Borrell Associates recently did a study on Local Search an developed this chart which shows the percentage of the advertising spend that goes to overhead and how much goes into buying the keywords when you use a reseller.
It’s not clear in this chart whether or not the reseller also hosts, maintains and monitors the landing pages but for sake of argument let’s say they do that, too.
The study goes on to say that the resellers will go out of business at these rates if they don’t have the technology backing them up to make this a scalable solution. Especially at the low monthly spend end of this chart the business can be so labor intensive that no one can survive on such few dollars.
The solution that we think works and can keep the retailers cost in the 25% range even at the left of the chart is two-fold.
One, have the technology that streamlines the purchase and monitoring of the keywords, without that this won’t work.
Secondly, specialize in specific verticles so you can leverage your knowledge and learnings across a broad range of clients.
The bottom line is that local search works and because you should monitor and improve your results constantly it’s not as easy to do as sending an ad to the newspaper and forgetting about it.
But for that very reason it really works, especially at 25% or less in overhead costs.