Understanding Google My Business & Local Search
Google’s Home Service Ads – Questions and Observations
Google’s test of the their new Home Service Ads generated a fair bit of conversation yesterday on Twitter. The ads started appearing more widely throughout the day allowing folks to dig in and get a better look.
Documents worth reading:
HSA Additional Terms for Providers
Home service ads Policies
Locksmith & Licensing – The test is focusing on plumbers and locksmiths. Locksmiths are an interesting choice. The locksmith industry has long been a hotbed of spam and deceit. With the ascendancy of Google local search most of that deceit moved online to Google in the form of local and adwords. Google did little to really stop it and imposed barriers that made it hard for legit locksmiths but didn’t seem to slow down the bad guys. And Google was profiting from this deceit via Adwords.
The solution for this new home service product is that Google is requiring licensing AND background checks and not just for the business but “you and each of your Team must comply with the “Minimum Provider Requirements,” as described in the HSA Platform Policies at www.google.com/adwords/express/hsa/policies.html”.
That certainly seems preferable to the mosh pit that has been locksmiths at Google. Certainly begs the question: why hasn’t that been done before?
Third Party Verification– Google is using a third party to make sure that participants are compliant with the requirements. “Determination of compliance with Minimum Provider Requirements is made solely by third parties, and not by Google, and any issues you may have with third-party adjudication of Minimum Provider Requirements must be directed to the relevant third-party adjudicator. You must provide honest, complete, and accurate information in connection with the HSA platform, including to third parties. All third-party verification processes are conducted solely to confirm compliance with the Minimum Provider Requirements, and are not used for any other purpose.”.
This will impose a fair bit of additional burden on small businesses. It will be interesting to see how that goes.
Customer Satisfaction– Amazon has a long history of understanding and dealing with customer issues. They do so directly and quickly removing a huge pain point in any transaction done via Amazon. Google on the other hand seems to want to push that issue off on the business and rely on crowd sourcing quality information and reviews to keep things on an even keel.
“A customer’s satisfaction with your Services is solely your responsibility. Google may provide assistance to customers who are dissatisfied with their experience on the HSA platform, however ultimately it is up to you to resolve any disputes between you and your customers. You agree that you, and not Google, are responsible for all claims made by a customer or other person or entity against you or your Team in connection with your use of the HSA platform and your provision of Services.”
Google has never been good at high touch interactions. This seems to be no exception. It seems a competitive disadvantage vis a vis Amazon.
Reviews and Quality Control– The review system is independent of their local review system and seems to only be available to users who have actually used the services. Google will obviously be tracking tons of other metrics that they will be making available to consumers: “for example, how often and how soon you respond to customer messages, the number of repeat customers you have, the average duration of your Service, number of Services performed, and feedback ratings and reviews (both positive and negative) on your performance). This information may also be made available on third-party websites”.
This is a big change on the review front…verified reviews. And might portend the future of reviews…
Pricing of the Ad– Obviously the success of this “ad format” is the ROI. It isn’t at all clear to me whether its a fixed rate, a % of the job, lead based or some other pricing model. Google says: “You may be charged a fee to Use the HSA platform.” Are they paying during the trial?
Google is giving up 3 of the highest paying ad spaces for the product. This product might only work in fields where the average job is high enough to warrant a bid rate equal to or greater than those 3 ads.
Payments– It isn’t clear exactly how payments are going to work but it appears that the whole transaction might run through Google. “Google may make available to you various payment processing methods to facilitate the collection of fees for Services provided via the HSA platform.”
Google has long dominated local search but it isn’t clear exactly how profitable that has been given the high costs associated with Mapping and local listing management (probably on the order of several billions of dollars a year). For the first time in years there are at least the glimmers of existential threats to Google in the local space. Apple has carved away some not insignificant number of maps and search users and Amazon seems intent on going after the home services space.
Google is obviously answering Amazon very directly. The details are not totally clear but it appears that Google is not going to let Amazon have the space to themselves.
From the small business perspective, these moves foreshadow a near future where you are no longer a truly independent business. That you have effectively become partners with some very large players whether you want to or not.
