SEOMoz’s recent acquisition of GetListed has got me thinking — there’s a dangerous trend going on in the SEO Tools market. I call it the SMB Death March.

The Long Tail The Pile of Bodies

Image courtesy of GapingVoidArt.com

SEO Tool Market

The SEO Tool market has exploded over the past couple of years, and with good reason. These days, it seems like most businesses understand that showing up in Google is critical. More and more marketers have had some experience with SEO, either on their own or via consultants.

Hollywood is using SEO as a prime time plot device, and SEO crime has even become front-page news for the NY Times. Now, at cocktail parties, when you say you do SEO, instead of saying “what?“, the other person says something like “oh, you’re one of those guys. ” With this increase in awareness comes an increase in the number of people offering SEO services. Which brings us to SEO tools.

Since the mid-2000s, when SEO started taking off, the market has been awash in tools to help SEO pros be more productive. And as the industry has grown over the past few years, the SEO tool makers have started attracting venture capital. Companies like SEOMoz, BrightEdge, Conductor and Covario/Rio SEO have all pulled in venture money to help accelerate the growth of their businesses. And growth is what these investors want to see.

By all accounts, and by the sizes of booths at SMX shows, the SEO Tool business is growing rapidly. But, I wonder if that growth isn’t ripe for disruption.

SEO Tool Commodization

I like to think of SEO as a disruptive industry inside the big disruptor known as the Web, with tool makers selling picks and shovels to all of us prospectors.

In theory, SEO tool customers should be willing to pay a premium to a tool maker in exchange for either greater productivity or some other kind of market advantage. With the millions of websites in need of SEO help around the world, there should be plenty of demand for SEO tools.

But, while each toolset company has some special sauce; in general, it seems as if the feature set is becoming commoditized. Everyone has their version of a ranking report, on-page analysis, link analysis, etc., and if they haven’t built it in-house, then they are licensing data from the same sources as many others. Some do a great job at UX or creating a community around their service, but if you are just looking for a tool, you have several choices that are increasingly difficult to differentiate from each other from the lay-marketer’s perspective (I know guys, you all are different, but that may not be so clear to your customers).

On top of that, thanks to steady decrease in the costs of technology, hundreds, maybe thousands of SEO tool makers are now out there peddling their wares. I probably get an inquiry every other day from someone with a new tool. And, while they may not have the whiz-bang feature sets of the big-funded guys, in many cases, they are hitting the need of a specific niche, and they are often cheaper.

SEO Toolset Competition

Commodization leads to more competition and smaller margins. When that happens, players start to look for alternative growth paths and more market share. Which brings us to the GetListed deal and the SMB (Small & Medium Sized Businesses) market. I’m not saying that Rand Fishkin has been doing B-Boxes on his trusty whiteboard. In a lot of ways that has nothing to do with business plans and everything to do with cultural fit.

But, if I were in the SEO tool biz and saw increasing competitive pressure from above (SEOMoz seems to me to be a mid-to-low-priced service and some of the others mentioned above, based on anecdotal evidence, appear to be moving closer to them in terms of pricing), I would start to look down market and figure out how I could get there before anyone else and win.

The SMB market has long been coveted by digital service providers.  According to BIA/Kelsey, local digital ad revenues will hit $38B in 2016. SMBs are a big part of that spend. Who wouldn’t want to sell to them? A business that can serve tens of thousands of SMBs well could be worth a lot.

But, like Rene Belloq found, the path to the Ark is littered with the corpses of those who tried to get there before him/her.

Here’s the problem with SMBs:*

  • They are hard to acquire as customers and are being pitched by everyone and typically have little/no time to talk to vendors, let alone figure out which one is best
  • When you do acquire them, they tend not to want to spend a lot of money
  • Once you start doing stuff for them, they tend to have a lot of questions/issues, etc., so customer support costs are high
  • They tend to churn out at a high rate — many go out of business and don’t want to wait for long-term results or invest enough to get meaningful results, so providing great service at the low prices they demand is tough and they bail

The strategy d’jour seems to be to get to the little guys via their marketing agencies. I can’t tell you how many start-ups have pitched me lately on business models that rely on distribution via search marketing agencies that service SMBs. BTW, in many cases those agencies are SMBs as well, so the same challenges apply when trying to work with them.

I am not saying SEOMoz/GetListed is now on a path to failure. Given what I know of both organizations, I actually give them a pretty good shot at growing GetListed into a really interesting platform for SMBs and their marketers. More than most in our industry, they seem to really walk the talk.

(Full disclosure: I gave some minor advice to David Mihm before the deal and he bought me breakfast last week — Huevos Rancheros, BTW).

But, I do believe this deal, along with the market forces mentioned above, are going to drive other SEO tool makers to start making plans to go after the SMBs and their agencies. Which means a lot of money is going to be burned learning the hard lessons of Local.

