*** update 9/4/11 ***
This post was originally written on 6/19/10. It show’s up #1 on Google for the phrase “Reach Local Scam”. I receive a lot of readers for this post, and to date, no one has successfully challenged my theories about the problems with Reach Local. If you are a small business that is considering hiring Reach Local to manage your SEM, I strongly encourage you to find alternatives. Another post that may be helpful is my short but sweet post titled “Google Adwords Secret….Reach Local…does not want you to know”
*** end update ***
********* ORIGINAL POST *****************
This is a review of Reach Locals pay per click program. Information in this blog post is from former Reach Local employees, Super Media (formerly Idearc Media) training, former Reach Local customers, various internet postings, personal experience, and real world examples I have stumbled upon while surfing the web.
Have you heard the pitch that goes like this? “If I brought you 50 phone calls this month, and only 10 percent of those converted to customers, you would have received 5 new customers from your Reach Local Advertising. You told me that the average customer was worth $1,000 to you, so you would have generated $5,000 in revenue for your $1,000 investment.”
In my opinion, Reach Local is a company to be avoided. While not necessarily “scamming” customers, they definitely do not deliver what they claim to deliver, and they deceive both sales reps and clients.
Let’s start with a quick example:
I did a search (on June 3, 2010) for “christmas light installation, denver, co” and the 2nd, 3rd, 4th, and 6th ads are companies that are paying Reach Local to run Pay Per Click campaigns for them.
(Moderators note – it looks like since the time of this screenshot - both “There Today” and “Burgess Electric” have both cancelled their Reach Local Programs (update 6/19/10 – original date of search was 6/3/10)
2nd ad’s URL – http://theretoday.rtrk.com
3rd ad’s URL - http://mistersparky6.reachlocal.com
4th ad’s URL – http://burgesselectric.reachlocal.com
6th ad’s URL – http://handymanmatters18.reachlocal.com
What can we speculate from this example?
- Reach Local is broad matching all of the keywords.
- Reach Local is not using negative keywords in their campaigns.
- There is an obvious conflict of interest here. If the company that is managing your PPC campaigns is also managing your competitor’s campaigns, whose interest do they have in mind?
The main problem with this scenario is that this type of search is not likely to result in a click, and definitely will not result in a conversion. So if no one clicks on the ad, it doesn’t cost you any money right? Wrong! This will increase your impressions, which will decrease your click thru ratio. This in turn drives your campaigns Quality Score down, which means that you will now be paying more per click for other keywords in the campaign. This is only one example, for one keyword. Imagine if they have loaded hundreds of keywords, and broad matched them. How many impressions are you getting that are not related to your industry? This is a very bad problem, and will cost you a lot of money you do not need to spend.
Other Red Flags:
- Reach Local marks up clicks – It is widely known that reach local does not charge management fees, they charge a percentage on your clicks. The problem (in my opinion) with this is that their profits are directly related to what you spend.
- Reach Locals reps get paid a percentage of your monthly spend. They receive a small commission when they sell you, then a residual on their clients. In my opinion, this encourages them to drive the most clicks, and spend your budget monthly.
- Reach Local has a very high churn rate of reps – my suspicion of why is explained in the next red flag.
- Reach locals sales reps manage your PPC campaigns. *EDITORS NOT, 9/4/11 (I have heard that Reach Local now has a department that manages your campaigns. I do not have proof, I have just heard this)** They are responsible for adding and removing keywords, adjusting bids etc. I suspect this is one of the biggest reasons for the high churn rate. Managing Adwords campaigns is a very tedious thing, and requires a lot of time. The more a rep sells, the more work they are creating for themselves. These reps were hired to sell, not manage Adwords campaigns. How effectively can a sales rep manage your Adwords campaign if they are also pressured from their managers to hit their sales goals weekly? How much time do they have to devote to your campaign when they have to devote time to cold calling, meetings, trainings, paperwork, and signing up new clients?
- Contracts – why do they need contracts with minimum term commitments, if they are delivering the R.O.I. they claim? In my experience, businesses do not mind paying money to someone that is making them money.
- Broad matching keywords, and bidding on single word terms. I believe this is meant to spend your budget every month. (See #’s 1 and 2 in this list.)
- Spending your budget every month. This should be a rare thing, unless your budget is unreasonable low based on your industry. I.E. a lawyer with a PPC budget of $300 per month.
- Their “Total Track” software – Reach Local claims this proves the value of your campaigns, but does it really? These reports are only showing you data that makes it appear as if your dollars are being spent wisely – this is manipulative as they could (if they wanted to) show you more pertinent information like Bounce Rate (how many customers were bouncing from your website (Huge when evaluating R.O.I. for clicks)) – depth of visit in site (how many pages did the visitor look at – top content – top abandon pages etc. etc. etc.
- Reach Local – like many large SEM firms does not do any kind of comparative testing – this would involve changing landing pages, or ad copy – and comparing it to the previous data in an effort to optimize your PPC campaigns.
In conclusion, the deception by Reach Local is to both the Sales Reps and the clients. They get the sales reps excited at the prospect of making over $100,000 per year (on residuals based on your monthly spend (see #2 above)), and give them a fancy title (Internet Marketing Consultants) after a short training (2 week crash course in Search Engine Marketing.) Then they turn them loose while they are still under the belief that they are “helping” the small business owner. The problem with this is that after the clients start dropping programs because they realize that the programs are not working, the reps lose belief in the company because they start getting tired of being made liars of. This is the reason why Reach Local has such a high turnover rate of employees (see #’s 3 and 4 above.)
