It’s all about finding quality people—that’s what Court Cunningham says is the biggest challenge for Yodle, the local lead gen of which he’s CEO. You need skilled people to both bring in new clients and set up campaigns—for them, they have 140 people in a call center dialing through the phone books and directories. Selling clients is easy—just tell them that the average client gets a 7 to 1 return. Thus, for every dollar they spend, on average they get back $7 in sales.
But the bigger problem is that of retention. How do you actually deliver upon the promise of calls that lead to sales? The small business doesn’t have much money, and VC-funded companies have expensive office space, overhead to cover, and profits to generate. Plus, if your agency’s focus is aggressive growth, good salespeople cost a lot of money, which further eats into whatever remaining budget you have to spend on the client’s PPC campaigns.
Cunningham mentions that Yodle spends the majority of campaign budgets on IYP (Internet Yellow Pages)—listings fees and PPC spend, as that generates the highest ROI. Content Factory takes a different approach—working more on the client’s website to get it ranking in organic (free) search results. That longer-term strategy arguably takes more effort, takes longer, and is not as automatable as just running a click budget via Google.
By not having to touch a client’s website (whether building a new one or tweaking the existing one), it’s easier for Yodle to scale up their customer base. And should the customer wish to leave, all their traffic disappears instantly.
By the way, Nathaniel Stevens is the founder of Yodle— the brainchild and super genius that started the company, NatPal, while still a student at UPenn. His original vision may or may not be reflected in the current company operations, which is no longer a start-up. We had dinner a couple of months back to discuss– more on that another day.
We believe that the strategy that will win for the small business, in the long run, is to be transparent in our techniques, focus on a blend of natural and paid search traffic, and help them integrate online marketing into their traditional marketing. The downside of this is that Content Factory isn’t going to grow as fast. But we believe that in the long run, the marketplace will become more competitive and that we should be delivering at that level now.
It will be interesting to see who will win in the local agency space– the giant companies that are spending lots of money to grow as fast as possible or the myriad of local agencies (with just a couple of folks each) that have clients in their own backyards. My money is on the little guy since there are a lot of unemployed bright people out there who are just starting to grasp the size of the local online advertising market. Those folks will be more motivated than the corporate giants. And we want to help them!