Synopsis — In late summer of 2010, we conducted an interview with the CEO of Yodle.com, Court Cunningham, to discuss the issues facing those involved in local online advertising. Court joined Yodle as CEO in 2007 when it had 10 employees and 200 customers. Today, Yodle has over 300 employees serving 7,000 local businesses in the top 40 major metros across the United States. Prior to joining Yodle, Court held the position of COO at Community Connect, a niche social networking company, where he lead consumer marketing, product development, and business development efforts. Before Community Connect, Court served as SVP and General Manager of the Marketing Automation group at DoubleClick, where he built DARTmail into a $60 million industry leading email marketing solution that was sold to Epsilon in 2005. Court received a BA in English from Princeton University and an MBA from Harvard Business School. Court is also the co-author of Local Online Advertising for Dummies, the first ever comprehensive book covering online advertising for local businesses.
The complete interview with Court, where we chat about local online advertising, follows …
The World of Local Online Advertising: Court Cunningham Of Yodle
SMS: Welcome, Court, and thanks for spending some time with us talking about your views on local online advertising. How do you define the term and how does it differ from local search?
Court: Local search advertising and local online advertising are very different. At Yodle, when we think of local search advertising, we think about SEO and PPC on search engines. Very specifically, this is about local targeted paid advertising campaigns and organic ranking on search engines like Yahoo!, Google, and Bing.
Local online advertising encompasses everything about the online presence of a local business — from their website, to their paid search ads, optimization of their organic and maps listings, and tracking what return they are getting on their investment. Many more channels, such as coupon sites, mobile, etc., pop up each year that could potentially be added to the mix for a local business after careful testing.
Given the power and novelty of the online medium for small business, we decided to empower the local business by writing the book Local Online Advertising for Dummies. The goal was to close the education gap for small business owners getting online. By taking a holistic view of the local online advertising landscape and putting everything together in a comprehensive way, the book addresses what local online advertising is, how to get started, why it is needed, and the impact that advertising locally online can have on local business owners looking to reach consumers in this new media age.
SMS: Local online advertisers, like Yodle, can bring economies of scale to bear in markets where local digital agencies were once the primary providers of local search marketing services. How do you see this marketplace changing? Will local online advertisers simply replace local digital agencies? Will this change happen on a national market level as well?
Court: There are more than 25 million small businesses in the US and more than 30% of them still don’t have websites. Given the enormous market opportunity, there is definitely room for both local digital agencies and local online advertisers like Yodle to thrive. Each of those 25 million businesses needs something different in order to get online. Some are looking for a neighborhood provider and others are looking for a larger organization with other service options. The bottom line is that many types of companies will exist for the foreseeable future to help small businesses to advertise online.
We see the national marketplace for online advertising remaining constant with most of the advertising business going to high and mid-tier firms in addition to niche agencies which are experts at a specific channel or marketing need.
SMS: Search engine optimization has always been a service with results that at times could be unpredictable and potentially expensive. Can Yodle offer an SEO-related product to local advertisers on a budget and set a reasonable expectation on ROI?
Court: In early 2010, we announced our third innovative new product, Yodle Organic. This product was more than a year and a half in the making. From our expertise developing technology to drive marketing objectives, building websites, deep knowledge of keywords from bidding on millions of them for our clients, and our understanding of the off-page elements of successful SEO, we were able to launch a great product at a low cost. The price point of approximately $500 per month makes it easy for small businesses that desperately need this component in their marketing mix to scale cost effectively.
An important goal we wanted for Yodle Organic was to remove much of the mystery surrounding SEO for local business owners. All marketing activities through Yodle Organic are tracked in a simple interface. Our clients can see the progress of their content creation, the claiming of the local business listing, link building, and so much more. We felt that a big barrier to entry for many local business owners was the pure lack of understanding of where the money they were spending on SEO each month would be going and how it would be helping them. We tried to eliminate that issue with Yodle Organic.
SMS: At the industry level, search marketing products tend to have a high annual churn rate, often in the 40%-50% range. What are the leading causes of this product churn? How does Yodle approach the churn problem?
Court: Given we are a private company, we’ve opted to not disclose this type of information. However, we are comfortable sharing that we are very happy with how this metric is trending and all of the other key drivers that impact this metric like client satisfaction and overall campaign performance are up.
SMS: The success of pay-per-click advertising, especially Google AdWords, continues to drive up the actual cost per click (CPC). This increase in cost makes PPC advertising more expensive to advertisers and less profitable for companies reselling these services. How does Yodle approach this problem? Is diversifying the traffic sources a potential solution? Is PPC in danger of pricing itself out of the market?
Court: We find that the combination of our talented marketing experts working closely with clients and our patent-pending bidding algorithm and knowledge of best practices has enabled us to deliver a solid ROI from the Big 3 engines — Google, Yahoo! and Bing — for our clients. In fact, our pay per click has dropped every quarter over the last six quarters, meaning we are delivering improved ROI to local advertisers. Additionally, we have rigorously tested beyond the Big 3 to find a long tail of traffic sources that generate solid results. This adds up to over 75 sites, which is another big benefit to a local business owner in terms of ease of execution. We feel further testing of any channel that can deliver a strong ROI is critical to our clients and Yodle’s long-term success.
SMS: Do you see any disruptive technologies on the horizon that will change the local advertising industry?
Court: Foursquare is providing a unique medium for consumers to connect with the SMB, but they are in more lifestyle-oriented categories like coffee shops, restaurants, and retail. Our focus has been more so on home improvement, health and medical, and professional services.
Groupon is interesting in more discretionary purchase categories like apparel, bars, and sports events. It is being challenged in that Groupon drives lower-margin customer to the SMB through its use of coupons, but it also cannot deliver a steady stream of new business and cannot separate out new customers from existing customers. I think the folks at Groupon will figure these challenges out over time.
SMS: At the last couple of digital marketing conferences that I attended (SES New York and ad:tech San Francisco) I didn’t see as many of the notable local online advertising companies in attendance. After talking to several of my industry contacts, it seems that local online advertising companies are attending more vertically focused conferences for industries like dental health, health care, home builders, etc. Is this a shift in client acquisition strategy for local online advertising companies?
Court: Local online advertising companies typically focus on small to medium sized businesses, so it is in their interest to go where their prospective customers go. ad:tech, and to a lesser extent, Search Engine Strategies (SES), typically target agencies and larger companies. Yodle approaches conference attendance / exhibition with a focus on ROI — if the ROI justifies setting up an exhibitor booth or sending company representatives, then we send them. Again, the number of people we send can vary greatly depending on the ROI opportunity.
SMS: What’s Yodle’s view on the local online advertising opportunities in the international marketplace?
Court: The international marketplace does present a large market opportunity, although the opportunity carries with it considerable complexity. Yodle focuses on North America, including Canada, because the North American marketplace, even with the high level of competition, still offers tremendous potential.
SMS: Thanks again, Court, for sharing your insights with us on the local online advertising space.