Well, perhaps not traditional video games, such as Pac Man or Space Invaders– I’m talking about how every website is now incorporating game dynamics. But if you consider how Facebook, LinkedIn, FourSquare, MerchantCircle, Twitter, Farmville, or other sites operate, according to these game dynamics you’d be hard pressed to tell me they’re not video games:

• Points: Earn points for not just killing monsters, but fully completing your online profile and spamming your friends to join (LinkedIn and Plaxo).   You do want to be at 100% completion, don’t you?  Even Google is getting in the social media game with the 100 point scale for Google Local Business Center, as well as the “Favorite Places” program.
• Levels: And with more points, you unlock the next level. It’s amazing how hard people will work to get to the next level– for example, in Farmville, even though you’re not getting any financial benefit.  You can’t sell things, like you can with Diablo 2 items, World of Warcraft, or Second Life, where there are currency exchange markets.  The combination of earnings points to achieve levels is no different than the power of frequent flyer programs and MLM schemes. Name any forum and show how it’s not a video game to achieve ego.
• Collection: In Boy Scouts, you had badges to collect. Online, you have the same thing, whether you’re checking in to FourSquare, collecting more friends on your Facebook Fan Page, or trying to win that twitter contest for free Italian food.  You can be hooked on these games or Hooked on Phonics– the viral power is the same. Imagine how the US education system could be revamped with the viral nature of points, levels, and collection!
• Randomization: What do Las Vegas and Christmas have in common?  When you pull that slot handle or tear open that gift wrap, you get that moment of anticipation not knowing what you’re going to get. Email is the ultimate game of unwrapping Christmas presents– it’s Christmas every day.  Are you one of those who refreshes email every 90 seconds or checks twitter?  Then you’re hooked on that intermittent stimulation. The move to real-time search increases this ADD, such that every website creates this type of anticipation. 
• Community: You get rewarded to sell out your friends. But it doesn’t have to be doing so for promoting tupperware, unregulated health products, or virtual gifts in your favorite Facebook application. It can be used for recruiting local advertising resellers or even home schooling your kids.  Games are only interesting when your other friends are there playing it.  How much fun would Facebook be if you had no friends?  And your “score” is only valuable in context to those of your friends. How much advantage is your laser hair removal if all your friends already have it?

Now consider any website or business from the viewpoint of video games– points, leveling, collection, randomization, community– and see how it’s not any different than a big big real-world video game.  In the world of local online advertising, it’s not enough to create business listings, multiply out local PPC campaigns, or have a solid platform in general.  It’s got to be social.  

And in 2010, with the merging of local, social, and mobile– you’ll see game dynamics come together in ways that will astound you.  Unlike the desktop computer, the phone has a GPS to tell you where you are, a camera to read bar codes, and perhaps a gyroscope so you can shake, fake light saber battles– or do things that are actually useful for your business!

The world of online and offline is rapidly becoming one big video game– and portals such as Facebook, which have all your relationship information (in a good way) are going to make us all children playing for points.  They have the social graph necessary to make the game possible, such that we can all keep score– and pay, of course.

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, VC-funded companies have expensive office space, overhead to cover, and profits to generate.  Plus, if your agency’s focus is aggressive growth, good sales people 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.  BlitzLocal 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 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 to help them integrate online marketing into their traditional marketing.  The downside of this is that BlitzLocal 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 who are spending lots of money to grow as fast as possible or the myriad of local agencies (with just a couple 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!

Sure, people are complaining about how Google gave $20MM to charities on our behalf, instead of giving us trinkets this year– whether they be a photo viewer, Flip video, or whatever.  But Google gave us some stuff that was far better than something you could just buy yourself at Best Buy. Look at these campaign features:

• Sitelinks in PPC ads: I won’t cover the ins and outs of AdWords sitelinks, but suffice it to say that this feature increases your CTR.  You can specify up to 10 links, but how many they actually show is usually just 3 or 4.
• Automatic matching: Scary, but Google will choose other keywords for you to show up on. Do you remember a couple years ago when Yahoo! just started tweaking people’s campaigns without telling them, causing advertisers to piss away money on irrelevant keywords– then get irate? Yahoo had the right idea, but was perhaps premature in the game of trying to simplify life for advertisers, as it was too big a step at once and didn’t actually improve performance.  The same naysayers of “expanded broad match” are complaining about Google’s move here. However, I don’t think it’s all that bad. 