Grab your popcorn.

*From Are SMBs Impossible To Serve Well, Google Et Al? 

Opinions expressed in the article are those of the guest author and not necessarily Search Engine Land.

Related Topics: Channel: Local | Local Search Column

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About The Author: is the proprietor of Local SEO Guide, a local search engine optimization consulting company specializing in yellow pages seo and local directory search—the blog is pretty fabulous too.

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  • David Jaeger

    Ahh, Andrew, you speak the word. Thank you for the insightful post. I’ve always told my upper management that SEM for SMB’s won’t be around in a meaningful way in 3 years. I’ve told that to some Google peeps too, I don’t think they “got it”.(Sad reality, market economics). Planning ahead requires identifying the successful business owner, and “partnering” with them. Let’s see how this industry goes…

  • Andrew Shotland

    Hey David, I disagree that SEM for SMB’s won’t around in a meaningful way in 3 years. As long as there are millions of SMBs that don’t have the time, patience or resources to do their own marketing, there will be plenty of opportunity to provide these services. The trick is figuring out a way to do it profitably at scale.

  • Terry Wall

    Hi there, Andrew! As usual, I enjoy your commentary–both here and on your blog. Something I’ve noticed about these “tools” (and you probably know it, as well) is that many of the companies that offer them also use them as lead-gen vehicles. So if I’m “Terry the SMB owner” and I fill out “SEO-X” company’s form to get my “free” ranking report, I can expect to be contacted by their sales department. I know how bombarded SMBs are with all manner of digital offerings being thrust at them, and I’ve seen that churn monster devour several online marketing companies. And I don’t see anything on the horizon that tells me his appetite will be diminished–in the least! My $0.02.

  • Lawrence Blumberg

    I have also been entrenched in this smb riddle for a decade, mostly on the direct sales front with enterprise level companies. I’ve found developing partnerships with Very clear expectations and mutual incentives (ownership/internal engagement that results in new business they can touch) can be sustainable.

    Granted, my current team is small, <10, so we have the 'luxury' of more personalized service. Companies like Hubspot, a reasonably large platform, has been scaling this landscape for years successfully without major forces of disruption.

    The teams that can manage to keep exceptional service priority one and Believe in doing so, will rub that Ark more often. I can't remember it ever working differently. Beholden to share holders, red tape, fast profit, etc. or not doesn't excuse subpar execution. Even if you take short term hits. Both sides get out what they are willing to put in. As the market matures, these companies will continue to thrive.

  • http://www.getsnappay.com/ Jim Rudnick

    Seen much of the same thing up here in CanuckLand, Andrew…especially from the ranking tool providers. With the recent announcement by Raven about their upcoming no-rank offerings…the Canuck ones I know up here have jumped on that bandwagon big time.
    Tools are tools. They can be used by anyone who knows how to run same. IMHO, that leaves out just about every SMB (up here at least) as they’re so thin Mgmt team wise that no one has the time to spend to even source good SEO tools…never mind using them.
    All our clients want are the reports – with tactical ROIs shown – and updates on quarterly strategy….everything else they’re not interested in…..might be a Canuck thing…but I do doubt it, eh!
    :-)

    Jim

  • http://steveplunkett.com @steveplunkett

    Google’s Terms of Service do not allow the sending of automated queries of any sort to our system without express permission in advance from Google. Sending automated queries consumes resources and includes using any software (such as WebPosition Gold) to send automated queries to Google to determine how a website or webpage ranks in Google search results for various queries. In addition to rank checking, other types of automated access to Google without permission are also a violation of ourWebmaster Guidelines and Terms of Service.

  • http://twitter.com/harryfassett harryfassett

    Need help Jim? I’m standing by. @harryfassett

  • http://twitter.com/harryfassett harryfassett

    “The trick is figuring out a way to do it profitably at scale.” Extremely tough, but if the relationship is strong, it can be done, because I have done it. :)

  • Antima Sharma

    “I am very happy to read your articles it’s very useful for me,
    and I am completely satisfied with your website.
    All comments and articles are very useful and very good.
    Your blog is very attention-grabbing. I am loving all of the in.
    turn you are sharing with each one!….
    underpads

  • Lucky Balaraman

    After optimizing our website for more than a decade, our conclusion is that yes, SEO is a good thing, but if you want to hit all the bases (aka keywords), a healthy dose of search marketing is absolutely necessary (with the added benefit of immediate results).

  • Andrew Shotland

    Thanks for the encouragement Antima. And super thanks for pointing me towards a great resource for underpads. Quality underpads are hard to come by these days.

  • http://www.agencyplatform.com/ Dave Thompson

    As one of the smb toolset providers, I am pretty excited to see what seomoz + getlisted would come up with. You are absolutely right. Many of us peddling our tools out there ;)

    But I think there are very few (Raven is one of them) who have understood the needs of smb’s and agencies.

 

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