Conventional wisdom, being more convention than wisdom, has taught us that the more reputable home services companies (plumbing, roofing, HVAC, electrical, etc) tend to receive higher placement in the sponsored, pay-per-click sections at the top and down the right-hand side of Google’s search results.
Working with more than a dozen home services companies, I always anecdotally thought this was malarkey. Thankfully, Andrew O’ Connell of Harvard Business Review drew my attention to a June 2012 study that researches pay-per-click advertising, company names, and customer complaints.
In “A” Business by Any Other Name: Firm Name Choice as a Signal of Firm Quality, lead author Ryan C. McDevitt published his research of plumbers in Illinois. Having spent twenty years working with not only plumbers but all manner of home services companies, I suspect his findings are true for the other home services categories as well.
McDevitt’s reseach upends the conventional wisdom:
Contrary to the prediction that only the highest-quality firms will win position auctions, plumbing firms that advertise on Google receive more than thirteen times as many complaints [with the Better Business Bureau], on average.
I knew it! But why? According to the research:
because Google disproportionately attracts uninformed customers with a low willingness to search, a low-quality plumbing firm has a greater incentive to appear among the top paid listings on Google, just as it has a greater incentive to use a name that appears among the top listings in offline Yellow Pages.
Remember the Yellow Pages? That was another part of the paper’s research, and their findings are certainly interesting, if not surprising, for companies like AAAAA-Plus Plumbing (emphasis added):
those with names that begin with an “A” or a number receive more than five times as many complaints with the Better Business Bureau, on average, and more than three times as many complaints per employee. In this sense, a firm’s name provides meaningful information to consumers even though a low-quality firm could disguise itself as a high-quality firm by using a different type of name. Firms that do attempt to conceal their identities by concurrently using both types of names provide starkly worse service: plumbing firms in Illinois that use both a name that begins with an “A” or a number and a name that does not receive more than fifteen times as many complaints, on average.
Have you always been suspicious of those companies? Me, too. Looks like we had good reason to be.
We’ve always tried to tell our home services clients that pay-per-click campaigns were replacing the Yellow Pages as the last refuge for people with no preference. We would caution them about fighting heavily in that space with the Cheap Charlies and the bottom feeders. Now it also appears they’re fighting with—and losing to—the companies that give ALL home services businesses a bad reputation. The research concludes:
While the previous literature suggests that firms’ listings will be sorted from high to low quality, the converse holds for residential plumbing services: firms in Illinois that advertise on Google provide lower-quality service. The same model of behavior that rationalizes the results from the Yellow Pages applies to Google, as the incentives for firms to signal their qualities to potential customers still predominate. Low-quality firms respond to the search behavior of uninformed consumers irrespective of the platform, whether by spending more on advertisements, choosing lower-ordered names, or submitting higher position auction bids.
It’s why we tell our clients there’s never been a more important time to be GOOD at what it is they do. It’s also why we encourage our clients to become the company their market thinks of first and likes the most when a need arises for their services.
There are great ways to do this for good companies. Do you know how?