The deception to the clients is in the reports they provide you as proof that your campaign is working. These reports amount to “choosing” which numbers to show you. There is much more data available, and we all know that knowledge is power. If they keep this information to themselves, they have the power. If they give it to the business owner, the business owner has the power. I believe they know this, and that is why you are only provided access to a limited amount of data. If you knew that the bounce rate for the keyword that gets the most clicks was 90%, would you keep paying for that keyword? No, of course not, and as I outlined in #’s 1 and 2 above, both their revenue, and the sales reps commission is tied to how much you spend. I believe this is the reason Reach Local keeps valuable information to themselves, and only shares certain info with their clients.
Thanks Chad…….Working in a micromanaged environment where your integrity is sacraficed is not ideal for anyone… I have decided to take the other position.
I also want to sleep at night…..
Good luck to you in your new journey!
You clearly were not good enough to keep your job at ReachLocal so I wonder why anyone would EVER hire you to manage their digital presence. I see no difference in charging per click vs a set management fee, except by click is more fair. If you knew anything about how ReachLocal runs a campaign, you would know it doesn’t have anything to do with creating ROI around “clicks”, ROI though ReachLocal is based around conversion activity, and they spent millions of dollars on technology that helps them perform better than ANY OTHER PPC company. BTW, it uses the history of all campaigns it runs to create better campaigns for everyone, and then the technology caters that to each specific company, therefore they could manage EVERY campaign for EVERY company and they will all perform differently. Also, if you are a bad rep anywhere you do not put forth the right effort to make a campaign successful, so when you say that they do not create “negative keywords” and I know they do, it proves that you were terrible at your job at ReachLocal and probably got fired because you didn’t sell anything, and therefore never created anything.
Thank you for taking the time to respond. As I read your comments, a couple of things became clear to me. (1) You obviously work for Reach Local and (2) You clearly did not read my “About” page. If you had read it, you would realize that I never worked for Reach Local. I have also stated many times that I do not sell SEM. I offer an Adwords Account Setup Service in which I charge a one time fee to setup an account for a client, then teach them how to run it themselves. Reach Local is not my competitor.
I am an advocate for small businesses running their own campaigns. For 90% of Small businesses, with budgets of less than $1500 per month, the bulk of their clicks will be driven by 10 or fewer keywords. These can be managed very easily, because after the adwords account is setup, there is very little work to be done. The performance can be easily watched (and managed) by linking Google Adwords to Google Analtyics. This way the business owner gets to see ALL OF THE DATA, relating to their adwords campaign, and they don’t have to spend hundreds of dollars per month paying Reach Local to manage it.
We will have to just disagree on your points about RL being able to run every campaign for every company, and about the ROI Reach Local brings their clients. I will say that if the R.O.I. was as great as they claim it to be, their cancellation rate would not be so high. Businesses do not cancel advertising that is making them money.
Regards,
Chad Musgrove
I have so much to say about ReachLocal and it’s employees.
First, if you are considering a job there, please do a ton of research on the company. Don’t rely on the tenured employees who make six figures to give you an unbiased opinion. You can make $ by default. Just stay around longer than anyone and you will get the accounts that are left by unhappy people leaving….therefore you make six figures before you know it. RL is a scam! From the top dog down to the brainwashed sales rep. (who I can’t help but feel sorry for)
This company is toxic like no other. RL supports immoral behavior in the worst way possible.
Please, avoid them. There are plenty of reputable companies to work for and do business with. This is NOT one of them.
BTW…I can assure you that “Good Citizen” is an employee of RL. I could shout his name out—but I won’t. He is the worst one of the group.
AVOID! AVOID! AVOID!
Reachlocal clearly does not use negative keywords! It seems obvious that a company that seems to advocate business for a local company would indeed negate all other states that have your same city name (32 other states in our case). And they also sell transparency with the website we are able to view and see the keyword phrases. Complete BS as I used our company name and was able to pull up my trusty reachlocal ad. Thank you reachlocal for allowing my known customers to have a new phone number to call me at.
As an ex employee of this greedy business you are spot on with your assessment!
Due to multiple legal threats from RLOC and my fear of doing something that will land me in court i won’t elaborate except to say, keep up the good work and thanks for revealing the truth about this companies practices.
The GOOD people who work for reachlocal have been fooled by biased training and a culture that eliminates contrary views. The management are the ones who know what you are saying is correct and thus the real culprits behind the scam. Consultants leaving RLOC have a very easy time because they are the ones that become wise to the decpetive practices and KNOW what clients really need.
Hi Juli,
My reply is in no way meant to be in support of Reach Local, so please don’t take it that way. It is common practice for some companies to bid on their company name. I don’t support this – as if you have an even mildly optimized website, and have your Google Places account setup, you should show up for those that already know you and just want your number.
I do however think that because this is such a hotly debated topic in the PPC world (whether to bid on your own companies name or not) Reach Local has an obligation to ask their customers before they start the campaign. My guess is that they just automatically add your companies name as a keyword – in an effort to make sure they spend your entire budget every month. If they failed to ask you – they should credit you back for the clicks that came from your companies name.
Regards,
Chad
I would agree with you that management are the larger culprits than individual sales people. I also sympathize with sales people who begin to realize 6 months down the road that things are not what they were taught, and by then they are making good money ($50,000 + per year) – and then are “stuck” in their jobs. It is a very difficult thing to go in to work, to do a job that you hate, and sell a product you don’t believe in. However, I also hold those same sales people accountable, because the fact is that they should do the right thing and leave ASAP. Very tough situation though, and I do sympathize.
There has to be something that can be done about this situation. Something that will hit Reach Local where it hurts, and force them either change – or shut down. They are causing way more harm than good to small businesses in this world.
Any ideas?
Regards,
Chad