Daily deals. Social Media. Mobile.
If I’ve learned anything over my 5+ years as CEO of Yodle it’s that conventional wisdom is often wrong and the so-called experts are all too quick to proclaim tried-and-true methods as extinct, or to crown a passing fad as the future of an industry. How much have daily deals, social media, and mobile lived up to the hype? Let’s see…
Daily deals = Future of local marketing? Not so fast.
Only eighteen months ago everyone seemed to be fixated with daily deals – and for good reason. Groupon and LivingSocial were growing at astounding rates. There were hundreds of entrants into the deals space – including formidable brands like Google™, Facebook, and Yelp – and you kept hearing stories about how merchants were lining up to participate in these deals where they only had to incur “marketing expense” for real, paying customers.
Fast forward to now. Groupon’s stock price is half of what it was when the company went public six months ago; Facebook has pulled out of the deals business altogether (to compete in full force with Google Plus™) and Yelp has significantly reduced its daily deals sales force. Small business owners are questioning whether a flood of often transient customers are worth giving up 75%+ of their unit revenue for, and consumers are increasingly fatigued by the relentless stream of deal emails in their inboxes.
Of course, none of this is to say that daily deals are dead; quite the contrary – deals are here to stay (Groupon may or may not be a $10B company, but it is a real business). What once looked like a revolutionary force in local marketing appears to now be just a part of the larger local marketing landscape.
Social media is great for small businesses. Just not for getting new customers.
Consider this: according to Hitwise, Facebook currently accounts for one in five page views in the U.S. – not just across social media sites, but across ALL sites on the entire Internet. So it’s not surprising that when we talk about local advertising, everyone wants to talk about “social.” “What are you doing for social?” “What’s your social strategy?” “How are you leveraging Facebook for local businesses? Twitter? Foursquare? Pinterest?”
While social media is a powerful tool for many small business owners, through our own testing and research it’s become clear that advertising on social media is not a great tool for local businesses to consistently acquire new customers. Last year, we considered adding social media advertising to our suite of solutions but we discovered that it was not an optimal way to drive quality leads and actually increased the cost per lead versus other channels.
Although large consumer brands have successfully advertised on Facebook to grow their customer base, things have gone in a different direction for small businesses. Platforms like Facebook and Twitter are instead being used most effectively as customer relationship management tools, something that’s illustrated by the success of Constant Contact’s “Social Campaign” product. Small businesses are now primarily, and very effectively, using social media to drive repeat business and engage with current customers. As for acquiring new customers though, search and other online channels are still far more cost effective than social.
Mobile is even bigger than we thought
Everyone knows that the mobile web is experiencing enormous growth due to the increasing prevalence of smart phones, and that this growth makes mobile marketing of significant importance to small businesses. That said, the prevailing wisdom among many in the local online marketing space was that mobile was primarily important for lifestyle businesses: restaurants, bars, retailers and a few other select sectors. After all, who searches for a plumber or a plastic surgeon or a property manager on their mobile phones?
As it turns out, a lot of people do.
What’s more, in addition to the large amount of search volume for “non-lifestyle” local services on search engine, we’ve actually found that many of these sectors see much higher conversion rates on mobile than desktop. For example, the conversion rate for HVAC contractors (the guys who install and repair your air conditioning) is 15% on mobile versus eight percent on desktop, while the rate for dentists is 15% versus 11%. This means that small business owners need to buy fewer clicks in order to drive the same amount of new calls and emails to their business – and that means more efficient marketing.
Although all the above issues are key for small businesses to varying degrees, there is arguably still another core development that we’ve found perhaps more impactful than anything else.
Recent research shows that the average small business has a monthly marketing budget of around $350. Many vendors in the space, however, have missed the mark by either offering premium solutions outside the price range of many small business owners, or low end and cheap solutions that also often don’t appeal to small businesses because they fail to drive the value that small business owners expect. Yodle by contrast has always been a leader in the local online marketing space and we’re continuing that trend by (along with companies like Yelp and Angie’s List) really focusing on this budget as the small business marketing “sweet spot.”
It will be interesting to see what happens across all these areas over the coming months and years. As always, Yodle will be driving change to help small businesses succeed online.
If you have any feedback to share or questions please provide it in the comments below and I’ll respond to you as soon as possible.