Kyle Sulerud - December 19, 2019This question comes from Becky of Cedar Rapids, Iowa.
I’m just getting started and trying to do some Google Ads management for some local service providers here. When I do try to do some research on their type of keywords and just see who else is advertising on those, a lot of times what I’ll come up with (depending on the service) is some of these national brands like Angie’s List or HomeAdvisor, other things like that. They clearly national advertisers who are just going to direct you to somewhere else to search for and find providers of that type.
So I’m just kind of wondering how that typically is going to factor in when I’m trying to advertise for just a local service provider, or searchers going to find the local people better. Are their ads more likely to show up because they are local and therefore may be more relevant? Or are those bigger advertisers going to just kind of dominate (because they obviously have lots of money to put behind their campaigns)?
I’m sure that’s probably pretty common. So I just thought maybe you might have some insight on that and how it affects things. And if that’s something that the clients see, is that something they should be worried about? So that’s my question. Any, any advice you can give, I would appreciate and I really liked listening to your podcast and getting all the information that I can.
The main question is: Should we be worried about big advertisers like HomeAdvisor and Angie’s List?
The short answer I’ll give is: NO. But of course, I’m going to get more into it than that.
This answer is not only for Google Ads managers. This would also apply if you are a local business owner, running your own ads.
If you are more of an e-commerce brand, this would be a different answer.
There are a lot of problems in trying to advertise most e-commerce products and coming up against big established brands.
To see what I mean, go over to Google. Do a search for something like “women’s shoes”, and take a look at who’s advertising. There aren’t really smaller companies that are able to advertise on those keywords. All you’re going to see are huge brands, huge stores. Those brands are very competitive in that type of search. They’re driving the prices up so high that smaller businesses simply can’t afford to compete.
But with local service businesses, that isn’t an issue, in my experience. Yes, you’ll have these big brands like Angie’s List and HomeAdvisor, who are advertising on these keywords. But typically, they’re not very aggressive with their bidding. They’re not usually in the top ad positions. It’s usually an actual local business, who is in the top position. This means the bigger brands haven’t been able to work it out to pay much more.
You see, they’re in the position of having to pay for the leads. They’re running Google ads to generate the leads. They have a cost per lead that they’re paying for. Then they are selling those leads to the business who is connecting with the customer. They need to be able to generate the lead at a low enough cost so they can sell it to businesses and make their profit.
That’s how they’re making profit. They are spending X amount on ads generating leads and then selling those leads to the business.
Becky, you’re in a similar situation.
You have to generate the lead for a local business at a low enough price.
You have to do this so that the business is happy with that price in addition to whatever they’re paying you to run those ads for them. It’s a slightly different business model than HomeAdvisor or Angie’s List, but very similar. You are both trying to generate leads for the lowest cost possible. You have to basically justify your existence and give value to the business owner. Then they are mostly just paying for the leads.
Now luckily, HomeAdvisor Angie’s List are not super aggressive when going after these keywords.
That gives us opportunity to bid on these same keywords at a reasonable bid. It’s a reasonable cost per click that’s basically been established by the local market. In some cities, it’s higher than others depending on what the competition looks like. But it’s not too unreasonable from what I’ve seen.
With e-commerce, like I mentioned earlier. That can be a little unreasonable compared to what you’re actually able to profit from those ads.
With local businesses, not so much. It is reasonable, as you can pay X per click, get a certain conversion rate on your landing page, and have a reasonable lead cost that the business owner can profit from.
So that’s good news. There aren’t tons of nationwide competitors driving up the cost per click.
That’s not to say they don’t have some effect on the cost per click, they’re still a competitor. But I wouldn’t worry about them any differently than you would worry about any other competitors. There’s always going to be competitors. So you need to find a way to set yourself and your clients apart.
Now with HomeAdvisor and Angie’s List, they’re going to attract a certain type of person. Someone who wants to go to a site like that and compare their different options. In general, that tends to be a different type of person. Someone else is going to see an ad for a local business specifically. And they’re going to just check that business out directly because of how the ad is worded.
Yeah, there are going to be people that could go either way. They’ll be drawn into either your ad or into the HomeAdvisor ad, depending on what your ad says. Most people it’s going to be one way or the other. Either they want to go through a comparison tool, or they just want to compare themselves. They want to go directly to the business’ websites and compare the options themselves.
So instantly, you’re already set apart from HomeAdvisor and Angie’s List to those types of people. Either they’re going to go one way or the other.
I’d actually be more concerned about other local businesses. Those are going to be your main competition here.
It sounds like you’ve been listening to the show. I know I’ve talked about this before. You need to set yourself apart. What makes you more special than your competitor? What will the client get out of working with you that they won’t get out of working with the next company? And that could be any number of things.
Perhaps:
- You’re the first person available that they can call and talk to.
- You have a better warranty than anyone else.
- You have more convenient appointment times.
- And other things that can set you apart.
That’s what’s going to attract the clicks to your website. And then you really want to make sure that your website is optimized to attract and get the lead. When someone lands on your website, you want to make sure that they are convinced at that point. They need to know that you (or your clients) are worth contacting, so that they become a lead. The better your conversion rate is, the more you’ll be able to pay per click.
Let’s say you’re looking to pay $100 per lead, and the website is converting at 5%. That means if you spend $100, you would need to get 20 clicks in order to get one lead. That’s $5 per click that you can pay. If you increase that conversion rate to 10%, for that $100, you can afford 10 clicks at $10 per click.
The difference between being able to spend $5 per click and being able to spend $10 per click means you can get a lot more traffic. Your ads will show up higher on the page. This is going to lead to the ability to get a lot more traffic. That needs to be a focus.
You need to focus on the conversion rate on the landing page. You’ll find that that’s going to help you compete a lot more, because you’re going to be able to pay more per click.
What’s the bottom line?
Don’t worry too much about HomeAdvisor and Angie’s List. Yes, they are competition. But they are no more threatening than any other local business competitor that you’re going to have to deal with.