Why Local Lead Generation Is Better Than 11 Online Business Models

June 22, 2024

Local lead generation is better than other online business models because it has:

  • Higher profit margins
  • Passive income potential
  • Lower competition
  • Improved scalability
  • Greater autonomy
  • Less risk
  • Faster income generation ability

After spending the last decade experimenting with various online business models like dropshipping, Amazon FBA, and affiliate marketing, I have found local lead generation to be the best online business model for most people.

Local lead generation leverages local SEO to create websites that serve local service businesses by providing them with high-quality customer leads. Once a local lead generation website is ranked on Google, you can rent the piece of digital real estate to a local service business owner for $500 to $3,000/month. 

In the following article, I compare local lead generation to 11 other popular online business models of 2024 and discuss why local lead generation is better than each of them. 

1. Dropshipping

  • Local lead generation has higher profit margins than dropshipping. Local lead generation can command profit margins of up to 90% because we use free traffic, while most dropshippers are lucky to get 15% to 20% profit margins because they mostly use paid traffic that gets more expensive as more people get into dropshipping.
  • Local lead generation has lower competition than dropshipping. Local lead generation websites mostly compete for online visibility against small business owners in specific geographic locations because of local SEO. Dropshippers compete for online visibility and sales against major brands like Amazon and other dropshippers on a global scale. Other dropshippers can also copy other dropshippers so there's no barrier to entry.
  • Local lead generation generates more stable revenue than dropshipping. The local lead generation model relies on forming long-term partnerships with business owners where they pay out a fixed amount of money each month for access to website leads, leading to fairly consistent income each month. This is serving the same one customer over and over again. With dropshipping, every month you have to go compete to acquire thousands of new customers. Not to mention how quickly things change in dropshipping from customer trends, paid advertising campaign performance, and seasonal fluctuations (e.g. most Ecommerce sales occur Q4 around the holidays).  
  • Local lead generation grants greater control over your business operations and online reputation than dropshipping. A lead generation agency owner is fully responsible for the successes and failures of each lead generation site they own and the results they produce for their clients. A dropshipping business relies on third-party suppliers to deliver the right products to customers within the specified shipping time, which opens the door for potential issues if the supplier makes an error.
  • Local lead generation creates a positive impact on local economies while dropshipping does not. Local lead generation helps small business owners serve more customers and achieve greater revenue. Dropshipping is just using digital marketing tactics to get people to buy products for a higher price than they are selling elsewhere on the internet to realize a small profit.
  • Local lead generation has greater passive income potential than dropshipping. Local lead generation websites can generate passive income for extended periods because once a website ranks on Google and is rented by a local business owner, it requires minimal oversight to keep producing income. Dropshipping stores need to constantly test new products and adjust marketing campaigns to remain profitable and keep up with fast changing Ecommerce trends + ever rising cost of paid ads.
  • Local lead generation allows for greater scaling potential than dropshipping. As lead gen sites can generate income passively, local lead generation business owners can invest more energy into building out a network of lead generation sites to scale up revenue. Dropshipping products tend to have short life cycles, requiring a business owner to spend more time focused on maintaining revenue by finding new suppliers and products rather than scaling.

2. Amazon FBA

  • Local lead generation requires less startup capital than Amazon FBA. You can get started with local lead generation for a few hundred dollars, which covers a web hosting plan, a few website domains, and some SEO tools. Private label and wholesale are the two most viable and popular business models for an Amazon FBA business. These business models typically require an initial investment of $5K to $10K to cover expenses like bulk product sourcing, international shipping, and Amazon PPC advertising. 
  • Local lead generation is less complicated than Amazon FBA. Local lead generation has a straightforward process to profit, which includes doing market research to find a suitable location, setting up a website, optimizing the website with local SEO, finding a local business owner who wants more revenue, and renting them your website space for a flat fee each month. Amazon FBA requires many more complicated tasks, including doing market research to find profitable products, sourcing those products (usually from overseas), coordinating with a logistics company to get your products from the supplier to the Amazon warehouse, optimizing your Amazon product listing with professional product photos and SEO-optimized copywriting, running paid advertisements to get sales, and keeping track of your products in the Amazon warehouse to ensure optimal inventory levels & on-going communication with foreign suppliers. (so many moving pieces)
  • Local lead generation is less competitive than Amazon FBA. Local lead generation businesses compete for Google visibility against mostly local business owners. Amazon FBA businesses compete against Amazon selling products on its own platform and the millions of other third-party Amazon sellers, most of which are Chinese sellers that are manufacturers or have manufacturing connections in Mainland China where products are are acquired on special deals & prices impossible to beat.  
  • Local lead generation offers a higher return on investment than Amazon FBA. A successful local lead generation website can provide 90% profit margin and immense ROI as the site steady returns those profits month after month and years. Only 1% of all Amazon products command profit margins between 50% to 90%, according to Jungle Scout. Most are 15-20% profit margin but because its so competitive there's no guarantee that your product will stay profitable after 1 year.
  • Local lead generation isn’t inhibited by the rules and systems of a third-party service like Amazon FBA is. A local lead generation agency has the freedom and flexibility to operate their business without direct influence from another company. An Amazon FBA business needs to abide by Amazon’s rules, such as strict product packaging requirements and favorable return policies for the customer. Furthermore, an Amazon FBA business needs to leverage Amazon’s storage and logistics systems, which come with high fees and aren’t always perfect, as Amazon FBA sellers often experience issues like Amazon losing their inventory or mixing their inventory with another seller’s in the Amazon warehouse. Amazon can also suspend accounts without warning, even to sellers that tried their best to follow the terms of service.