Some additional screen shots:
© Copyright 2023 - MIKE BLUMENTHAL, ALL RIGHT RESERVED.
Thanks for updating the article. Also, Kudo’s and thanks to Glenn Gabe who pursued this issue yesterday, got some answers and enabled you to update yesterday’s story.
On some of your points above:
Payment: The public won’t know how much is charged or what the “deal” is between google and the locksmith’s, plumbers, and any other entities that pursue this. Google has a paid placement situation in place for hotels and booking flights. Nobody knows what the payment arrangement is. Those involved know. To date, the news hasn’t hit the public. It will be a long time, I suspect, before these details leak out, if they do.
Google’s revenues and displacing ads:
Google is not going to LOSE money on this. Check their advertising revenues from their quarterly financials, quarter after quarter, year after year. They always GO UP. They know more about this than you and I, Bing, any government, etc. By the way, they aren’t going to tell us about this either, as they won’t disclose anything about the payment arrangements described above.
Additionally, there is something different about adwords, that you haven’t described: Businesses who advertise in adwords in topics where there are multiple advertisers can vouch for this.
The more ad competition, the higher the bid prices. When businesses feel an urgent need to get more traffic and they aren’t getting it through organic or the Pack (local) they up their bids. When the competition gets more fierce ad click costs go up. They go up for every click position. If the top position was paying $3.00/click…it will go up to possibly $4.00 click. If the fifth position was paying $1.25/clic k it will go up to something like $1.50/click. Greater and more desperate competition drives up adwords costs. Try it. You’ll experience what other advertisers experience.
We’ve been running adwords for about a decade. Our costs per click costs have more than tripled. There is a lot more competition in adwords than in earlier days. For our smb’s where the geographical competition is most fierce for customers the per click costs are huge. Where the adwords competition is weak…the costs are dramatically (and pleasingly) more affordable.
The Home Service Agreement (HSA) vetting process. This is primarily a feature that checks two things:
1. The size and financial capability of a business and
2. Background checks on employees.
Large businesses invest in all of the financial, licensing, bonding, insurance needs required by the HSA. Smaller, newer, and less financially secure businesses may not. That is the cutoff.
Initially for a business many of these requirements are reasonably affordable. I’d guess that all but the smallest can afford them. If something goes wrong in the course of business over years, and insurance or bonding costs rise, because of past problems…then those costs can become prohibitive.
On the security check for employees backgrounds, I’d suggest that is a reasonable effort from a consumer perspective. I’d think most consumers would be bothered by having a workman in your house with a criminal or problematic background.
Hey, some people might support having ex cons in your home. It is the promise of “a second chance”. I suspect the majority of consumers would prefer to know there are no criminal or other inappropriate elements connected to the service people that do work in your home.
In sum, I don’t think the above are exceptional vetting processes. But they do weed out a certain group of service providers that a certain part of the population doesn’t want.
On vetting for reputation. There is something about this that makes me laugh. If a business doesn’t have a lot of google reviews….then where is google getting its review summary?????? Will google tell us????
DUHHHH. I don’t think so. Hey,,,,,plumber A had 28 great reviews on yelp. Here is a link to them!!!!! 25 terrific reviews on Angie’s List. Here is a link to the Angie’s List reviews. Go visit
Mike: Google isn’t going to do this. Amazon, on the other hand does provide accessible reviews. I, for one would like to read reviews. I’d ultimately put more value on reviews than on google’s “paid placement”.
Speaking of Paid placement….that of course was something swore up and down when it went public that it wouldn’t do.
But it has. Danny sullivan wrote a terrific piece on paid placement back in 2012. You should surface it. He also addressed the issue as far back as 1998. The base arguments against it haven’t changed.
When google puts paid placements in such a prominent location and in a big box….it starves websites below that box of traffic. Maybe those websites of local plumbers and locksmiths will start paying more in adwords.
Ultimately everyone either pays google, or doesn’t get to play.
All of which is fine and dandy…except google is a monopoly on search…and probably more so on local search.
Do you know of local websites that get 15 or more % of their search traffic from bing, or any other search engine???? I doubt it. Google is the massive directory on the web.