Some considerations on Automatic Matching:

Yes, it encourages laziness. And will put in crappy words if your landing pages (which they crawl for keywords) stink.  If you have a great campaign already with tight ad groups and strong negatives, it’s unlikely they’ll be able to add much traffic. Otherwise, there is risk that your budget will get maxed out quickly.

You can still run keyword performance reports to determine exactly what keyword triggered your ad.  So in the same way that you run placement reports for content to weed out junky sites you’re showing ads on, you run a keyword performance report to see what new keywords you’re matching on, so you can then stick them in your campaigns or just negative them out. At the bottom of the ad group, they even break out the automatic match traffic, which is incremental to your regular traffic and doesn’t affect the rest of your bids, positions, or Quality Scores.

They do take into account location: Yes, so if you’ve got a franchised account with multiple locations, they will be smart enough to choose geo-modified keywords and pair them with the right ad and landing page. However, in Google’s semi-helpful FAQ on automatic matching, they caveat this by saying it works only when ALL the keywords in an ad groups are geo-modified.

You should try it-- but don’t just assume Google’s recommendations are going to automatically improve your campaigns.  It will certainly improve Google’s profitability, but not your conversions.  Unlike most tin foil hatters, I consider this feature– and anything else they roll out– good, if you watch carefully what you’re doing.  It’s effectively like the keyword opportunities tool, where they propose new keywords for you– except they’re automatically jammed into your campaigns.  Note that for this to work, every keyword in your ad group must be location-specific.

So between the improvements in Conversion Optimizer, sitelinks (beta only), automatic matching (beta only), mobile ads (who knows), and new local options, Google has given us a ton of new gifts for Christmas.  I’m surprised so few people are talking about it– perhaps because Google themselves doesn’t talk about it, instead just quietly releasing new features into the wild.

 The new Bid Simulator, which you’ll see in the keywords tab, forecasts how many clicks and impressions you’ll see at different bid levels.  It only shows the simulator for some of the keywords– not sure what logic is used to choose which ones.  It certainly isn’t search volume, since some of the lowest volume terms in our campaigns have the Bid Simulator icon.

Important to note that the Google AdWords Bid Simulator doesn’t predict the future– rather, it estimates what would have happened in the last week had everything else stayed the same except for your bid.  Google explains it here.

In this first screenshot, you see that we’d get nearly the same traffic at any bid price for this keyword.  Note that the estimates impressions is the same.  By bidding higher, we move to a better position.  We are currently bidding $3 a click to get 63 clicks, but if we drop our bids to $1.01 (a third the price), we get only 3 clicks less (a 5% reduction).  Thus, a 200% bid drop for only a 5% click volume drop– for you economics students out there, that’s significantly inelastic.

Why?  At some point, you’re already in first position, so bidding higher won’t matter.  Google’s AdWords bidding auction, as clearly explained by Hal Varian (Google’s Chief Economist and the author of my undergrad Econ textbooks) in this video, shows that our price is based upon an increment of the next highest ranked bidder and your Quality Score.  P1 = B2Q2/Q1.  In other words, the price you pay to be in position 1 (P1) is the AdRank of the advertiser in position 2 (Bid of Advertiser 2 x the Quality Score of Advertiser 2)– then divided by your Quality Score.

On high volume, highly competitive terms, you would expect to see a more gradual fall-off in this bid curve.  Normally, you’ll get hit with the double whammy of more clicks at a higher cost per click– if clicks and CPC are both increasing by 50%, then you’re hit with an overall cost increase of 1.5 squared, which is 225%.