3. Affiliate Marketing

  • Local lead generation can provide faster results than affiliate marketing. A local lead generation website typically takes 6 weeks to 6 months to rank on the first page of Google because it's easier to rank with local SEO. An affiliate marketing website or YouTube channel typically takes 2 - 3 years before it starts attracting enough traffic to generate solid income because affiliates are competing on the global stage. 
  • Local lead generation allows for more autonomy than affiliate marketing. Local lead generation agencies are subject to applicable regulations like the Telephone Consumer Protection Act, but still have considerable flexibility in how they operate and implement their services for local businesses. Affiliate marketing businesses are subject to all the same advertising laws as local lead generation, but must also abide by the specific rules set forth in each affiliate program they promote. For example, the Amazon Associates program does not allow their affiliate links to be used in any email marketing campaigns.
  • Local lead generation websites are less susceptible to the effects of Google core algorithm updates than affiliate marketing websites. Google's local search results are relatively stable through Google’s large core updates, allowing many lead gen sites to remain unaffected during these times. Affiliate websites, also known as niche sites or authority sites, can experience major disruptions from Google core updates. Many people are even questioning whether affiliate sites are still viable since the latest Google algorithm updates in 2023 and 2024 have substantially diminished the visibility of these sites in favor of major brands that have actual products or publications like Forbes and experiential forums like Reddit.
  • Local lead generation is less competitive than affiliate marketing. Local lead generation uses local SEO to compete for low difficulty local traffic while affiliate marketing campaigns typically compete for relatively high difficulty global traffic. 

4. Print on Demand

  • Local lead generation has higher profit margins than print on demand. While local lead generation websites can generate upwards of 90% profit margins, the majority of print on demand shops earn around a 10% profit margin, according to print on demand service provider Customily.
  • Local lead generation allows for tighter control over operations than print on demand. A local lead generation business is solely responsible for the service they provide to the customer. A print on demand business relies on a third-party company to produce and fulfill customer orders, which means the actions of the third-party company could negatively affect your brand reputation if they don’t perform their services well.
  • Local lead generation offers a more reliable income stream than print on demand. Small business owners typically elect to maintain long-term partnerships with local lead generation websites because it offers them a readymade marketing channel that is effective, leading to consistent month-to-month income for lead gen site owners. Print on demand is an Ecommerce business model. As such, income from a print on demand business can be inconsistent due to factors like seasonal sales trends and economic conditions.
  • Local lead generation is less competitive than print on demand. Local lead generation agencies mostly compete for online visibility against small business owners who aren’t experts at marketing. Print on demand products face intense global competition, especially from similar products on platforms like Etsy and Redbubble. It is way too easy for anyone to post print on demand listing on these platforms. This low barrier to entry causes heavy saturation across most print on demand categories.

