and followers, especially if you pay a few dollars a day. Then you have a captive audience you can post to on a regular basis. I wish the same were true with Google + pages, I mean that you could increase followers easily in some way.

    As far as Facebook ads go, they are not effective in getting customers. The bounce rate is high. According to my Google analytics, the average of users clicking on a Facebook ad stays on a site less than ten seconds, while users clicking on Adwords ads stay 1.8 minutes. Adwords have been very effective for clients and me. Not so with Facebook. When I saw the bounce rate stats for Facebook, I canceled my ads.

  10. Nobody knows the volume of adwords sales that google’s partner resellers have and their penetration into the smb world.

    There is simply no data at all. Even if one could access the aggregate volume of the resellers themselves (and you can’t) one wouldn’t know how much adwords and adwords express volume is done by google in total. Its not public data and they don’t provide a whiff of a speck of that volume.

    They keep that data hidden.

    Here is one list of adwords reseller partners

    I have experience with two of them. They rip smb’s off. Plain and simple. Its been going on for years. I got a first hand experience with one about 4 years ago. Before that there were a lot of complaints about them. My last exposure with one of them was late last year. They were ripping off and bs’ing an smb.

    Are others better? Possibly.

    The reseller business as google has set it up, and at least as some practice it is dirty.

    But…its a tough slog to sell to smb’s. Even while I had and operated smb’s I sold into them in a consultant commercial real estate capacity. They are tough to get a hold of and tough to sell to. One by one. 20 million or so in the US and another 20-30 million around the world. Since google essentially eschews a sales team its no wonder they have operated a reseller arrangement. The resellers are effectively google’s “feet on the street” sales force.

    At least with two of them they have about a consistent 4-5 year history of giving terrible service and value.

    If I were FB I’d be cautious about using that method to get to smb’s. Its already been stained.

  11. Well said, Dave.

    “They were ripping off and bs’ing an smb.”

    In this way Google is just like the print YP, except that they can keep some separation by using resellers.

    A lot of early frustration with AdWords came from how they positioned it as an easy to use self serve platform. We’ve come to understand, however, that AdWords is not so easy and requires middle men who have to hard sell in order to pad their margins.

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