6 years ago I worked for an online advertising company called Red Media Corp. who launched a product called RedTo.com (Toronto’s Local Search Engine) which behaved like a search engine for local businesses but still had all the functions of a business directory. It used keywords and keyword phrases to determine the results for a given query. At that time, the idea made sense because major search engines such as Yahoo!, Ask Jeeves, Google, MSN and Microsoft Live focused on a broad search across the web instead of searching within your community. RedTo.com wanted to compete with YellowPages of the world by not only having their business directory online but by producing a printed directory with a list of local businesses and their URL’s. The printed directory was short-lived and the actual search engine went public and lived for a couple of more years before it became ZipLocal. After that, not sure… last I heard some directory company (Yellowpages?) bought it in the US.
So the business model was pretty simple. Get traffic and sell advertising space for a monthly or quarterly fee. Great! Hold on though! The implementation of this business model was FAR from simple. Traffic is always underestimated by ambitious entrepreneurs. One aggressive marketing campaign may be enough to get you traffic right away but it’s a completely different story to maintain that traffic and build on it.
So let’s say you want to start a business directory based on this model and use social media and other online strategies to populate your directory. Do you stand a chance for success? Do people or businesses still need online business directories?
Lets take a look at where businesses are spending their advertising dollars.
Google, Bing and Yahoo have really jumped leaps and bounds in the last 5 years in regards to local search. Submitting your URL to these search engines is still free and business services like Google Places is free as well which is great for local SERPs. Here is an article on the effectiveness of local SERP results and how it’s effecting how business rank on search engines http://goo.gl/owDcZ. Search engines also have PPC campaigns available to business owners which has been proven to be very effective as long as you know what you are doing. A PPC campaign can also drain your wallet if not properly managed. My point here is that search engines are dominating the online advertising market not directories. Why would I look for a business directory first then search again for a business in the directory when it could get results instantly by using a search engine? Using a search engine has become common practice for anyone using the internet. Ever wonder how many people have a search engine as their default home page?
Lets take a look at some numbers in the advertising market.
Google owns 44% of the Global Advertising Market which has risen almost 10% in the last five years! It’s not even close! Google is also dominating the global search market and they continue to grow thanks to the purchases of DoubleClick, and Youtube. Even Facebook with 500 million users sat at 3.1% of the market in 2010.
Despite economic crisis’ all over the world, consumers are still buying through internet channels so you should expect online advertising to also increase in the years to come. ZenithOptimedia is predicting a 58% increase between 2011 and 2014.
Even though the choice of advertising type for businesses has not changed at all in the last 10 years, the platform in which it is being delivered, has. It’s no competition. Search engines is the choice of consumers therefore it’s going to be where businesses will be investing their advertising dollar.
So are business directories dead?
One could argue that if you have a niche market you could create a smaller business directory that caters to industry specific needs. You could add video and social media and create a sort of hub that only caters to a specific audience. Ok, great! First you are going to need to attract this audience and have them continuously come back to your site. That alone is a challenge that can take a long time. Next, keep in mind though that regardless what audience you are targeting, chances are they are all search engine users or social media users that have been accustom to using a sophisticated algorithm in Google or they have experienced the intuitive interface of Facebook so what ever directory you feel will be the next big thing, keep in mind that consumers have standards now and if your directory can not keep up, it will never get off the ground. In the end, no audience equals no advertisers.
Imo, business directories almost dead but not quite. I still think they could still be useful for building links.
Social business is the way to go but that’s another story.