Cutting Out the Local Advertising Agency: Google Goes Direct

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google LSA

Google just debuted their new Local Service Ads (LSA) in 30 markets, and are calling plumbers, locksmiths, electricians and HVAC companies directly. Participating businesses must pass “Advanced Certification” guidelines to verify they are established and have safe employees.  When certified, they may purchase the GOOGLE GUARANTEED ads at the top of local search listings. A good article about LSA can be found at Street Fight.

Advanced Certification is really ad verification. Generally speaking, advertising verification is designed to decrease online fraud. For example, Facebook recently started verifying all political ads in wake of Russia’s tampering in US elections. From an advertising agency point of view, verification improves the industry. Digital ads have more trust with consumers. Verification should be a win for everyone – consumers, ad agencies and publishers alike.

However, in this verification case, we are talking about Google. Part of their business model is based on industry disruption. Paid search has disrupted the Yellow Pages.  Free Google Sheets and Docs continue to target Microsoft Office revenue.  Google Analytics eroded paid analytics services like HitsLink. With LSA, verification is a tool to disrupt the advertising agency model. Now companies like Royle Media are in their cross-hairs. Our active clients include electricians, plumbers, and HVAC contractors.

What’s Wrong with Google Going Direct?

  • For 18 straight years, we’ve been telling business owners that, “Google never calls you,” and telemarketers posing as Google are frauds and scammers. That all changes now as Google makes outbound sales calls. They have opened Pandora’s box and created more opportunities for bait-and-switch advertising criminals. Business owners beware.
  • Google AdWords was introduced Q4 2000. Since then, local digital agencies have been Google’s bread and butter, their biggest advocate, and sales force. Going direct means Google is cutting off the hand that feeds them. There is no loyalty in Mountain View. Will the direct sales model backfire as agencies shift more budget to Bing, Facebook, Pandora and programmatic ad networks? Why send business to Google when they are a competitor?
  • Now that Google will “guarantee” a company’s trustworthiness through LSA, does that mean their other paid and organic listings are full of unethical companies? Did Google create verified ads because AdWords and Google organic search results have always been full of predators?
  • Removing the agency reduces accountability. Google only cares about Google. Facebook ads often CRUSH Google AdWords when it comes to ROI. Pandora and Bing regularly provide better return than expensive Google AdWords. Digital agencies measure ROI, verify that ads were properly delivered, and recommend the best advertising options for the business owner.
  • Google’s new Local Service Ads push the organic listings further down the page, maybe even page two. For the businesses that have invested heavily in search engine optimization (SEO), they now need to pivot to Google paid advertising. That does not diminish the value of SEO with Bing and their partners.
  • For the last couple years radio, television and newspaper companies have moved to the “agency model”, where they build and optimize websites, sell Google AdWords, and programmatic banner campaigns. Now LSA will be competing directly with broadcasters and publisher-sold AdWords campaigns. These media companies will surely drop Google from their digital advertising toolboxes once they figure it out.

Ten years ago, I held a corporate position with Entercom Communication, and Google was courting our radio group to sell AdWords. I attended a conference in Mountain View where they wined and dined us broadcasters, as well as newspaper and phone book publishers. Google wanted us “partners” to sell their ads. We had the sales teams, and AdWords seemed complimentary to local radio spots.

The Stanford MBA’s at Google created complex formulas to determine commission rates. The commission tables were difficult to understand, much less explain to a commission sales rep in the field how they got paid.  A simple percentage of gross sales was unreasonable to Google. They needed to have leverage over their partners. When it comes to partnerships, win/win is not in Alphabet’s vocabulary. One decade later, and Google is still up to their same tricks. There is no loyalty or win/win in Mountain View.

Previously when we had problems with Google, we simply called them and were routed to Mountain View or Arizona. Now Google customer service calls are routed overseas. Unfortunately, the new customer service folks do not have the same depth of advertising knowledge as the North America-based client service professionals. This makes Google frustrating to work with. Will the Google Guaranteed customer service people be overseas also? I’m not sure the busy plumbers and electricians will have the patience for off-shored customer service.

This blog post may seem overly critical of Google, but sorry Silicon Valley, you can’t always have your cake and eat it too.  Maybe we’ll lose our Google Partner status for slamming them. If that’s the case, then so be it. We can buy around Google with Facebook and programmatic display ads and hot beholden to Alphabet’s cold soup.

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