5. YouTube Content Creator

  • Local lead generation offers more passive income than YouTube. After you set up a local lead generation website and partner with a local business owner, long periods of passive income is achieved, as site maintenance requirements are minimal. YouTube content creators must consistently publish content to remain in a favorable position with YouTube’s algorithm and receive platform visibility. 
  • Local lead generation offers faster income than YouTube. By leveraging local SEO, a local lead generation can rank on the first page of Google and start attracting potential customers for businesses within 2-6 months. YouTube creators typically need to invest a few years into consistent content creation before growing the channel enough to get monetized on YouTube and start earning a solid income. 
  • Local lead generation has lower startup costs than YouTube. With a few hundred dollars, you can set up a handful of solid local lead generation websites. Starting a successful YouTube channel can cost over $1-2K when considering expenses like a high-quality camera, microphone, lighting, and editing software like Adobe Premiere or Final Cut Pro.
  • Local lead generation is less risky than YouTube. After spending less than a few hundred dollars and giving a website 2-6 months to rank, you can determine whether a local lead generation website is worth continuing. You can minimize this risk further by building 10 lead gen sites at once. Few of those sites are bound to become successful even at worst-case scenario. It can take years of investing time and resources into video content production before it’s possible to determine whether a YouTube channel is worth continuing, leading some to end up wasting a considerable amount of time pursuing success on the platform. 
  • Local lead generation is less competitive than YouTube. There are 33 million small businesses in the US alone, according to the Small Business Administration, all of which could potentially be interested in local lead generation services. On YouTube, 183 hours of new video content are uploaded every minute, according to video production company Wyzowl. Many YouTube channels target the same niches, like travel, personal finance, online business, and technology, because these niches pay the most. As such, achieving visibility on the platform for the high value niches that are worth creating content for is incredibly difficult.
  • Local lead generation allows more independence than YouTube. With a local lead generation agency, you can mostly operate your business how you want, as long as you adhere to relevant digital advertising laws. A YouTube channel needs to abide by the rules of YouTube or risk losing monetization features. For example, according to YouTube’s advertiser-friendly content guidelines, YouTube can remove monetization from content that includes inappropriate language, violence, controversial issues, sensitive events, and shocking content. 

Closing Opinion

This isn't to say that YouTube isn't right for some people. Clearly, there are creators that have become wildly successful through YouTube. YouTube is highly competitive and you often need to stick it out for a long-time before finding success and you still have zero guarantee even with all the hard work & effort. This means you should only pursue YouTube if you're incredibly passionate about it. If you're the type that wouldn't mind making video content even if there was no money involved. Then YouTube might be worthwhile, but don't do it if all you want is to make money online. There are much easier methods for that, like local lead generation.

6. Blogging

  • Local lead generation generates income faster than blogging. A local lead generation site can rank on the first page of Google in as little as 6 weeks by targeting local keywords, after which leads can be sold to local businesses for a profit. Blogging takes much longer to start producing income, with a survey by Productive Blogging finding that it takes around 21 months for the average blogger to earn their first dollar.
  • Local lead generation requires less work than blogging. A local lead generation website can start ranking well on Google with a simple website that consists of an SEO-optimized homepage, a few service pages, a handful of blog posts, and an about page. For blogging, most blogs need at least be 1500 words and you need 50 blog posts before Google will start considering the blog for better search visibility. A blog also needs to routinely update old content and consistently publish new content to show Google that the website provides fresh information for optimal search visibility.
  • Local lead generation is less competitive than blogging. Local lead generation sites have the advantage of niching down into both a specific service and specific location. Bloggers can lessen the competition by targeting a specific niche, but they still need to compete on a global level for search engine traffic.
  • Local lead generation spreads risk better than blogging. Local lead generation agencies can set up many sites and experiment with many niches and locations because each site requires relatively minimal resources to set up. Bloggers typically need to invest the majority of their energy and resources into just one or a few blog sites, as blogs require more resources to rank well on Google.
  • Local lead generation is less likely to face disruption from Google updates than blogging. Local search remains relatively stable through most Google algorithm updates, and most local searches aren’t triggering the new Google AI Overview that other search queries are starting to trigger more often these days. Blog visibility can experience massive changes from Google algorithm updates. Furthermore, many blogs target informational search queries, which are starting to lose traffic to the Google AI overviews that are providing high-level summaries to these queries at the top of Google so users no longer need to click into a website to get their answer. 