What I think Google may have neglected to include in their Bid Simulator is the impact of sitelinks in position 1, which give a tremendous boost to position 1 advertisers.  This estimation would be hard to do, given that the feature is not in wide release– though BlitzLocal is fortunate enough to have enough accounts that we have a few of them with this beta feature enabled.

Here is an example of a Bid Simulator shown when there is hardly any data— on a tail term with phrase match on.  Were there enough ad data, we’d be able to calculate the Incremental Cost per Click (ICC).  Don’t make fun– the ICC is the term that Google uses to describe this concept– namely, the additional price you pay for incremental clicks, measured by the change in cost divided by the change in clicks.  If you’re bidding up, your ICC is significantly higher than your average CPC, which averages in all lower click costs.

Overall, I find the AdWords Bid Simulator partially helpful.  Looking at average position I believe is nearly as good, since Google won’t tell you the bids and Quality Scores of the other advertisers anyway. It also doesn’t appear to take into account the effects of negative keywords, dayparting, geo-targeting, and other settings (at least based on their internal PowerPoint showing the actual data used versus estimated for Bid Simulator.

The next step for Google is to make recommendations on how to increase profit based on the simulation.  If I raise my bid to get more traffic, then I’m also decreasing my profit per click.  Google should tell me what bid makes the most of this trade-off.  Currently, all Google’s recommendations seem to be to increase bids, add keywords, and increase budget, so not sure if they’re going to do this any time soon.

However, it is true that if you use Conversion Optimizer, that you can’t use Bid Simulator and that using Conversion Optimizer is effectively maximizing profit if you know the right CPA target.  Love to hear anyone’s experiences here with Bid Simulator, ICC, Conversion Optimizer, and other estimation tools.

Tonight, I had dinner with Dr. David Verebelyi, Chief of Laser Surgery for the Colorado Center for PhotoMedicine.  They do liposuction in Denver, laser hair removal, and other laser-based skin procedures.  We’re doing cosmetic surgery on his website– not his face or butt!  We’ve celebrated one year with Dr. Verebelyi and he mentioned that in 2009, he drove 40% more business than in 2008, while paying 12% less in marketing cost.  

In fact, Internet marketing has been so effective, that he’s putting all his advertising dollars online– no print, radio, or TV. So before this blog post starts looking like a testimonial or marketing brochure, let’s talk about some interesting things we’ve learned this last year:

• Legitimate doctors are having trouble competing with spammers promoting weight loss products. By spammers, I’m talking about the fake testimonials and “flogs” (fake blogs).  Dr. Verebelyi and his staff actually do have celebrity clients, so how can he yell over the noise created by the folks who aren’t real?  Having a phone number and contact information prominent on the page helps, but many consumers aren’t reading that far.
• Social media is effective not for coupons, but when stuff is actually free.  Just like the above example, his office has offered small free services in the hopes that once a prospective patient comes in that they’ll sign up for other procedures. Twitter has been effective in promoting free services, driving folks into an email autoresponder process.
• Negative keywords and targeting are key to effective advertising. The young women and teens who want to just get a prescription and get right out are not profitable. So we have to demographic target and also use a heavy negative keyword list.  You don’t want to be paying $5 a click on a teenage girl who just wants to buy Clearasil from the supermarket.
• Before and after pictures are critical.  Patients want to see results and Dr. Verebelyi is one of the best in the nation based on his performance. He literally wrote the book on laser skincare techniques and trains surgeons nationally, as head of training for the American Society for Laser Medicine and Surgery. The funny thing is while you’d think that patients would care most about finding the best doctor (this is your body, we’re talking about– no discount heart surgeon for me!), price is still the #1 consideration.

Looking forward to 2010, we’re going to take advantage of Google’s latest features for local– ad extensions, sitelinks, Google Favorite Places, Facebook integration, and so forth.  And look forward to a new site in January– it’s not just Denver Botox, you know.