It is not a healthy situation on the web, for small local businesses, and ultimately for consumers. The trend is for every business to pay google something. That means every consumer pays a bit more and google and its stockholders and its employees make more.
One last thing: You referenced the costs of mapping and suggested payback to google.
I read the same source article as you, suggesting that a full mapping capability costs $1-2 billion/year to maintain.
WHOA!!!!!! That suggests why only Apple and Google are pursuing this. That same article suggested google needed $2/visitor in ad income and Apple needed $6/sale in mobile phones…or something along those lines.
Mike: As you know “best estimates” for local search traffic from years of inquiries from the various engines suggest about 1/3 of searches are local. Google ad income is over $60billion/year. The simple math suggests $20 billion in advertising income suggested from local. Maybe more, maybe less. We don’t know.
But that safely covers the $1-2 billion in maintaining maps. It also enables google to invest in fiber in submarkets and self driving cars….and all those other things they do.
I wouldn’t fret or worry or reference google making a return on its maps costs and its local costs. They clearly cover those costs and then some…and some more. Its a non issue. And anyways they aren’t going to tell us, or the government, or the EU or anyone anything. They are very secretive.
Anways thanks for the thoughtful article.
Trust me I am not fretting about Google’s return but they are constrained by the same forces as other captitaliststs… they need income, growth and profit. They can’t afford small scale and need this to work for them first and foremost.
Great info thanks for the update Mr.Blumenthals. The HSA Platform Policies link goes nowhere btw.
Mike: Thanks for responding to one of my points: 😀
Google is a business. Its also publicly owned with share prices going up and down. I understand that. In that regard they do need to show profits, show growth, show positive trends on the financial side; qtr, after qtr. That quarterly focus is very much an anomaly focused on the peculiarities of the American system, and incidentally one that increasingly rewards senior management over everyone else. C’est la vie.
My concern is that google is the monopoly directory for services. That sort of makes it like the old US phone system. There was government oversight of that. It was essentially mandated that certain things occur:
Rural areas got affordable phone service and connections. Hey…that worked for places like Olean, NY and its nearby communities. Also yellow page directories listed EVERY business. And every home got a free yellow pages and white pages directory.
It gave access to all. That was the premise. I guess it worked. People from Olean could call around the world, and people in metro areas could find a lot of choices for doctors and lawyers and butchers, bakers and candlestick makers.
Now Google controls the world of information. It mandates what is seen or not seen. It manipulates the presentation. If google doesn’t want websites to get traffic it creates boxes and places them above the websites. If google wants to get paid for showing the information it puts up “sponsored boxes”. Those boxes go above the other information. They get the traffic.
There is no oversight over google. That is my issue. What do you think of that issue?
Mike: From a slightly different perspective this thought just struck me: About 1 year ago Google was the lead investor on a $100 million dollar investment into Thumbtack; Thumbtack, the classified site that drives solicitations to businesses from customers wanting a bid on work. Here is one story on it from last year: http://www.bloomberg.com/news/articles/2014-08-20/google-capital-leads-100-million-investment-in-thumbtack
Per the article that raised Thumbtacks total VC money raised to $150 million. As an investor you get huge insights into the business. Huge. Its not just google looking at the traffic data they send to thumbtack. They are seeing what is going on from the inside.
So they have an insight into how much business and the volume of solicitations and the quotes that plumbers and locksmiths and sooooo sooo many kinds of businesses make to customers. Google can pick and choose which businesses they want to pursue for solicitations for paid services. Boy do they know a lot!!!!!!
A short while google penalized Thumbtack for inappropriate link building or one of those “penalties”. The penalty lasted a week. Not long. I wonder why? 😉
Needless to say google offers for paid inclusion on various services…could crush thumbtack if it chose to do so. Alternatively they could cherry pick from the offers that are most voluminous and charge the most…and then set fees to those service providers.
Hmmmm. Its good to be google and to have all the information. What do you think????
Thanks for posting possibly the most thorough look into HSA online right now. I work almost exclusively with home service providers, so I’ve been waiting anxiously to see what the G would come up with.
