Local Search (and Directories) are incredibly difficult.

26 Feb

I’m a big fan of playing to your strengths. For me – that’s finding something interesting, iterating, building it, and moving on. For others, it’s really diving deep into a singular topic. For others, its programming solutions. We all have our skills (which you do have to nurture, but that’s for another day).

One common (and intelligent) approach is to utilize your existing network to figure out a problem they’re having – and solve it for them. Right there you have an existing pool of customers that you can utilize to build out your product/solution – giving you a quick proof of concept that you can expand to others.

On that note, when one is deeply entrenched in an industry, you will come across your fair share of hucksters (who seem to be doing financially well), and your fair share of brilliant individuals (who seem to be doing financially poor). Putting two and two together, a common solution is to build some kind of “master directory” that will serve as a way of weeding out the inferior/illegitimate, and highlighting the best.

Stemming from this realization, people often come up a grander plan, and we end up with a form of (local) search directory – a centralized location that a user can trust to find the best (and weed out the rest). Connecting professionals with customers.

Having a ton of hands-on experience with both local search and directories: You have no idea what you’re in for.

In the past month, I’ve actually had five people suggest a form of (local) directory in various niches of fitness/health, and ask me my take on implementing something like this.

And I can see the appeal – 3 years ago (after a 3 year hiatus from local directories), I was about to purchase a premium “trainer” domain to build a directory. Last year, I kicked around the idea of buying Dietitians.com for the same purpose. Thankfully, both times I realized the folly of my ways and gave up on it.

In no particular order, a few of the issues you face:

Chicken and the Egg

More than anything else, you will suffer from the chicken and egg problem. Your professionals won’t bother putting effort into your directory without visitors… and visitors won’t bother with your directory without professionals to sift through.

From a marketing perspective, you have two channels to target. One does not lead to another – you could have an amazing directory of personal trainers, but if consumers don’t know about it, no one will ever see it. You could be getting 50,000 visitors a day to your directory website, but if it’s not being promoted to professionals (remember, most of them operate offline), they won’t even know to add themselves to it.

This is it not conjecture – I speak from experience. I actually have a directory website that gets 50,000 visitors/day … and the amount of professionals that add themselves is a pithy number.

And when you add local, the headaches increase 100x. A strong foothold in one city (even a major one like New York) literally means nothing to a visitor from Chicago, or LA, or any other city. You literally have to win one city at a time.

Listings / Data

The Internet is like not like Rome at all – if you build it, no one cares. So how do you originally seed your directory? Do you input that data manually? Good luck – are you really going to cover an entire industry? Are you going to buy the data? Good luck – inevitably up to 20% of it will have significant errors… and fixing those can be an immense headache.

Plus you have to scale your data – unless you reach some modicum of compleatness (that’s a real word!), your directory will appear half-assed. And half-assed is worse than zero-assed.

Who remembers?

Google has been de-emphasizing directories for years now, and only continues to do so. So let’s say you need a lawyer – are you going to search google, or are you going to go ahead and visit Avvo.com? (a beautiful example of a local directory).

So even if you acquire a “customer” (defined as a visitor who comes to your site), are they ever going to come back? Are they going to tell their friends?

Even if you are some expertly curated directory, how will the customer know to trust you? Why would they trust you?

Who is going to pay?

And here’s the most important paradox – how are you going to generate revenue?

Whenever I asked this, the person responds “well the business owners will.”

Why would they? I mean, look at Yelp – well established, millions of visitors, millions of reviews. But if you’re a business – you literally have zero incentive to pay them. If your ratings are good, you’re already getting exposure, so why bother paying? If your ratings are bad, paying for more exposure is akin to shooting yourself in the foot.

Premium listings? Well, if you make professionals pay to fill in their profile, then why would they bother? And if they don’t bother, and handicap the “free” listing, why would customers use the website in the first place?

Are you going to try to charge users? Are they expected to pay to access your list of professionals? Other than AngiesList (which itself has financial difficulties), this is a model that has never worked.

So who exactly is going to generate your revenue? There are definitely potential synergistic ways of generating revenue, but you need some size before you can pull that off. In the meantime, good luck with marketing to two unique channels while you’re battling Google

Arbitrage is likely the only answer

About the only way to make money is to realize that most professionals do not understand the Internet. Someone like Travis Jones does really well in fitness because he understands how to utilize targeted internet marketing to generate revenue. So you can convince a business owner to pay you $10 per lead while you find them at $5 each.

But now you’re no longer running a directory. You’re a marketing company. And there goes your original idea of being a high class directory.

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