Killer local advertising

The Journal writes a good primer on marketing online via blogs and search and such. Buried in there is a gem of an anecdote that shows why newspapers and yellow pages are in deep trouble with local advertising — unless they find new ways to serve them and compete with Google:

It’s hard to engage in any public relations, of course, if the public doesn’t know you exist. In early 2004, Kenny Kormendy says he was on welfare and struggling to make ends meet as a taxi driver in the Minneapolis-St. Paul area. He had tried to reach the public through typical means, such as ads in the telephone book or handing out cards at the airport, but says there “were so few calls, it was unreal.”

Mr. Kormendy was decent on computers, he says, and so he built a rough Web site for his company, Gopher State Taxi, figuring travelers coming to town might locate him when searching for transportation. But he never popped up front and center in search-engine results until he stumbled upon Google’s AdWords service, a cost-per-click advertising program that rotates advertisements on the right side of Google’s search page based on the specific keywords a user types. He decided to give it a shot.

It paid off. In recent months, Gopher State Taxi has routinely popped first on Google’s sponsored link for core keywords, including: “Minneapolis, airport, taxi.” Mr. Kormendy says his business has grown to a network of nearly three dozen cabs and he is off welfare. He estimates his total payout to Google is about $175 to $205 monthly, based on how many clicks his ads get. “People with cellphones on planes can find me,” he says. “Almost every time I ask someone, they tell me it was on the Internet. And nine times out of 10 it’s from Google. I don’t have $50,000 to compete with [bigger taxi companies]. But with what I create off the Internet, I can blow them away.”

Increasingly people turn to the Internet instead of phone books or newspapers to find restaurants, office-supply vendors or any kind of service. In addition to advertising opportunities, companies including Google, Microsoft, Yahoo, Amazon Inc. and Time Warner Inc.’s America Online unit are tailoring their search products to include maps, narrowed neighborhood searches and storefront images to court small businesses with local audiences.

  • http://www.chinesepod.com Ken

    Jeff,

    This seems slightly implausible to me from a business perspective. Growing to 3 dozen taxis on the basis of 200 bucks a month ad spend sounds like a stretch.

    And if it is actually true, it probably won’t last. Google is useful, but it is no silver bullet, because what’s good for the goose is good for the gander: Kormendy should have kept these insights to himself! If his competitors (the big ones he talked about) read this they’ll surely go in an outbid him for the keywords (sounds like there’s quite a margin there). It doesn’t take long to do. If they do, he’ll soon be sent back to obscurity, or real life, whichever you prefer.

    Google is awesome, but I wouldn’t give the impression that it’s a magic bullet. And don’t forget about the click fraud article that appeared in Businessweek recently.

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  • brooklynite

    duhh

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  • http://www.howardowens.com/ Howard Owens

    Here’s why Google AdWords isn’t a big threat: Most small business are techophobes, too busy to learn, too satisfied with what they’re doing to switch, and AdWords may be simple, but it ain’t easy enough for the average small business owner/manager.

    There will always be exceptions, which is all this anecdote proves. The facts, the data, proves local advertisers are not terribly interested in Google text ads.

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  • http://www.gopherstatetaxi.com Ken Kormendy

    This article is a little flawed, using second hand information but still on track. Our network is closer to two dozen cars and my google cost had soared to over $500 per month(post article). I have trimmed back my bid amounts on google and focused on getting our company listed higher in the raw search of google. We now get about the same number of customers from google but with less expense.