Circos Brand Karma

Official Blog of Circos

SEM Haves and Have Nots

with 5 comments

At the unofficial Circos hangout, Central Park Bistro, I met a small business owner who was having a hard time with SEM. This particular gentleman was in the hardwood floor business, and he had a couple of complaints which I thought were interesting.

1. Picking the right keyword was too difficult for him. He gave the example of the trouble he had with trying to adword “hardwood floor.” The keyword tool gave him a long list of synonyms (including plural and tense permutations), almost all of which were highly sought after by competitors, and therefore, expensive.

2. National advertisers drove up the local rates. He asked me to look for “hardwood flooring, Woodside, CA” to see what I found. The last I did this, in the sponsored link section I found LumberLiquidator (which is national), Pacific Custom Flooring (which serves the Bay Area), and NY-Floorman (guess where their office is?). The ads on the side had SimpleFloors (national), iFloor (national), and VortexFloors (national). What’s also interesting is that the top sponsored link, LumberLiquidator’s stores in the Bay Area was in Berkeley and San Jose.

(to further underscore his point, I found pretty much the same results in the Sponsored Links on top and on the side when I switched location to San Mateo, CA, San Francisco, CA, Los Angeles, CA, Reston, VA, and New York, NY!)

While lots of people are asking him to install hardwood floors in Woodside, CA (and surrounding areas), he’s relying mostly on word-of-mouth referrals for new businesses these days. He says he simply can’t compete because he doesn’t think like a marketer, and even if he came up with all the right words, he doubt he’d be able to afford them. He says the Yellow Pages days were so much simpler for him, and he feels, fairer, though he also recognizes that the number of new businesses that he’s getting from Yellow Pages means that it isn’t as effective as it used to be.

Now if you think this guy is perhaps a technology laggard, you’d be surprised. He’s younger than me, and not only did he pull out his laptop to do some email at the bar, he was connected via a Cingular aircard.

His experience drove home what I’m feeling is problematic with the current model: it’s optimized for the “SEM Haves,” not the best-in-class. Think about it, for small business owners, their expertise is in their line of work, not marketing. They’ve traditionally relied on word-of-mouth referrals and directories to get their name above or alongside their local, regional, and national competitors. As more people turn to the web as a resource for finding service, their lack of marketing expertise (and time/money resources for it) hurts their visibility, turning them into “SEM Have Nots.” While they may provide the best service, they may go out of business anyway because new customers don’t know about them or can’t find them. On the other hand, big players that have the know-how and the money end up with more exposure, and benefit from the rise in consumers relying on the web as a resources to find things. They come out on top in the results because of their marketing prowess, not because they’re necessarily the best-in-class.

I think the problem of the Haves v. Have Nots in the SEM space will have larger implications if this advertising model continues to dominate. No one wins if the best-in-class can’t be found. There’s got to be an alternative.


Written by Morris

January 14, 2008 at 1:23 am

Posted in marketing, sem

5 Responses

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  1. […] my previous post re: SEM Haves and Have Nots, I think it’s good that at least for the duration of this contest Google is helping local […]

  2. Indeed.

    I share your concern about the “haves and have nots” – and the resulting impact on the limitation of our choices in a local market.

    The “old” marketing led to the creation of dominant brands in most industry sectors – retail, services, and even dining. The results?

    Because we are usually presented with the same set of choices in any metropolitan area, and we can’t discern which of the local options may be worthwhile, we learned to accept “predictable” experiences rather than to take the risk necessary to find extraordinary ones. Olive Garden? Macaroni Grill? Ugh. What’s your favorite local Italian restaurant?

    Consequently, the local craftsman (like the guy in your story) have a difficult time competing with the ad spend by larger competitors – and the reinforcing loops that result lead customers to the national brand and starve the local provider out of business.

    I, too, had hopes for the power of the Internet to alter this dynamic. I actually joined with like-minded partners to launch a venture via a parent company we called Elah Valley to focus on using the emerging technology to enable local companies to compete more effectively using these new tools.

    That was in 1998-2000, before the behemoth known as Google created the dominant advertising marketplace – and before AdSense became another competitive weapon for the national players. Sigh.

    Can Circos alter the competitive landscape by harnessing the power of social knowledge to overcome the impact of bigger ad budgets? I, for one, certainly hope so.

    _ James

    Elah Valley is where David slay Goliath.


    February 6, 2008 at 9:22 pm

  3. Great discussion.

    Agreed, the irony of the information age for the locals is that their information has become less convenient to find (yp vs. google).

    My belief is that it will level out over time just as the traditional marketing sector transformed as locals decided to advertise and compete with the Cokes of the world. Once there are enough locals, as a whole, to make up a competitive option for providers to take interest in the business, the market will provide a solution.

    The big trick is to anticipate the technology and vehicle and capitalize on the wave. šŸ˜‰


    Bryan Carter

    February 6, 2008 at 9:49 pm

  4. Circos is indeed working on a model to simplify online marketing for big and local brands. Thanks very much for your comments.


    February 7, 2008 at 2:12 am

  5. Nice post, great job. I have recently started my own blog so its handy to pickup tips from what you have going here. Many Thanks. Agustin Lorent

    Agustin Lorent

    March 3, 2010 at 3:12 am

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