Eric Chandler is in an enviable position: Advertisers want to give his company more business than he can accept.
Chandler heads up SuperPages.com, the Internet yellow pages directory owned by Verizon Information Services. And there are more small businesses looking to place pay-per-click (PPC) ads on relevant SuperPages search results than there are spaces for such ads.
“We have about 8,000 business categories on our site and 58,000 cities,” Chandler says. “You can have a group of advertisers in any one of those cat-geo combinations. And our sales reps are incredibly effective at securing budgets from local advertisers. So even if you added up all the ad inventory of the major players across the Internet, it would be hard to find enough to satisfy the demand at the local level.”
What to do to run off this pent-up demand from local advertisers? The answer, Chandler announced last week at a local search conference sponsored by The Kelsey Group, is for SuperPages to strike a deal with Google. Under the agreement, SuperPages.com will sell placements in Google’s PPC AdWords program so that its advertisers—largely small or local businesses—can apply those excess ad budgets to Google search marketing.
“Google will be a tremendous source of incremental value for our advertisers,” Chandler said in an interview. “This deal allows us to use a higher percentage of the dollars that advertisers have allotted to us. And it lets Google access a new set of advertisers who are not currently participating in their program.”
That means Google is taking advantage of Verizon’s feet on the street. Where Google gets most AdWords sign-ups through automated processes, SuperPages.com uses both Verizon’s 3,000-person Yellow Pages directory sales force and a dedicated sales team of its own to sign advertisers into the SuperPages online network. And the majority of those new marketers have not done any performance-based advertising before, Chandler says.
“These are local mom-and-pop businesses with online ad budgets as small as $50 a month,” he points out. “Search marketing firms just can’t afford to go down to that level. Until now, the only other option for these advertisers has been to go to self-serve on Google and Yahoo! But small local businesses with four to 10 employees, taking calls and handling customers every day—they don’t want to become search engine marketing experts. They don’t want to have to set up a PPC program and then manage it themselves.”
A test version of the program has been operating for several months, placing ads from about 400 SuperPages advertisers in Google search results using a customized version of the AdWords application processing interface. That API will let SuperPages move “tens of thousands of advertisers at a time” into the AdWords network and then aggregate the reporting for both the Google and SuperPages PPC ads into one report, Chandler says.
Google already has ad sales relationships with other Internet Yellow Pages operators such as BellSouth and R.H. Donnelley’s Dex Media. But those programs offer advertisers a guaranteed number of clicks for a flat monthly fee, on the theory that most small businesses don’t want the hassle of dealing with Google’s ad bidding system. Those guaranteed-clicks programs also rely on arbitraging outside ad placements, Chandler says. “By charging a flat fee, you’re incented to go out and get cheap traffic to maximize your margins. That calls into question whether your interests are aligned with the advertiser’s interests.”
By contrast, SuperPages is positioning itself as a kind of agency for local ads, Chandler says. “We’re finding the best sources of traffic for this advertiser based on the amount of money they’re giving us, how much they’re willing to bid, and the categories and geographies they want to hit. We manage this money in multiple environments for them and then aggregate this performance information and report it back to them.”
Advertisers will set a maximum PPC budget for a month but will leave it up to Superpages to determine where that spending can product the best return on investment (ROI). Because the SuperPages network delivers a highly targeted search environment for advertisers, Chandler says, “It will typically make sense for advertisers to burn the most money on our network and then push it out, in order to get the highest ROI.”
Like a search marketing firm or ad agency, SuperPages will charge a proportion of the monthly ad spend for managing users’ campaigns. “We’re charging advertisers 30% of their media spend as a full-service fee,” Chandler says. “So for a small business that’s spending $100 a month on media, both on our network and in Google, then at the end of the month we’re going to charge them that $100—if we were able to use it all—and overlay a $30 fee for managing and reporting on their overall program.”
And like any search engine marketing agency, SuperPages would like to hook this program into as many ad networks as possible. The company already has deals to power MSN’s Internet Yellow Pages application and earlier this year announced agreements to send local PPC ads to both MSN Local and MSN Virtual Earth. “As MSN adCenter is brought up this summer, we certainly hope to be able to add them to the mix,” Chandler says. “After that, the only other major player would be Yahoo!, and that’s a great opportunity for us too.”
All in all, he notes, it’s an example of “co-opetition” in action—combining resources from separate players to allow a more effective penetration of the local search market. “Nobody has all the assets under one umbrella to fulfill the demand for a very fragmented market like local search. It will take a number of key players working together. If we can collaborate, even though we compete on certain fronts, we can make this a much bigger pie.”