I look at ads all day– it’s part of my job. I even go out of my way to click on ads to see what competitors are doing.  So rarely am I surprised. But today I saw this:

  Yes, it’s an ad not promoting BlitzLocal, but actually targeting BlitzLocal.  How’s that for a taste of your own medicine? 

Shari Donnermeyer of Borrell contacted us yesterday about their local conference in NYC in February, asking if we want to come, as well as sponsor.  Previously, I was not considering going, since we just got back from the Kelsey conference in LA last week, which is the larger of the two shows.  However, now I’m seriously considering it.  

After all, I had mentioned in passing to Shari that I was getting bombarded on Facebook with ads promoting their conference– and that they were using the same creative over and over without testing various images, headlines, and such.  And now, this is what I see on my Facebook the very next morning– I’m impressed.

Tell me– how do you NOT want to go to their conference after seeing something like this?

This is an example of the kind of personalized advertising that is available only on social networks such as Facebook and MySpace.  It’s hyper-targeted, cheap, and effective.  How’s that?

This is a guest post by Keith Wilcox

Okay, I admit it.  Some of the details can be a little challenging.  I still have to look up a bunch of HTML that I’m sure other bloggers know by heart.  I don’t know exactly how Google PR works, and I’ll be damned if Alexa rankings make any sense to me.  What I do know is that none of that would matter to me if I had never written my first article 6 months ago.  Even tentative steps are steps.  Blogging really is nothing more than having something to say and saying it.  Indeed, there are some basic rules to follow, none of which are complicated.  First, have a theme.  Second, be consistent.  Third, don’t give up.  That, in a nut shell, are the rules by which people, whether they be athletes, politicians or actors, become successful.  When you execute on those three principals then you can start worrying about the details.  Excuses don’t pay the bills, and good intentions are good for shit.  The only thing that matters is taking one step forward – then another.

The Theme:

My blog is all about being a homeschooling Stay at home Dad (SAHD).  Every article I write has some connection to parenting, fatherhood, children or education.  Of course, themed blogs are not necessary if all you’re doing is updating friends and families on your daily routine.  However, for the purpose of becoming a web presence, a theme is vital.  You must find a niche and become an expert.  Butterflies, massage therapy, speaker technology, fertilizer – just pick something and go with it.

Consistency:

One sure fired way to fail is to be flaky.  Nobody likes a quitter, and nobody likes to be kept waiting.  Readers will read your content if you have something interesting to say, but they won’t keep coming back without fresh news and insights.  There are certain blogs I read every day.  There are others that I read once a week.  I know when to come back because I know the update pattern to expect.  People who aren’t consistent get forgotten.

When the Going gets Tough:

My blog spent 2 months at 20 visitors a day.  It spent another two at about 100.  Then it suddenly shot up to 1200 visits a day for a month.  Now it’s back down to between 300 and 400.  By successful blogger standards my traffic numbers are somewhat pathetic.  But, the trend says I’m going in the right direction.  Sure I had a month over 1000 visitors per day.  Then I bombed.  I could spend my time fretting about that dip, or I could focus on the fact that I started at 20 and I’m still trending up.  I’m a long way from where I want to be, but I’m not giving up just because I bombed this month.  That’s the story of life.  Quitters never prosper.

The Details:

You’re not technically minded?  Neither am I.  I have a double major in History and Spanish.  What do I know about computers and the world of online advertising?  Well, I didn’t know anything before I started, that’s for sure.  Now I know a little, and thats the most I can say.  But, look at my blog.  I’ve asked a ton of questions to people who are experts at this stuff.  They’ve helped me, and I’ve learned.  Did I know who Shawn Collins was before I Started?  Nope.  And, I’ll bet he doesn’t know who the heck I am.  I read his blog though and listen to what he’s saying, and I’ve learned some things.  Dennis here has  been an invaluable resource for SEO advice.  You don’t have to be technical, you just have to be curious.