Right off the bat, I see a couple huge issues with HSA. First, a lot of contractors I work with, and plumbers in particular, loathe the HomeAdvisor model. When plumbers have to pay to bid on nonexclusive leads through a platform that pre-vets providers, it creates the impression that all providers offer comparable quality and it creates a race to the bottom on pricing. They’re incentivized to offer the cheapest parts and labor possible while earning good reviews and remaining on the platform, so they can still make a reasonable margin while outbidding everyone else. That’s why most plumbers I’ve worked with will only rely on HomeAdvisor to normalize the demand during slow periods, to keep their workers busy when other marketing channels aren’t generating enough business.
The second issue is the pricing. “Locksmith San Francisco” has a suggested CPC of $19. If they’re replacing that ad block with the HSA block, applying a bunch of extra labor and support to build the trust metrics, splitting up the bid three ways and still turning a greater profit than they could have with the old ad block, those have got to be some expensive leads
The third issue is how users perceive this kind of advertising, and how that reflects on the core search product. Organic clickthroughs have always been higher than ad clickthroughs, basically across the board, and it will be interesting to see if all these new trust signals for HSA (like verified reviews, background checks, etc.) will be enough to close that gap. If they don’t, they’ll be passed over like most other SERP ad types, leaving organic, unpaid locals, and third party platforms (like Yelp) with the lion’s share of clicks. If the new HSA ads get clickthroughs like we’ve never seen before in SERP ads, users could easily lose faith in the unpaid map packs. If Jimmy’s Lock and Key is the first result in HSA (backed by verified reviews, background checks, etc) but D in the unpaid map pack (backed by no real trust metrics and a black box ranking mechanism), then why would anyone put faith in the unpaid map pack? When a user then gets to a SERP that only has an unpaid map pack (because of the industry, geo market, or even the specificity of the search), they’ll still have less faith in the unpaid pack and could ultimately end up on Yelp.
Long story short, I expect the chances of them successfully rolling out HSA nationwide, as it exists today, are basically nil.
Thanks for your thoughtful reply.
Some thoughts to add to yours and a few questions… Unlike HomeAdvisor Google has incredible reach and if they want to can probably remake the market. Question: Wouldn’t different pricing models circumvent the problem you note about the race to the bottom? IE Pay per click to listing, pay per job received etc..Do we know if it is pay per quote?
I agree with you that the bidding, if it has to replace current income, would be costly. I am curious how that would work out for Google and the potential bidder.
Google is a company that responds to what it perceives as existential threats with a competitive product. They are feeling that from Amazon. This is a standard play from their play book. Remmeber Offers? Google’s response to the Groupon threat… Whether it goes anywhere depends on
1)Whether they can make money
2)How much heat they are feeling
There is no oversight over google. That is my issue. What do you think of that issue?
Monopoly is not new to American capitalism. It’s not new to capitalism. In fact there are some that think that it is intrinsic to it.
Until and unless the economic model changes we will have monopoly.
Given that government policy is defined by the very people you hope they regulate, I see little hope in that path.
We agree with you Dave, and many of your posts show you’re passionate about this but the message needs to go to a wider audience. I think you should run for public office 🙂
Aw Mike: We interact too much. I sort of anticipated an answer of that ilk. Although I see you noted that google has influence over the potential regulators. Its slippery isn’t it?
Joe Goldstein’s comments above are interesting. When I worked in commercial real estate we used to solicit competitive bids on work all the time. I don’t recall contractors or subs declining the opportunity to bid. But maybe that was the commercial side and my particular market.
Bidding does drive one’s prices down. Its a good observation…and the description on how bidders think is apt. On the other hand if there are a lot of bids solicited and I’m one of the bidders and this process generates….say 50 chances for business per month…when I’m used to only generating 10 chances/month…maybe I bid all the time. I’ll win some of them.
If I’m a savvy homeowner with a requirement for a big job, I do like this opportunity. I can get competitive bids on line and it saves me tons of time. It appears to be consumer friendly to me and on that basis I suspect the world of web users will like it.