7. Creating a course or building a community

  • Local lead generation requires less knowledge and skill than being a course creator or community builder. Local lead generation is relatively beginner friendly because local SEO gives you ability to consistently pick out cities with weak competition. Furthermore, selling businesses on local lead generation services is often an easy process because you can let them test out your website leads for free before coordinating a deal. Creating a course or building a community typically requires that you have achieved a high level of expertise on a specific subject, or else people will consider it a scam if you can’t deliver the value your customers expect.  
  • Local lead generation requires less work than creating a course or building a community. With a simple drag-and-drop website builder like snapps.ai, you can create a local lead generation website in less than 5 hours. According to course creators from the Udemy Instructor Community, it requires approximately 40-man hours for just 1 hour of course content. Paid communities typically boast access to exclusive content that takes considerable effort to produce, and manage. With expensive courses, the students will expect on-going support & training.
  • Local lead generation requires a lower initial investment than creating a course or building a community. You can set up multiple local lead generation websites for under $200 dollars. The typical online course production cost ranges from $200 to $10,000 at least, according to Online Course Host. Building a community requires considerable content creation, marketing, and technology expenses. For example, Skool is one of the most popular platforms for hosting online communities right now and it costs $99/month.  
  • Local lead generation is easier to sell than a paid course or community. You can show a business owner the value of a lead gen site by providing them some free leads to test out, making it easier to close the sale when the time comes. Many people are skeptical about paying for online courses and community access because much of the information presented in these courses is available for free online. Although online courses and communities can provide participants with extensive value, the course creator or community owner typically needs a really solid online reputation to make sales.
  • Local lead generation sites age well while an online course or community may not. A local lead generation website tends to grow in value over time as the website can attract more backlinks, citations, and reviews to strengthen its position in Google search. Online courses and communities can become outdated over time and lose value if not updated regularly.  

8. Remote setting or remote closing

  • Local lead generation doesn’t rely on another company to provide opportunities like remote setting and remote closing do. A local lead generation business creates its own remote sales opportunities by setting up websites it owns completely and selling the results to businesses. A remote sales professional needs to get hired by a company that needs sales support to earn income.
  • Local lead generation doesn’t always require active work to generate income like remote setting and remote closing do. Local lead generation website owners can enjoy periods of passive income after the website is created and a local business owner takes the leads. Remote setters and remote closers only make income when actively contributing to the sales activity of the business they work for.
  • Local lead generation is scalable, unlike remote setting and remote closing. The ability to earn passive income allows local lead generation agency owners sufficient time to create more lead gen sites. Furthermore, many local lead generation tasks can be automated or outsourced, so local lead generation agency owners can focus more on the tasks that scale the business. Remote setting and remote closing are not scalable because both roles are just trading time for money.
  • Local lead generation is more accessible to beginners than remote setting and remote closing. Local lead generation requires proper local SEO skills that beat the algorithm but if you know the right things, anyone can beat it. Closing the deal is actually pretty easy because most business owners are desperate for more leads. People from all walks of life can find success with local lead gen with the right strategy & process. Landing a remote sales position as a beginner can be nearly impossible because most companies would prefer to fill these positions with experienced candidates.
  • Local lead generation can provide more stable income than remote setting and remote closing. Local lead generation agencies form long-term partnerships with service business owners, often charging a monthly retainer that pays out a fixed amount each month. Remote sales jobs tend to generate inconsistent income from month to month, depending on the performance of the sales professional.

9. SEO Agency

  • A local lead generation agency creates assets for itself, while an SEO agency creates assets for others. A local lead generation agency performs SEO on the websites that they own. This hinders a client's ability to fire a local lead generation agency because the client will lose access to the free traffic & leads. SEO agencies perform their work directly on a client’s website. This enables a client to fire an SEO agency after the SEO agency has achieved the desired rankings.
  • Local lead generation is often simpler to implement than an SEO agency. Local lead generation is a repeatable process that focuses on just one aspect of SEO in local SEO. The local lead generation agency owner has the freedom to use the tools and systems they prefer to create local lead gen sites. Operating an SEO agency typically requires a more comprehensive understanding of SEO and website operation, such as technical SEO, off-page SEO, and website design and development. Also SEO agencies have to compete in very competitive markets whereas in local lead gen, we can purposely avoid those competitive markets & go dominate much easier ones. 
  • Local lead generation is easier to sell than an SEO agency. A local lead generation agency creates traffic and lead flow before pitching a business owner. Therefore, a local lead generation agency can enable a business owner to experience the quality of the leads before committing to a contract, which means you're a lot more trustworthy and dramatically enhances their desire to want to work with you. We call this providing results in advance. SEO services from an SEO agency can take 6 to 12 months to start generating results for business owners in many cases. As such, convincing a business owner with limited marketing resources that they should commit to a long-term contract for SEO services to realize a potential benefit in the future can be a difficult sale.
  • Local lead generation has higher profit margins than an SEO agency. Local lead generation agencies can realize profits margins of up to 90% because overhead costs are low. Many local lead generation agency owners can perform all the necessary local lead generation tasks on their own because of the relative simplicity of the business model, so it’s possible to avoid expensive outsourcing costs. SEO agencies typically realize profit margins between 10% to 20%, with 50% being exceptional. This is because SEO agencies typically need to hire support or outsource tasks to freelancers to properly accommodate a business's needs.

