David: Hey Mike, hope you’ve been well. Given that I picked the topic of our conversation last time following the Street Fight Summit, I thought I’d give you a chance to talk about what you want to talk about this week — I’m sure you’ll take me up on it. 🙂
Mike: I thought we could talk about the amazing shift in Google’s approach to local advertising with the widespread rollout of Advanced Verification and the steady rollout of Local Service Ads.
David: Sounds good to me. I’m still not sure most agencies (if not SMBs) recognize what an existential threat these Local Service Ads are to their businesses.
Let’s take a look at a local SERP in my home market of Portland. For simplicity’s sake, let’s ignore traditional organic listings (which are nearly 1100 pixels down the page anyway!).
Local Service Ads lead the way:
Followed by a traditional Adwords ad:
Followed by a traditional 3-pack:
Maybe we level-set for readers first what Local Service Ads and Advanced Verification are?
Mike: Tom Waddington did a great summary of the differences. Essentially LSAs are a new ad unit that is a fixed price-per-action product for HVAC contractors, plumbers, electricians, locksmiths, and garage door companies.*
Google provides a consumer guarantee of the businesses that appear at the top of both mobile and desktop. It is currently in 30 markets, including Portland (as seen in your SERP). It includes a verification process that makes sure that the company is legit and that the employees are not a risk to consumers.
David: Basically Google’s version of Thumbtack, then. It looks like there are only 5 locksmiths that have opted into the program in Portland. Which may speak to the lack of companies that make it through the LSA verification process, but we’ll talk about that later.
I have two follow-up questions. The first is: How is Google recruiting these businesses?
Mike: Google, upon entering a new market, is actively reaching out to listings in that market and inviting them to go through verification and join the LSA program.
David: Wow, so direct sales then? And based on GMB, not on Adwords — so that if a business is working with an agency or consultant on its Adwords account, Google could be ripping that business right out from under them?
Mike: Initially, it was designed to be totally direct, though I have heard that they have created (or will soon be creating) something akin to Manager Accounts (aka MCC) that would allow agency involvement. But the product is pretty simple with a flat fee based on industry and market that ranges from $12 to $25 for an action. So lower-priced services have lower costs.
David: Hard to make a percentage margin there, although I suppose a flat management fee would still be a possibility?
OK, now for my next question: Where do the businesses not marked with a Google Guarantee come from?
Mike: Those that are not marked as guaranteed are local listings that are not paying for the privilege and have not yet been verified into the program. Or if verified, no longer paying. But what searcher would EVER use a non-guaranteed choice?
David: True. Got it on the LSA front. How about Advanced Verification?
Mike: Advanced Verification, which recently rolled out nationally, is a separate verification process for only locksmiths and garage door companies, Google’s biggest scammers, that drives the company through deep scrutiny to be eligible for any local Adwords or Local Service Ads.
David: So Advanced Verification is a prerequisite for Local Service Ads (which then have their own verification process)?
Mike: It is a prerequisite, only in the Locksmith and Garage Door verticals at this time, although one has to wonder whether they might not do something similar in Drug Rehab.
David: Aha. Or any spammy industry (mesothelioma law, airport limousine services, etc., etc., etc.)?
And does AV affect organic listings at all? I guess I’m trying to figure out where the traditional 3-pack listings come from in my local SERP?
Mike: Not only does it not impact organic listings but it doesn’t really impact local listings at all. A company can go through either LSA or Advanced Verification and could still conceivably have bogus GMB listings. If you remember the San Diego test, Google tried to put ALL local listings through the test, and it was stopped quickly when the listings dropped by 90%.
As for Advanced Verification, it requires that a company be in compliance with all relevant local laws, licensing, and registration. Google looks for valid licensing, previous Adwords behaviors, and includes video interviews. If there is any evidence of fraudulent or deceptive, practices a business can be denied entry. It is thought that Google looks for abuses as far and wide as reviews and social media as well. If rejected, a company gets a chance for an appeal, but if nothing has changed, the appeal will fail.
David: I’m starting to wrap my head around this. So this new local SERP Google has created involves:
- Three separate spam teams
- Three separate ad units
- Five separate UI elements
At some point this will all consolidate under the Local Service Ads umbrella, right? Especially since that format best enables Google to monetize voice results?
Mike: So that is compelling. I am not really sure how it will play out. It depends on what direction they take LSAs and whether they expand beyond the service industries.
It sure looks though like the 3-pack is definitely playing third fiddle in this orchestra. Is this just specific to home services and spammy industries or is this the future of all local search?
David: Or fourth fiddle, depending on how you count!
It seems like the first time in its history Google has admitted that algorithms can’t solve the problem of local spam — AND they found a way to monetize the same real estate in a way that still puts them in a good position vis-à-vis voice. They’ve cut the Gordian Knot of Local.
Mike: I am not sure that I would go so far as to say that they gave up on algorithms. In these cases, they probably just created a some more and sprinkled in a few humans for good luck. Google has built a great business around AdWords, but it seems that the cracks started to show when the model was applied to local.
It certainly appears that for many industries, the previous approach to local (free listings) may have run its course and that pay to play is the only way to keep the listing clean, fair, and trusted.
David: Is that sound I hear Yelp’s antitrust team cracking its knuckles?
Mike: While I think that this might be better for many small businesses AND consumers, it gives Google a great deal of power to approve or disapprove participants. I have received emails decrying Google having denied admission to Advanced Verification, and we have seen cases where that has impacted a number of businesses because Google didn’t truly understand local laws.
David: Few employees at Google have ever understood the existentially damaging position in which these kinds of decisions put small business “edge cases.” As with so many initiatives, the businesses able to harness new opportunities Mountain View gives them see the rising tide lift their ship. But the ones who miss the boat or are accidentally excluded from it drown quickly.
Mike: Not only has Google become a powerful arbiter of which members get to join these new clubs — IF they succeed in creating a new, dynamic local marketplace they may actually upend the way that these services are defined locally, and all of these plumbers et al. are just working for Google and not themselves.
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.