Striking It Rich with SEM

By Brian Quinton

Mar 29, 2005 12:24 PM

Kenny Isbell's father founded Apache Oil Co., a Pasadena, TX-based wholesaler of motor oils and industrial lubricants, in 1970. When he cut back on his duties in 1996, Isbell took over the day-to-day operations of the family business, selling product around the Houston area.

That made Kenny a busy guy. It also meant that he had zero time to figure out why the Web site Apache set up in 2002 wasn't drawing the kind of traffic it should have done.

"Nobody knew it was there," he says of the early days of that site. Customers could use it to set up service accounts or download other necessary forms; but few were even coming to the site. "Every so often, it produced a couple of requests for quotes, maybe one every six months."

But three years and the rise of one search marketing industry later, that situation has changed, and Isbell gives the credit to a new SEM campaign through ReachLocal, a provider of advertising services for small and local businesses. He heard about ReachLocal through an old high school friend whose college roommate was an agent for the company. He checked them out, signed on for a first SEM campaign last December, and began seeing results right away. "Through mid-January, we invoiced about $40,000 in new business from first-time visitors to our Web site," he says. "I figure that cost us about $117 in ad clicks. And we've booked $70,000 in new business in the last six to seven weeks."

Launched in November 2004, the ReachLocal platform lets small enterprises place ads with both Google AdWords and Yahoo Sponsored Search and with the pay-per-click offering on Verizon's SuperPages.com Internet Yellow Pages directory, as well as placing banner ads on the Advertising.com contextual network. ReachLocal co-founder, CEO and President Zorich Gordon says his company was designed to let businesses whose transactions most often happened offline tap into the strength of the Internet to enable those deals online. That means designing a Web presence if the company doesn't have one. In Isbell's case, it meant taking the time and effort out of mapping a keyword strategy, placing ads on the largest search engines with appropriate geo-limiting, and tracking the clicks, calls and e-mails that those ads provide to measure their effectiveness. Isbell says local businesses like his can benefit from the per-per-click model that underpins most search engine marketing, because it's based on performance. "I think it's the most effective advertising out there," he says. "It's like having a big billboard out by the highway, only the sign is free, and you pay when customers see it and call you."

But even more than the clicks, Isbell says, it's the call logs and phone contacts that tell him his SEM campaign is doing its job. In fact, he admits that he hasn't had time to follow the ad tracking personally. "I've tried to track the results, but the campaign has just been growing too fast," he says. "I leave the tracking to ReachLocal. They give me call reports, track e-mails, and send call logs that record the effect our ads have had." Isbell pays particular attention to the call logs; in fact, he and his sales people use them to make follow-up phone calls and check that callers received the information or other service they requested. That's a point of difference in the highly competitive Houston petroleum market, he says: "We set ourselves apart through personal service and quick turnaround." Isbell often has the click-through calls come directly to his mobile phone, and says he received four on the same day he spoke to SearchLine.

The other selling point for the ReachLocal SEM service is that it requires minimal ongoing management from Isbell or his team. "I just told them which words I wanted to market to, and they turned a list of a couple hundred keywords into about 9,000 terms," he says. "I let them manage it all."

The result is that an Apache ad is on the first Google page almost every time Isbell checks on his keywords, he says, in anything from the first to the fifth position. "We're a Shell lubricant distributor, and for all the Shell-related keywords, we're coming in up above the corporate Shell page," he says. Isbell also markets against his competitors" trade names, which doesn't impact his ROI because so far, few of his local competitors are doing search marketing.

If and when they follow his example, Isbell doesn't worry that his most productive keywords will be priced out of his reach. "Right now I'm paying 10 cents to 50 cents a keyword," he says. "If it ever got up to $2 to $3 a term, that might be a problem for me. But right now, I'm happy, because I'm getting the sales results I want on the other side."

Prior to search marketing, Apache's most likely advertising option was a large display ad in the Yellow Pages print directory. Isbell says the company now spends about $2500 per month for a large display ad in the local book; but when his current contract runs out, he plans to cut back to a small business-card size ad and put the money saved into further search marketing. The paper directory only produces one to two prospect calls per week, he says"no comparison to the first-time calls he gets from search ads.

Gordon says that Apache is typical of most small businesses in a couple of respects. "They want to cut a check and have somebody else do the rest of the SEM work," he says. "They also want reporting at a higher level, leads, and for them leads mean real customers. $100 for 100 clicks isn't a good deal to these businesses if all those clicks are just "lookey-lous." Small businesses know that business is good when the phone rings."

But about two months from now, Apache might be a very atypical ReachLocal customer in one respect: Isbell is thinking about taking his distribution nationwide, shipping around the country. It wouldn't take much, he says; just some tankers and some back-office changes. He'd probably re-design the Web site to offer a separate page for customers interested in full truckload orders. All that might happen in as little as two months, he says.

That is, if he can find the time to set up the infrastructure. And that depends in part on being able to handle the new business that his local SEM efforts have already brought in. "I'm still running regionally for now," Isbell says. "Still trying to digest all that new business."