The market is not as competitive as it looks

The question

Every trade has a few businesses that lead its big search, the short phrase that names the category. Most tools that help owners with search point them at exactly that phrase, because it has the largest volume and the highest click prices. So the obvious question is how much of the map those leaders actually hold, and what happens one level down, on the smaller searches for one service in one neighborhood.

How we measured

We took two trades in South Brooklyn, a stretch of 13 ZIP codes from Bay Ridge and Sunset Park to Sheepshead Bay and Marine Park: med spas and jewelers.

• The head term (med spa, jewelry store) was searched from 181 fixed points about half a mile apart across the area, the way customers standing in different places would search it.
• The small searches were one search for each service on our list (24 treatments, 29 jewelry services) from the center of each of the 13 neighborhoods.

For every search we recorded the business in first place, its review count and whether its owner has claimed the profile.

Why South Brooklyn, and not Manhattan

For jewelers, Manhattan would distort every one of these measures. On West 47th Street between Fifth and Sixth Avenues, the Diamond District, open map data lists about 1,600 jewelry businesses within roughly 500 feet: dealers, booths in the diamond exchanges, repair counters and gold buyers. Midtown alone holds 2,232 of the 3,658 jewelry businesses we profile across New York City, about 74 per 10,000 residents against about 4 for the city as a whole.

A cluster that dense pulls the map toward itself for blocks around and behaves as a market of its own, a trade district as much as a place where neighbors shop. Any measure of concentration taken there would describe the district, not the way local markets usually work. South Brooklyn is a residential market with ordinary shopping streets, much closer to what most local businesses face, so it is the better place to ask how the map is shared.

Four measures

• Different leaders: how many separate businesses are first in at least one search.
• Effective number of leaders: a single number for how concentrated the first places are. If the market behaved as if this many businesses shared first place equally, it would have the same concentration as the one we measured. A handful means a few businesses own the map; dozens mean it is split. (Technically, the inverse of the Herfindahl-Hirschman index of first-place shares.)
• Top five hold: the share of all first places held by the five businesses that hold the most. This is a measure of concentration, not of weakness.
• Weak and unclaimed leaders: searches where the business in first place has fewer than 25 reviews or an unclaimed profile, and, separately, those where its profile has never been claimed by the owner.

What the numbers show

Even the big search is split. Because the map is drawn around the person searching, the head term has dozens of different leaders across the area: 49 for med spa, 85 for jewelry store. It is more concentrated than the small searches, though. The five strongest med spas hold 43% of first places on med spa, against 31% on the small searches; for jewelers it is 31% against 21%.

The leader of the big search is not the leader everywhere. Among jewelers the business that most often leads jewelry store is first at about one point in nine on that search, but first in only 6 of 377 small searches. Among med spas the gap is smaller: the strongest med spa leader is first in 27 of 312 small searches. Strength on the category phrase does not carry over evenly to the services underneath it.

Many small contests are held loosely. In 13% of the small med spa searches and 25% of the small jeweler searches, first place belongs to a business with fewer than 25 reviews or an unclaimed profile.

Among jewelers, one small search in seven is led by a profile nobody has claimed. That is 55 of 373 searches, or 14.7%: the business in first place has never taken control of its own listing. Among med spas it happens in 4 of 311. Whatever puts those businesses first, it is not anyone tending the profile.

Weighted by demand

Counting every search once treats a service people search for a few times a month the same as one they search for thousands of times. So we also weighted each small search by the monthly Brooklyn search volume of its service, split evenly across the 13 neighborhoods. This is closer to the flow of customers than a count of searches.

For med spas the picture barely moves: weighted by demand, the small searches are still shared among the equivalent of 28 leaders, and the top five hold a third of them.

For jewelers, weighting changes the story, and it is worth being plain about it. The largest small searches, such as watch repair with about 5,700 searches a month in Brooklyn, are held by specialist watch shops, so by demand the small searches are about as concentrated as jewelry store itself. What grows is the weakness: 41% of the demand in the small jeweler searches goes to searches led by a business with fewer than 25 reviews or an unclaimed profile, and 23% to searches led by an unclaimed profile alone. For jewelers the opening is less about how many businesses share the map and more about how loosely the leaders hold it.

A note on the grid

The 181 points of the head-term grid are not 181 independent contests. Neighboring points usually return similar results; that is how the area splits into micro-markets, 8 for med spas and 7 for jewelers. Read the head-term row as shares of territory: how much of South Brooklyn each business leads, measured evenly across the area. The effective number of leaders there describes how many businesses share the territory, not how many separate fights there are. The small searches, with one point per neighborhood, are coarser in space but closer to separate contests, one per service and place.

What it means for an owner

The contest most owners have in mind, the big search, is the one where the leaders are strongest. One level down, on one service in one neighborhood, the map is split among many businesses, and a meaningful share of first places are held by businesses that have not done the basics. A small business does not have to beat the strongest competitor on its strongest ground. It can look for the searches where the current leader is thin, and win them one at a time.

Our free book, Found on the Map, turns this into a monthly method, starting with why the head term is crowded and how to choose the searches worth working on.

Limits of this note

• It is one snapshot per trade. Weekly tracking of both markets will show which of these patterns hold and which move.
• The jeweler figures here replace those in the first edition of our book (81 different leaders and 15% weak leaders in the small searches). The book used an earlier copy of the data in which many profiles lacked their claim status, so unclaimed leaders were undercounted. The next edition will carry the corrected figures. The med spa figures match the book.
• The head term and the small searches were measured with different designs, a dense grid of points against one point per neighborhood, so the two rows of each trade are comparable in direction rather than to the decimal.
• A weak or unclaimed leader is an opening, not a guarantee. Distance still counts, and nobody controls who Google shows first.
• Not every open search is worth winning: it needs customers and work you do well.