Peas in a pod: the problem with online directories

What are online directories?

Online directories first appeared in the 1990s as electronic versions of the paper-based business directories distributed by telephone companies to their subscribers. For a detailed history, read Wikipedia's article Electronic Yellow Pages.

Today, a large number of directories are published on the Web but few have any connection to telecommunication suppliers. Their scale and scope varies but they typically fall into one or more of the following:

• National, all categories of product and service
• National but service-specific (e.g. UK electricians)
• Local or regional, all categories of product and service
• Business-to-business, which often focus on vertical markets

Features

The business listing includes company name and overview, address, contact methods, and a list of the products or services provided. There may also be a facility to upload company and product images.

An increasingly common feature is a system which allows customers to rate suppliers and post a review.

How much does a listing cost?

Prices range from free to several thousand £ per year. As a general rule, the more you pay the greater prominence your listing is given.

So, what's the problem?

The problem is having to share advertising space with all your competitors. If you are a plumber in a large city, for example, dozens of other plumbers will be listed alongside you.

Lost in the crowd

In such a crowded environment, it is very difficult to stand out. Achieving this usually means paying a premium price to get your listing 'featured'. But even then, most directories will display a list of your rivals beneath your ad.

Some directories operate a distribution system where, for example, advertisers move up and down the listing rank in rotation. The idea is to share the orders around: "let everyone get a piece of the cake". That may sound reasonable but it is not how businesses achieve growth.

Search engine visibility

There is also an issue concerning how people search for local products and services. Our experience suggests that customers are much more likely to use a search engine (e.g. Google, Yahoo or Bing), rather than an online trade directory.

Some of the better directories are highly optimised for search engines and feature well in the results. But the issue of crowding remains. Whose listings are the directories promoting on the search engines and how? For every enquiry you do get, how many are going elsewhere?

Our advice

In spite of their limitations, directories dominate the online advertising market for sole traders and small businesses. And they are the easy option. Before you invests, however, consider the following advice:

1. Free listings

A number of online directories provide a free basic listing and it makes sense to maximise these opportunities. Just one word of caution: some use this as a 'foot in the door' approach, hoping to upgrade you to their paid service. It's not a show-stopper, just be prepared for the follow-up sales calls.

2. Paid listings

Despite our view of online directories, we don't discourage small businesses from using their paid services providing the advertising pays its way.

At the outset, decide how much sales revenue you need from every £1 spent and take time to review your sales leads and orders. Using a unique e-mail address and 0800 or 0845 telephone number for each advertising source is an effective means of tracking performance (the latter include statistics about incoming calls and some web-based suppliers provide the numbers free of installation or rental charges).

Before renewing a directory listing, review its performance and if it hasn't delivered the required revenue, scrap it! Don't carry on in the hope that things will get better.

3. Writing skills

In a crowded market, an effective way to get noticed is to write persuasive advertising copy: words, messages and style that prompt customers to click on your ad rather than those of your rivals.

Enter the following phrases in a search engine to find advice and tutorials: 'persuasive writing', 'writing advertising copy'.

4. Alternative solutions

Commissioning your own website is an alternative but will only work if your customers visit it. And that requires other promotional tactics (read our article: Why do so many websites fail?).

If you are based in the UK or Ireland, you may wish to consider Diadem's managed service for small businesses. This includes a unique website and all the additional services needed for success. Read how it works for plumbers and heating engineers.