I think so long as the consumer world feels favorable to google it gets tough to contest their actions that businesses perceive as threatening and monopolistic. But boy oh boy, google keeps moving into different industries and verticals…and every time they do so….they do it with lots more information than any other entity. Google has all the info. Nobody else has access to it.
I think down the line the Google relationship with Thumbtack..which generates requests for plumbing and other services could be a can of worms. If Thumbtack doesn’t generate a profit and a payback to the initial investors who came up with at least $50 million of venture money….they could go after Google for diminishing its value, for “stealing the data” and the like. I guess we’ll see.
I definitely agree that Google thinks they can remake the market, and about their typical response to existential threats. But I don’t agree that Google Offers failed due to a flawed monetization strategy or outside pressures any more than Google+ did. They just failed to differentiate because Google was more focused on the market opportunity than the unique selling proposition.
With HSA, their product is a unique combination of unoriginal features borrowed from Angie’s List, Yelp, and HomeAdvisor. They could probably capture some traffic from less engaged users (ones who haven’t already found their review platform of choice), but I definitely don’t think they’re going to convert any users who have already invested into other platforms.
You bring up a good point about the pricing model, re HomeAdvisor. I have no idea which model they’re actually using, and looking back at the mechanics of the pack, it has to be a little flexible. You can send a bid request to a provider right from their own card, or click the “more providers to view or contact” option at the bottom to send requests to up to 3 simultaneously. I wonder if the contractors can even see which options you used.
Competitive bids are a part of life for contractors, and I don’t think too many of them have a problem with that. The big issue with HomeAdvisor’s model is that you have to pay just for the right to bid on a job. It’s not much – only $8 for an everyday plumbing repair, iirc – but you can see how that could rub someone the wrong way. Especially on a smaller job where there’s not a lot of margin to begin with.
The good thing for contractors is, if you want to get 50 chances for new business every month, there are a lot of ways to skin that cat. A lot of the contractors I’ve worked with will halfheartedly try any new marketing platform out of curiosity, but they won’t stick with it unless it has a strong ROI or meets one of their specific business needs (Angie’s List is good for finding wealthier clients, HomeAdvisor is good for keeping your employees busy during slow patches, pure organic SEO is good if your reviews suck, etc.)
At least on paper, HSA sounds like you have to commit to an meaningful investment in quality and transparency (with verified reviews, background checks, etc) while still ultimately paying for the ads or leads. To a contractor, you could either invest into SEO (and eventually get “free” leads), pay for PPC (and get leads without the reputation building), or buy into HSA and get the worst of both worlds. As long as there are alternatives like SEO and PPC that can drive enough traffic, I don’t see a lot of contractors getting excited about HSA.
I agree that Thumbtack will probably be a thorn in Google’s side for a long time to come, but I think it’s going to do a lot more damage to their public perception than their legal team.
I can see this as an interesting new revenue stream for Google, but hopefully its at least treated like adwords (bidding + spend limit). I’m already leaning towards this being a negative deal for small businesses as is, but if Google were to take a percentage of the service provided, then I think it would be more of a strong arm maneuver against small businesses. I also noticed that the ad placement pushes organic listings further down on the page, hmm….
Joe: Thanks for your comments and awareness of the industry.
Not knowing the industries nor doing their seo or seeing their traffic and knowing about their sales, relative to traffic I looked at yelp and google trends. yelp data is harder to interpret. Google trends suggests more searches for locksmiths over time than for plumbers.
(plumber got an amazing spike in trends when “Joe the Plumber” became famous in politics a few years back)
The $19 to get on first page for plumber (I assume in the Bay area) is indeed high. It suggests several things:
1. Its difficult to get traffic from organic and/or the pack…or its difficult for a lot of the players.
(think of that for a second—if its difficult to be visible in the organic and directory listings….then you have to pay to play—gives google an incentive to adjust visibility accordingly–doesn’t it???)
2. $19/bid is not cheap. Suggests that, revenues, profits and mark up on jobs are healthy…and it suggests a visit to the site gives a high likelihood of a sale.
3. The security and financial review is completely on the back of the vendor. I’ve never paid for that kind of service. I suspect its a healthy expensive cost. It will weed out “players” for only the ones that are already financially strongest.