So, you want to be a blogger, but you haven’t started yet.  You’re probably more qualified than me; but, I’ve done something and you haven’t.  I might never be comfortable with my expertise or I might be worried about what people will say.  I might even be concerned that I’ll get badmouthed and threatened because of the things I say.  You can’t live your life in fear.  One step at a time, that’s all I’m asking.

I wanted to know whether Albertsons was still open, so I did a Google Search.  Here are the results:

As you can see, Google saw that my search query had local intent, since I have a city name and state.  And you can see they picked the two nearest Albertsons locations.  So far, Albertson’s is 1 of 1.

I call the phone number on their listing and got the number not found or has been disconnected message. Ooops– someone at Albertsons is not keeping their local listings up to date. Score: 1 for 2.

So I click on the link for their listing and it takes me to this page:

This is their store locator page, not the individual listing that I’d expect to see with the store map, locations, hours, items carried, and so forth. Score: 1 for 3.

Okay, well I’m already here, so let me put in my zip code of 80234, which is Westminster, Colorado– which should give me the nearest stores, right?  After all the url is locator.albertsons.com/StoreLocatorAction.  And here is what comes back:

That’s it– no store listings, navigation menu that lets me go to the albertson’s home page, nothing.  The message says there’s a store in my area, but it seems that Albertsons is not interested in telling me where it actually is.  If you click on the link they provide, asking you to view their press release, it goes to this page:

Whoa– I suppose it’s interesting that 3 years ago, Cerberus Capital Management bought out all the Albertsons stores.  But really, I wanted to know if I could do some late night grocery shopping.  How bizarre!  There is a link back to the store locator page, but I decided not to go through that same series of hoops again.

Folks, this is what happens when you don’t take care to manage your local listings.

• Have you made sure that your company locations are properly being submitted to Google, Yahoo, Bing, InfoUSA, Acxiom, and the 200+ other directories out there?
• Are you sure that the information is accurate and up to date, whether you have one location or 5,000?
• Do you take full advantage of what the search engines provide you with– to also input pictures, videos, reviews, rich descriptions, and even coupons?  It’s free, you know.
• Do you have a process to regularly monitor these listings so that you can add, update, and delete the locations that you have?

In audits, we often see over 40% of local listings with inaccurate data– that’s a lot of people you are denying to your stores. Let us run an audit for your locations and you might be shocked. Contact Eric.Evans@blitzlocal.com if you want an assessment, by the way.

We estimate that it would take you 30 hours to go claim and verify a listing for a single location across the top 20 sites.  The manual process of doing this is painstaking– you have to confirm a PIN sent via phone or postcard or respond to a phone call from a verification company weeks later.  The odds of getting it right are low.   Now multiply that 40 hours per location times however many locations you have– then you have an approximate cost to do it yourself.  If you do want to do it yourself, let us know and we’ll send you our guide on how to do so.

But if you’d like an audit, we have special pricing through the end of the year for $3 per location if you have over 100 locations.  We handle this entire process for you.  Else, it’s just $10 per month per location you have– and that includes the submission, verification process, as well as reporting back on how many listings made it through.  It’s also month-to-month, in case you aren’t happy with the measurable results we provide.

Somebody should call Albertsons and tell them about this.

For the last year, Google has been showing personalized search results– did you know that if you are logged in versus not, you’ll often see different search results?  Thus, you may be thinking that you rank highly on a search term for you or your client– but really it’s because you search for that term all the time, skewing results.  Just look in the upper right corner to see if it says “logged in”.

One way to handle this is to add “pws=0″(without the quotes)  to the end of the search query.  That’s a lot better than the drudgery of logging out to do searches and then having to log back in again.  Try it!

Google is already personalizing search based on a whole bunch of factors, such as where you are, what your past search behavior was, and data from other Google services you use.  Thus, the concept of ranking #1 doesn’t really make sense anymore.  So what do we do now?  We look at how much traffic we get, not what position we rank on.