Ellen Siminoff is the chief executive officer of Efficient Frontier, a leading provider of paid search engine marketing (SEM) solutions. The company's aggregate management spend ($150 million annually) on Google and Yahoo! Search is larger than any other SEM agency. Before joining Efficient Frontier, Ellen spent six years at Yahoo! as one of the founding executives. She also worked for the Los Angeles Times as electronic classifieds manager and founded EastNet, a global syndicate barter company distributing television programming to 14 emerging market countries in exchange for advertising time, with her husband, David. Ellen earned her MBA from Stanford's Graduate School of Business and also holds a bachelor's degree in Economics from Princeton University.
Efficient Frontier recently announced its partnership with ReachLocal, an internet marketing platform that allows local businesses to target their search advertising within specific geographic areas.
iMedia: What does this partnership bring?
Siminoff: ReachLocal brings internet marketing to small and mid-size businesses. Through its relationship with Efficient Frontier, Reach Local's customers now will be able to take full advantage of search through the tier one engines like Google and Yahoo! Search Marketing and maximize the effectiveness of their search campaigns based on business objectives and marketing budget. The partnership will bring large-scale search marketing solutions to the local level, making it more efficient and cost-effective for small and mid-size businesses to drive local traffic.
iMedia: How will it help small to mid-size businesses?
Siminoff: Until now, there really hasn't been an effective way for small and mid-size business to compete against larger advertisers on the tier one search engines. With this partnership, local businesses on the ReachLocal platform now have access to the Efficient Frontier solution, the same powerful search technology solution used by many of the top search marketers. What they receive from us is our sophisticated paid search and bid management services that will allow them to optimize keyword campaigns and maximize ROI.
iMedia: How about the larger online marketing companies? Does this mean they will need to adapt their strategies to compete on a local level?
Siminoff: Absolutely. We manage more than $150 million of paid search advertising for some of the largest online marketers. These types of advertisers understand the popularity of local search and that many consumers use the internet to research products and services and purchase them offline. As such, many have/will integrate local search into their overall online campaign strategies.
iMedia: The search engines must be licking their chops with the expectation of more advertisers entering the fray. What does local search mean for them?
Siminoff: I expect search to grow 30 to 40 percent this year off of a pretty good number, which will be just shy of $6 billion, depending on which analyst you listen to. Logically, you would expect local search to contribute and/or even add to this growth outlook, with expectations that more small to mid-size businesses will advertise online.
iMedia: But, can we make that conclusion for local search yet?
Siminoff: In relative terms, SEM still is a very young, untapped industry, and concluding that local search will bring a substantial amount of more ad dollars is a bit premature. I will say the success of local search will be decided by two things: consumer behavior and advertiser usability. What I mean by consumer behavior is the "point of entry," where consumers enter online to get their information. Search engines will need to make their local platforms clear, easy and useful. As for advertiser usability, the search engines will need to provide advertisers with volume and an easy way to bid. How advertisers manage their campaigns to maximize ROI is where the rubber will meet the road.
iMedia: You just mentioned "point of entry," where consumers enter to get their information. How does local search fit in?
Siminoff: If you think about all of the new trends/services that everyone is talking about (contextual advertising, desktop, pay-per-call, etc.) it all has to do with "point of entry," including local search. Search engines are trying to provide their advertisers a higher value of distribution to the consumer, which is the point where they first enter the marketplace to get their information. Right now a majority enter at the general level. And many others enter at the vertical marketplaces (e.g. travel sites). So, as you can see, local search is competing against more mature marketplaces to become the preferred point of entry.
iMedia: Do you think keyword prices will rise as a result of local search?
Siminoff: Yes and no. How do you like that for an answer? But it's true. There's no doubt that overall keyword pricing has been increasing due to many factors: more competition, more budget spend and more consumers buying online. The better question is in what industries/categories will local search affect keyword pricing the most? Logically, one can conclude that localized industries such as real estate, automotive, restaurants, etc. will see increases since consumers are more apt to purchase these products locally and offline.
iMedia: What trends are happening in local search?
Siminoff: There are several trends. The biggest one is what the leading search engines are doing, like Google and Yahoo!. They've been fine-tuning their platforms and partnering with technology providers to make local search easier and more effective. An example of this is localized search engine registration where businesses can set local search rules by category, town, street name, zip code, etc. Another trend is pay-per-call. It's an intriguing service that I think local businesses will find as the "missing piece" to jumping into the paid search market since many of them may not have websites.
iMedia: What is the state of local search marketing industry?
Siminoff: Still maturing, but growing at a rapid pace like the overall search market. There's a lot of interest and demand, and if you take a close look at the model, it makes total sense. I would even say that it is following the trends of traditional, offline advertising of trying to pinpoint and target the consumer. But unlike television, radio, newspaper, etc., advertising that is limited in its ability to target consumers, local search (and overall search for that matter) will grow exponentially because it can target the consumer more precisely.
iMedia: How are marketers integrating local search with the rest of their strategies?
Siminoff: The jury is still out. If you ask me what I think marketers will do, I'd say it depends whether they are a local/regional business or national one. There's no question that more and more local and regional players will continue to enter the marketplace because the local search marketplace is becoming more efficient. My guess is that over time, as they become more knowledgeable and comfortable with paid search, they will follow the overall marketing industry trend and move more ad dollars into paid search, including a portion of their offline budget to online. For national businesses that have been using PPC, I think you will see them focus more ad dollars on local search since the majority of consumers today use the Internet more to research products and services that they purchase later offline.
iMedia: What's the most important thing local search marketers need to know?
Siminoff: It's an information gathering tool that leads to purchases. The Kelsey Group and ConStat, Inc., announced in a new study that 70 percent of U.S. households use the Internet as an information source when shopping locally for products and services, up 16 percent since October 2003. Marketers need to realize this and focus their paid search marketing to drive traffic locally.
iMedia: What are some of the mistakes marketers make with local search?
Siminoff: Most small and mid-size companies do not have the bandwidth to manage search marketing campaigns. They set up their campaigns using simple rules like bidding for a specific position or spending limits by individual keywords and then put the campaigns on autopilot. The result is that their campaigns are not maximized and generally under-perform. The combination of ReachLocal and Efficient Frontier solves this problem by allowing marketers to set an overall budget and campaign strategy and then the technology manages for performance and smooth spending evenly over the month.
iMedia: What is the future of local search marketing?
Siminoff: Very bright. And, as broadband services reach more households, the sky is the limit for local search. But, how far it goes will be determined by the capabilities of small to mid-size businesses to compete against larger advertisers.