The Locals Take On Google’s Home Service Ads

Last week’s appearance of Google’s Home Service Ads sent a bit of a shockwave across the Local Search industry. My TL;DR take:

• This may really screw with organic local pack displays in the SERPs. (Time to rebrand as “Local Lead-Gen Guide”?)
• This kind of pay-per-lead ad unit requires a significantly high-touch backend process — not one of Google’s traditional strengths.
• How does this affect local lead-gen players like HomeAdvisor and Angie’s List? I am betting once Google gets the system down, they will want to partner with more experienced players in the space to drive liquidity — similar to the way the big yellow pages (YP) players resell AdWords. Of course, most YP companies are not crazy about that arrangement.
• This, combined with Facebook’s recent chess moves into Local, is increasingly reducing the amount of organic inventory for local service customers. Local marketers are going to have to continue to get creative in working within and around these systems to hit their objectives.

For a bit more color, I asked a few Local Search veterans to weigh in on this new development:

Craig Smith, President of Home Advisor

We’ve seen this coming for a long time. While Google is clearly a great source of local traffic for us, we have eased our reliance on search over the past few years and have focused on building a solid direct brand with homeowners. This year, we are spending $40 million on national direct response TV ads and are crushing it.

Google clearly has a big funnel of consumer and homeowner traffic, but they haven’t done the hard part of this business yet. What everyone in this space is underestimating is the investment needed in the professional network.

We’ve spent 15 years and $1B in building this network, with nearly 100K service professionals and three million ratings and reviews. We have 1,200 people working on getting the pros into the network, hand-holding them through the process and educating them on how these products work. We’ve been trying to get service professionals to self-serve for 15 years, and we know how hard that is. Our licensing/background check algorithms are very complicated because each state is different. And if we see a professional get a negative review, we have an entire process to work with them to mitigate the situation.

Our MarketMatch program is similar to Google’s, but we’re seeing more and more consumers want on-demand scheduling. We just launched Instant Booking, our Uber, where you can book directly onto a service professional’s calendar. We have 60 people working on this initiative. To do this, you have to have huge network liquidity available. You need a deep bench of plumbers because calendars are all over the place.

Managing these small budgets requires sophisticated tools and algorithms. I have no doubt that Google has a lot of smart people working on their service, and they have the traffic — but if you put customers and service professionals in front of a firehose of demand without an effective system to manage it, no one is going to be happy. We are focused on bringing consumers not just to a service professional, but to an available one.

Managing demand efficiently is a trick. It doesn’t just require algorithms — it requires humans.

Mitch Ratcliffe, Senior Analyst BIA/Kelsey

Google’s approach has strengths and weaknesses. Its design, featuring the service provider, is clever and personalizes the experience from the first click. We are not confident that Google’s requirements for participation in the program will avoid regulatory backlash; the background checking, licensing and insurance coverage an on-demand provider must provide may be interpreted by states as employment conditions.

If Google’s AdWords pricing model for on-demand units is not adjusted — downward — the service may struggle to be competitive against branded sources, such as Thumbtack, Porch or TaskRabbit, which do not charge the service provider, taking a share of revenue instead.

Perry Evans, CEO of Closely

The value-add to the consumer is contact convenience plus a shopper’s “trust factor” that is implied in the background check. I buy the convenience part, but for trust, on Yelp I see 373 reviews for one five-star rated locksmith, while the Google ad unit shows businesses with three or fewer Google reviews.

Google can’t make up for its lack of review content with background checking. As a consumer, I’d much rather see this experience on top of Yelp’s content foundation (reviews, photos, links, etc.).

What’s not addressed, which has been the challenge to these models for years, is availability. When SMBs don’t respond in a timely manner or there’s no availability at the time desired, the experience is never as simple as it sounds.

This still feels like a rough hack test. The plumber request time frame form shows “today, tomorrow, within a week, within a month” — clearly missing a primary use case of “I need a plumber now!” (Compare this to the sub-category-specific depth you see in the inquiry forms of places like HomeAdvisor.) How hard would it have been for Google to put an extra half day’s thought into the inquiry form and tune it for common use case inquiries?

Chris Marentis, CEO of Surefire Social*

When Google showed the results from the local knowledge graph/Google Maps and Google My Business pages at the top of the SERP, the objective was a better user experience.

Service providers who took care of customers, earned good reviews and had a well-established online presence had a good chance of appearing high in the SERPs. (It helped if they had a good SEO team.) This new Google product may affect these businesses that have worked hard to establish their Web presence.

Pay-per-lead customers generally are price sensitive and are “shopping.” This causes more competition for the in-home sale. This may not be as big an issue for plumber or cleaning service-type categories, but when you get into more considered purchases (replacement windows, roofing), the in-home sale is crucial to success. So it’s not clear the service is going to work as-is for lots of local service categories, and I expect a fair amount of iteration over time.

Many small businesses won’t like the “get several quotes” approach. Some of the benefits of PPC I frequently hear from clients are the ability to promote unique selling points, cut through the clutter and potentially capture exclusive leads. Also, many are focused on selling quality over price. This goes the opposite direction, somewhat making it a price comparison engine for Company A vs. Company B vs. Company C.

If testing is successful, I see this product combining with or replacing AdWords Express, which has not delivered on its promise for local SMBs. Most aren’t using it as a simplified way to get started with PPC, and feedback on results has been poor. Google is hoping this will make it even easier to advertise on Google and power their revenue growth.

I think for national brands supporting local independent entrepreneurs they depend on to drive their business, having a coordinated strategy becomes even more important. Brands matter to consumers, and in the SERPS, consistent use of brand identity in all channels will help win the click, even if Google sets this up to bias top three results with their new home services product.

Manpreet Singh, CEO of TalkLocal

A whole business day… THEN Google emails me to tell me they haven’t responded in that long? Meanwhile, every business I’ve sent this request to gets my contact information?

Consumers wants an experience that’s not just convenient, but efficient and secure. At TalkLocal, we do it in just 90 seconds, while protecting consumer privacy. I look forward to getting more details about this program, as I expect Google will make huge improvements before expanding. They have a reputation to uphold.

*Disclaimer: Surefire Social is a client of Local SEO Guide.