Google & Small Businesses

It is almost unnecessary to enumerate why small, local businesses are–almost inherently–a good thing when their profit model is sustainable.

Small, local businesses feed capital into the pockets of individuals rather than leading to large and concentrated accumulations of capital that is often only beneficial to people who are already wealthy.  

-Small, local businesses tend to have a smaller carbon footprint than large businesses, cutting out the gas required for long-distance transportation of goods.  

-Small businesses frequently use more environmentally friendly materials, since that is what is available to them, and since the community affected by pollutants or toxic materials is often in their own backyard.

Eric Schmidt waving spock style to congress

Eric Schmidt waving spock style to congress

So how does Google’s search engine help small businesses survive?

And why does this deflate the accusation that Google has monopolist tendencies?

Local Search: The Key to Survival for Many Small Businesses

While some questions may remain after Eric Schmidt’s hearing before Congress last Wednesday, there is one point the Google Executive Chairman hit on that is crystal clear and absolutely valid: While Google’s lead on their Search Engine competitors may be, realistically speaking, almost unapproachable, Google is good for competition in general. In particular, Google levels the playing field–or should we say battleground–that used to separate local brands from national brands.

At about an hour into Schmidt’s testimony, Chuck Grassley asked him a question, to which part of Schmidt’s response went as follows.

“We are in the ranking business…so for every winner I am satisfied that the vast majority of small businesses are extremely well served by our approach. If anything, our approach promotes and enhances small businesses over large businesses, because it gives them a role that they would not otherwise have because of the way that the algorithms work.”

This rang true to me. I am not personally sure if Google is in violation of anti-trust–it doesn’t seem so to me, but I am not an expert. I am, however, fairly knowledgeable in the field of search engine optimization. And what Schmidt said to Grassley reminded me of a day last autumn when Google integrated places into organic rankings. This was an epic day for small businesses anywhere, and since the firm I was working for worked to promote the products and services of small local businesses, we celebrated.

When Google merged place results with organic search results that gave many local businesses the edge that they needed to stay alive. A local company generally will not have the money to invest to beat out their national competitors in a battle for their most important keywords. But they WILL be able to compete when it comes to place optimization. Merging place and organic search leveled the playing field. And this is only one of the many ways in which Google has given local businesses a fair shake.

Pay-per-click–an industry which, indeed, is virtually monopolized by Google–has also been very good for small businesses.

Where local businesses cannot compete for television spots with their national competitors, they often can compete for geo-located keywords on Google. And this strategy brings in predictable revenue–much more predictable and manageable than most forms of traditional advertising. Google recently launched Boost and AdWords Express to bring even smaller fish onboard the PPC express.

Why would they do this?

Because Google depends on revenue from the PPC campaigns of small businesses.

That is where their $20 billion plus of annual revenue comes from. It is definitely in their best interest to maintain competition at a local and national level–and that is what they are in the business of doing. So Google depends on small businesses for survival, but small businesses also depend on Google for survival. It is an elegant symbiosis.

While from Microsoft’s vantage point–as they try to flesh out their algorithm from machine-learning based on billions of Google searches–Google’s advantages in the realm of search engineering, mind-share and market-share may seem unfair, unbeatable, and unattainable. But excellence does not a monopoly make. And who is Microsoft to be complaining about monopolies anyway?  Schmidt’s larger point remains valid and, in fact, virtually indisputable:

“Last year alone, Google’s search and advertising tools provided $64 billion in economic activity to other companies, publishers and non-profits in the U.S. and we’re proud of this contribution to the economy… Without exaggeration, high tech is the most dynamic sector of the U.S. economy. The advertising-supported Internet alone is responsible for 3.1 million jobs in the United States. And according to a recent McKinsey study, the Internet was responsible for 15 percent of America’s GDP growth over the past five years… The Internet is also home to some of America’s most successful companies—Amazon, Apple,Facebook and Google. We compete hard against each other and we welcome that competition. It makes us better. It makes our competitors better.”

In an environment where the barriers to entry for the traditional marketing sphere is getting higher, social media marketing and related strategies like PPC and geo-located SEO are the only solutions left for many small, local companies. And Google continues to provide easy access, and a low entry fee to get into the game for scrappy, ethical entrepreneurs.

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