Locafy Announces New Value-Based SEO Pricing Model
- Locafy introduces a new value-based pricing model for its SEO product to boost recurring subscription revenues.
- Successful trials demonstrate added advertising value and revenue potential for clients.
- Locafy aims to capture a share of the global online advertising market dominated by Google.
- The company's innovative pricing strategy aligns with the growing demand for performance-based digital marketing solutions.
- Locafy's technology is proven to deliver additional 'clicks' worth hundreds or thousands of dollars per quarter above typical charges.
- The new pricing model removes financial risk for clients and provides certainty in SEO spending return on investment.
- Locafy's performance-based pricing model is expected to generate around a 50% increase in revenue for the company.
- The company plans to launch an initial marketing campaign to target its existing clients, partners, resellers, and subscribers.
- Locafy intends to extend its marketing efforts to millions of businesses listed in its global business directory network.
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Insights
Locafy's introduction of a value-based pricing model in the SEO industry is a strategic move to align with the substantial Google Ads market. By pegging SEO campaign prices to the perceived value of 'clicks' generated, Locafy is effectively leveraging the cost-per-click (CPC) framework familiar to digital advertisers. This could potentially disrupt the traditional subscription-based pricing prevalent in SEO services. However, the success of this pricing strategy will depend on the concrete performance outcomes and the perceived value by the clients.
Given the competitive nature of the digital marketing industry, Locafy's pricing innovation could serve as a differentiator that attracts businesses skeptical of SEO's return on investment. The emphasis on aligning costs with results may resonate well with performance-driven advertisers. Nevertheless, the company's ability to maintain service quality and consistency will be important as it scales this model. The risk lies in ensuring that the increased sales velocity does not compromise the effectiveness of their SEO campaigns, which could lead to customer dissatisfaction and churn.
Locafy's shift to a performance-based pricing model represents a potential upside for its revenue streams. The preliminary trial results indicating significant added advertising value for clients suggest that there is a tangible benefit to this approach. If Locafy can maintain these results at scale, there is a clear pathway to increased subscription revenues and possibly improved margins.
Investors should monitor how this pricing strategy affects Locafy's financial metrics, such as customer acquisition cost, lifetime value, churn rate and average revenue per user. The company's plan to initiate a marketing campaign targeting its existing client base and beyond indicates an aggressive growth strategy. However, it's imperative to consider how these changes will affect the company's cash flow and whether the anticipated revenue boost will be sufficient to offset the costs associated with the marketing and technological enhancements needed to support the new pricing structure.
The SEO industry is traditionally known for its complexity and opacity in pricing and performance measurement. Locafy's move to a value-based pricing model could introduce greater transparency and accountability, which could be a game-changer in how SEO services are bought and sold. By demonstrating a direct correlation between SEO performance and the equivalent PPC value, Locafy is attempting to demystify SEO for business owners.
However, the challenge will be in maintaining this correlation at scale, particularly as SEO results can be influenced by numerous factors beyond the control of the service provider, such as search engine algorithm changes. The industry will be watching to see if Locafy's model can withstand these variables and still deliver consistent value to clients. Additionally, the company's technology, Keystone, will need to be robust enough to adapt quickly to the dynamic nature of search engine algorithms to sustain its competitive edge.
Innovative Pricing Expected to Boost Revenues through Increased Sales Velocity, Scalability, and Subscription Revenue Opportunity
Successful Trials Show that Locafy Technology’s SEO Performance Often Exceeds Existing Base Subscription Fees
Aligns SEO Campaign Pricing to the Global US
PERTH, Australia, April 11, 2024 (GLOBE NEWSWIRE) -- Locafy Limited (Nasdaq: LCFY, LCFYW) (“Locafy” or the “Company”), a globally recognized software-as-a-service technology company specializing in programmatic “Entity-Based” search engine marketing, today announced that it has released an SEO product with a new value-based pricing model that it anticipates will drive a strong increase in recurring subscription revenues. The Company believes that this model is the first of its kind in the automated SEO industry.
“In digital marketing, the core objective is to drive visitors to a client’s website, typically measured in ‘clicks,’” said Locafy CEO Gavin Burnett. “Based on our successful free and paid trials of our proprietary Keystone technology with media organizations, publishers, and direct clients, we’re confident that our technology is among the best in the industry at driving additional ‘clicks’ for clients.
“When using market-based advertising price comparisons, the ‘clicks’ our technology delivers are often worth hundreds, and in some cases thousands, of dollars per quarter in additional value above what we typically would charge a customer,” Burnett continued. “This pricing model shift is intended to capture increased revenue for Locafy that is commensurate with the value that our technology provides.”
The digital advertising market is dominated by Google, which reported revenues of more than US
“We’re confident that our clients will embrace this pricing model as well,” said Burnett. “We believe that this pricing model will resonate with digital agencies and business owners that have traditionally been skeptical of SEO services, as we’re removing the financial risk from SEO campaigns and providing certainty in SEO spending return on investment. Overall, clients are really paying for their business to be found in online search; we believe we will provide a solution where clients can rise to the top of search and only pay for the value they receive at rates already determined by the online advertising market.”
Locafy has begun quantifying the effectiveness of value-based pricing. In a recent preliminary, unpaid trial of this pricing model, one industrial client reported over AUD
Under Locafy’s new performance-based pricing model, an identical paying client could be expected to generate around a
Locafy expects to begin an initial marketing campaign in the coming weeks to its several hundred clients, partners, resellers, and active database of more than 250,000 subscribers. The Company then plans to extend its marketing to the several million businesses listed within its global business directory network.
For more information about Locafy’s technology, including educational blogs and case studies, please view Locafy’s investor relations website at investor.locafy.com.
About Locafy
Locafy (Nasdaq: LCFY, LCFYW) is a globally recognized software-as-a-service technology company specializing in local search engine marketing. Founded in 2009, Locafy's mission is to revolutionize the US
Forward-Looking Statements
This press release contains “forward-looking statements” that are subject to substantial risks and uncertainties. All statements, other than statements of historical fact, contained in this press release are forward-looking statements. Forward-looking statements contained in this press release may be identified by the use of words such as “subject to”, “believe,” “anticipate,” “plan,” “expect,” “intend,” “estimate,” “project,” “may,” “will,” “should,” “would,” “could,” “can,” the negatives thereof, variations thereon and similar expressions, or by discussions of strategy, although not all forward-looking statements contain these words. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, they do involve assumptions, risks, and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company’s reports that are filed with the Securities and Exchange Commission, including its most recent Annual Report on Form 20-F, and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
Investor Relations Contact
Tom Colton or Chris Adusei-Poku
Gateway Group
(949) 574-3860
LCFY@gateway-grp.com
1 Tiago Bianchi, “Google: Advertising Revenue 2023,” Statista, February 1, 2024, https://www.statista.com/statistics/266249/advertising-revenue-of-google/
2 Rohit Shewale, “Google Ads Statistics in 2024 (Revenue, Roi & Facts),” DemandSage, February 26, 2024, https://www.demandsage.com/google-ads-statistics/#:~:text=
3 “What Is Average CPM and How to Calculate It,” DashThis, accessed April 10, 2024, https://dashthis.com/kpi-examples/average-cpm/#:~:text=A%20good%20cost%20per%20mille,an%20average%20CPM%20of%
4 Mark Irvine, “Google Ads Benchmarks for Your Industry [Updated!],” wordstream.com, accessed April 10, 2024, https://www.wordstream.com/blog/ws/2016/02/29/google-adwords-industry-benchmarks
FAQ
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