Closing Opinion

We teach our students how to do SEO services for clients as well, but we teach it as a way to earn fast money. There's nothing wrong with stacking cash for a service but just know that they may not stick around long-term. This is why we also teach the importance of re-investing that money into building out your own lead gen sites, since those will be more long-term.

10. PPC Agency

  • Local lead generation generates long-term results while PPC generates temporary results. A local lead generation website can be set up once and generate marketing results and income for years. A PPC advertising campaign stops generating leads the instant the advertising campaign is turned off.
  • Local lead generation offers higher profit margins than a PPC agency. A local lead generation agency can set up and rank a website on Google for a few hundred dollars and generate up to $3,000 per month from that investment. A PPC agency is provided a paid advertising budget by their clients. Typically, a PPC agency will charge a percentage-based management fee of 8% to 10% out of the clients total advertising spend to earn a profit.
  • Organic traffic has a higher conversion rate and ROI than paid traffic. Organic traffic from search like local lead gen sites produce an average conversion rate of 2.4% and an ROI of 748% while paid traffic like a PPC agency produces an average conversion rate of just 1.3% and an ROI of 36%, according to data from internet advertising agency First Page Sage.
  • Local lead generation is easier for beginners to sell than a PPC agency. You don’t need testimonials from prior clients to sell local lead generation. Instead, you do the local SEO work upfront and show that your service is legit by letting a business owner test out the leads your website generates, leading to an easy sale. Businesses aren’t likely to put their paid advertising budgets in the hands of a novice without any actual results, which can make it difficult for new PPC agencies to land clients. Oftentimes, new PPC agencies need to create their own case studies for proof of performance by running paid advertising campaigns with their own capital, which can require thousands of dollars in ad spend and a solid offer to promote.

11. Social Media Marketing Agency (SMMA)

  • Local lead generation is simpler than a social media agency. Local lead generation entails generating organic traffic through Google. A social media marketing agency needs to understand the algorithms of multiple social media platforms, including Facebook, Instagram, Pinterest, Twitter, and TikTok. Furthermore, a social media marketing agency should be able to implement both organic and paid advertising strategies for these platforms. 
  • Local lead generation agencies can earn passive income while social media marketing agencies earn active income. A local lead generation website has the potential to earn passive income as you can automate the distribution of leads to the business owner using automation tools like CallSling. A social media marketing agency needs to be actively engaged in a client’s business by implementing social media campaigns and reporting results.
  • Local lead generation requires less client oversight than a social media marketing agency. With a local lead generation agency, you can mostly operate your websites how you wish because you own the assets and you’re just providing the results to the client. With a social media marketing agency, you are publishing content directly to the brand’s own social media channels, so they will typically require closer cooperation, such as requiring a content review process. Social media marketing clients are also likely to request regular updates on social media marketing progress to ensure you’re performing your role well.
  • Local lead generation results are easier to validate than social media marketing results. A local lead generation website sends leads directly to a business, so the business has a first-hand understanding of the value the lead provided to the business. Using tools like Callsling every phone call is recorded and tracked, which makes it easier for the business owner to understand how much they're making from the local lead gen agency. With social media marketing, it's difficult to attribute social media marketing efforts to real business results like revenue because social media typically provides an indirect influence through driving brand awareness and engagement rather than conversations. As such, it may be difficult to retain social media clients when your proof is based on vanity metrics like likes, shares, and comments rather than direct customer interactions.

Conclusion: What is the best way to get started with local lead generation?

The best way to get started with local lead generation is to join the largest community of local lead generation professionals. After joining this community, I was able to scale my local lead generation business to over $50K/month. Joining a community allows you to expedite your success by piggybacking on the knowledge and resources of others who are already thriving with the business model. It also allows you to network with like-minded people on the same mission, holding you accountable each day to achieve your goals. 

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Ippei Kanehara

$52K per month providing lead generation services to small businesses

Ippei.com is for digital hustlers, industry leaders and online business owners.

His #1 online business recommendation in 2024, is to build your own lead generation business.

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