The following is Part 3 of a four-part series on local search marketing called “The Journey From Clicks To Conversion.”
“Guaranteed Budget” and the Evolution of Local Search
As the “guaranteed” clicks traffic product became more difficult to deliver, local search companies looked to change their business model with the introduction of the “guaranteed” budget product. The primary change was a shift in risk from the local search company to the business customer. In the “guaranteed” clicks traffic model, the local search company assumed the risk of click price fluctuation but under a “guaranteed” budget model, the local search company had the flexibility to buy clicks at higher price points without losing money on the product.
The hard sell to the advertiser in this situation is that as click prices rise and the media budget stays fixed, the advertiser will receive fewer clicks. They are no longer guaranteed a fixed number of clicks.
A “guaranteed” budget search product consists of a “fixed” budget that is agreed upon by both the local search company and the business customer (advertiser). The local search company uses the fixed media budget, often in monthly increments, to fund the pay-per-click (PPC) campaigns. If the click prices rise, fewer clicks will be sent to the advertiser, although if click prices go down, more clicks can be generated.
In addition to the media budget costs, advertisers are also subject to management and administrative fees that are added on as supplementary charges by the local search company. Though small businesses assumed greater risk, they also achieved greater transparency into the actual cost of their advertising products.
Initially, the business customers were lukewarm to the product offering because in their mind they were going to receive fewer clicks for essentially the same amount of money, and this was more or less true. To overcome this perception, the “budget-based” click product had additional value-added services bundled with it.
The most common value-added service was a call tracking number that provided additional validation that the click traffic was indeed converting into sales leads. Call tracking services, which had been in use for years in print advertising, were special phone numbers that when placed on a website and called by prospective clients, redirected the call to the advertiser (customer) while saving the call information. The call-tracking information was generally then imported into an online reporting facility (or dashboard) that allowed advertisers to view and track their clicks and calls.
After a slow start, the “guaranteed” budget product started to gain wider acceptance and is now more popular than guaranteed click traffic products.
A discussion of how small businesses learned about cost per lead will be forthcoming in Part 4 of this article.