The Bifurcation of the Local SEO Services Market

David: Mike, great to catch up at the LSA show in Chicago this week. Sadly, this will probably be our last in-person column for awhile.

Mike: Not only was the conference well done, but Chicago weather has been absolutely beautiful. It’s my first real taste of spring after a very long, cold, wet winter in the Northeast.

David: You and I both gave two presentations here around a similar theme—one that we’ve raised in this space over the last year—the idea of Google as your new homepage.

Reflecting on our suggested takeaway for agencies—that they should be offering photos, Posts, review monitoring and maintenance, and Q&A monitoring and maintenance to address that theme—has gotten me thinking about the value distribution of SEO for the typical local business. This distribution directly affects how agencies should be pricing and packaging their services.

(Parenthetically, this assumes the business already has a functioning, responsive website.)

Mike: Yes, the changing nature of search and the increasing localization are making “traditional SEO” harder, more expensive, and less productive of ROI, and that should lead every agency to assess what they are delivering and to whom.

David: Exactly where I was headed. At least in the Twittersphere, it feels to me like both sides of the “SEO has never been more important” vs. “SEO is dying” debate are missing two incredibly important nuances: what you’re defining as SEO really matters, and the type of business for whom you’re doing SEO really matters in terms of which side of that debate is correct.

Mike: While Google never throws away an algorithm, local SEO including link building and significant content, etc., certainly is less of the be-all-end-all that it once was for smaller players. They are just too expensive for many low-end businesses. Likewise, the value of “citation building” has also declined significantly in value.

David: Right. Lower-end SEO packages that essentially resell citation submissions probably aren’t showing the value that they did in 2012. There’s still a great opportunity for a high-value, low-end service offering, but it’s a different bundle and a different kind of value—one that’s focused on converting recovery searchers as opposed to attracting a boatload of new discovery searchers.

Mike: Given the vagaries of local search, for these smaller businesses the highest value in my book lies in the area of conversion optimization techniques that you mention above. Google, in the era of Pigeon, will give smaller players their fair share of discovery searchers. Essentially, Pigeon (and other updates) severely limited the search radius of most local searches to a few blocks in urban areas.

It’s going to be much more cost effective for that small business to convert more searches than to spend the money needed to show up on the “City + category” search (which has almost become a vanity search these days, as the use of these modifiers has declined in many categories).

David: The nice thing for agencies, though, is that many of the Knowledge Panel conversion techniques are non-technical in nature and can be executed by a junior-level employee with just a little bit of training. Keyword research, keyword theming, site architecture, competitive analysis—so many of the complicated fundamentals of traditional SEO are completely unnecessary and irrelevant for this new low-cost service offering.

Theoretically, the business owner could do all of these things themselves but they typically lack the time and follow-through to actually execute.

Mike: Yes. The success in this area comes from regular and steady efforts, and these types of services are much more process-driven. So that the value the agency provides in this is essentially the ability to execute the weekly and monthly tasks necessary. Additionally, there are a number of automation tools that will make the job even easier at scale.

Meanwhile, those on the higher end (like personal injury lawyers) can still benefit from the full monty. But those SEO services effectively start at a price point ($3,000 and up) that most SMBs would balk at.

David: A business’ average customer value absolutely has to play a huge role in determining what they invest in SEO and whether or not the return on investment is going to pencil out. Even a mid-level (let’s say $3,000/mo.) SEO package just may not work in this new era of ads and Knowledge Panels in the SERPs.  

Now, if they spent a little more and got some serious link-building, content development, PR, and other tactics, the added visibility from higher and broader 3-pack rankings and featured snippets might make it work. The winners in this new era are winning bigger than ever.

But I don’t see those benefits coming with a typical $2,000-$3,000/month plan. For the most part, businesses are going to get almost the same value out of the $200-$300/month package that just focuses on Knowledge Panel optimization as they will out of the $2,000-$3,000 package.

Mike: A business that is splitting its offline and online marketing budget at 50/50 and is spending 3% of its gross on marketing would need to be grossing over $2 million with decent margins to be able to rationalize that.

David: Which dramatically shrinks the size of the market for agencies.  

So, I think we agree that there’s still plenty of value agencies can add through SEO at the very high end and plenty of value at the very low end. But what should the agencies do that are stuck in the middle?

Mike: What I have been telling agencies that I speak with is that they need to start moving into areas tangential to, but outside of, traditional SEO spend. This means that agencies need to start looking at other areas of the marketing budget, consulting, and process improvements. These include helping the SMB execute on the basics like gathering critical customer information like email address and mobile phone numbers.

David: And helping businesses answer questions from prospects and responding to quote requests in a timely manner, as well as analyzing customer demand for various products and services.

Mike: Exactly. There is an enormous opportunity for agencies to really help these small businesses by moving beyond SEO. For example, it would not just be about getting reviews—it would be helping the SMB handle complaints and review responses.

By exploring these other pathways, agencies can move their average per-client income higher while still providing incredible client value.

David: 100% agree. Regardless of your clients’ average spend level, expanding beyond your traditional SEO offering to make that SEO more effective at the same price point will increase their satisfaction and help you build a more defensible business.

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After more than a decade in local search, David Mihm now runs Tidings, an email newsletter platform for small businesses that leverages their everyday social media activity, and his own weekly newsletter, Minutive. In 2012, he sold his former company GetListed.org to Moz, helping over 3 million businesses get better visibility in Google and other search engines. Along with Mike, he’s a co-founder of Local University. 

Mike Blumenthal is a co-founder of GetFiveStars, a feedback and reputation platform, and LocalU, which provides small business and agency training in sustainable local search marketing. His motto: All Local All the Time.  He writes at his blog and does a twice a week podcast about Local marketing. 

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Got an idea for what you want Mike and David to discuss next time? Send it to either [email protected] or [email protected], or just leave a comment below and we’ll put it in the hopper!