Financial strength is not a substitute for good quality work though. If all google shows are its own reviews…then that is an issue. If it does follow up and gets reviews from the work that is performed via the bid service…then there will be more substance to the process.
Bidding on work: If you are already in an industry where most work is subjected to bids than you are used to it. If not…it drives quotes to the bottom. A difficult game to play.
Back to the observation connected to a $19/bid to get on the first page of search for adwords….and that the price partially implies that visibility in organic and/or the pack is difficult—- a highly placed sponsored bid box…creates more difficulty in simply getting visible in search. All implies the search engine is a pay to play vehicle….ever more and more.
I’m not concerned in how google charges for the leads. On the consumer side nobody tells me what a sales person or middle man takes out of a fee. (at least in most cases). If they take a big big part of the cost of a job..I suspect we will hear about it sooner or later. That of course would raise fees….by a LOT.
As referenced by Mike, Google sees Amazon’s effort in this area as an existential threat. You went back in time and referenced Google offers as a response to Groupon and Living Social. Neither turned out to be the threat first perceived. Google ultimately dropped it. Big deal from Google’s perspective. (currently btw: Groupon advertises in adwords–less threat than additional source of adwords funds).
I suggest that Google makes an incredible volume of funds via local search and locally placed ads. If google’s paid ads sitting in and on top of organic search results block amazon from moving into google’s monopoly on local search…and the resultant fees from locally placed ads….the payoff will be huge.
Doesn’t matter if they make more or less than with adwords or not….defending the turf is worth its weight in gold.
I’m happy to weigh in. The is one of those rare subjects that I actually know something about, so I really can’t help myself.
First off, $19CPC is actually for locksmiths. The head terms for plumbers in the bay area are closer to $30. It’s not just a California thing either – It’s $38 in the DFW metroplex, and generally $25+ in any major metro.
There are a lot of reasons it’s gotten so high. Some plumbers have been burned by bad SEO and would rather invest into something reliable, some set up adwords to drive leads until their SEO takes off (and never turn their adwords off because the return is still technically positive), and some just set it and forget it. I’ve actually onboarded a client who had an active adwords account and an active adwords express account, running against each other.
A lot of plumbers are also very territorial. They would rather lock their competitors out, take a job for a break even price, and then plant the seeds for repeat business with leave behinds, drip marketing, and gimmicks like water heater stickers.
And then you’ve got a few national competitors who pressure their technicians to perform unnecessary upselling and charge astronomical prices. They can turn a short term profit off of any click, at any price.
But speaking of territorial behavior, I definitely agree that Google’s trying to protect their monopoly on search with HSA, though when Google goes into reactionary mode it’s usually to combat existing threats, rather than anticipated ones. My gut says that HSA has more to do with Yelp’s dominance and the evolution of the service industry as a whole, rather than Amazon Home Services. They made have accelerated the time to market due to Amazon, but Yelp has been competing with Google’s map packs (and monetizing the traffic that Google couldn’t) for a lot longer.
My main question/concern thought process is this:
1) do you think the local pack (7 pack) will still continue to exist in organic search if this happens.
2) Some excellent points raised above. It will be interesting if Google can pull this off. Aside from Adwords and Android a lot of their releases have been flops.
The “future” is always a shaky bet when it comes to Google. In the context of the current searches, the remainder of the local pack are gone… its the HSA ad, adwords and organic. Which implies the disappearance of the pack but doesn’t guarantee it.
They will need to make it more clear , in my opinion, that those results are paid sponsors ads. Right now not so much.
I also see low priced services such as house cleaning companies showing these ads too. So, its not just licensed skilled jobs such as plumbers and electricians.
The cost is going to be high for a lot of companies. All their employees need to get that 500 dollar background check to qualify ?
This looks like to me like Thumbtack where a lot of fly by night outfits pay to bid and not deliver. When I use services such as Thumbtack especially for like maid services. I was not happy with the results. They were individuals and companies I never heard of nor did they have website or long standing footprint in my local community.
Not sure if I wanted to let those people into my home. I like Uber but I would not let an Uber driver into my home.
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