January 11, 2011
Like last year, Mike Blumenthal asked me for my thoughts on what were the most important events in “local” in 2010. I obliged and Mike put together a blog post with my answers. In a nutshell, they are:
- The launch of Twitter Places
- Foursquare’s growth
- Facebook launches Places
- The launch of the iPad
- The rise of Groupon and the explosion of the daily offers space
- Groupon rejects Google’s purchase offer
Head up to Mike’s blog to read the rest of my post.
Excellent keynote to start the first day of the BIA/Kelsey conference. Jeremy Stoppelman, Yelp’s CEO, shared with us a lot of interesting data points regarding their business.
- How they define what they do: “connecting people with great local businesses”
- 14 million local reviews as of today
- Top review categories: 26% restaurants, 24% shopping, 9% beauty and fitness.
- Expanding geographical coverage: France, Germany, Austria this year, more coming soon.
- Yelp currently has 39M unique visitors vs. 26M last year (per their Google Analytics).
- Monetization model: video ads, paid (ranking) ads, daily offers (what Stoppelman called the ”transaction business”)
The CEO then discussed the main traffic drivers for Yelp mentioning search engines like Google, Yahoo and Bing and he also listed Facebook as a great source of Web traffic. He talked about how search engine optimization (SEO) in the local space (read Google…), is becoming problematic. He doesn’t think Yelp (and other local media sites) will be able to rely on Google for traffic down the road but the good news is that the industry is heading towards “mobile”. People don’t search on mobile, they use applications. At Yelp, mobile is a startup within a startup and it’s been very successful. 30% of their total traffic comes from mobile now and a business is called every 5 seconds.
He also shared his strategies for driving distribution on mobile:
- Leveraging your web assets
- Store promotion
- Battle for on deck
When prodded at the end of the session, he mentioned that “Mobile is the future of our business”.
What it means: Looking at Yelp, it looks like they are becoming a more mature business (with all the good and the bad that comes with being “mature”). Google’s moves in local is definitely a threat but their move into mobile is creating huge opportunities for them. Monetization is probably still problematic (it’s very difficult to monetize merchant reviews) but “daily offers” might be a great way for them to speed up revenue generation. I think they are a good example of the strategic importance of mobile in local/social.
December 7, 2010
Unless you’ve been living on a deserted island in the last 10 days, you’ve heard about the presumed $6 billion Google bid to buy Groupon, the leading daily offers player. Groupon walked away from the opportunity on Friday and will probably do an IPO in the next12-18 months (like Facebook). I gave a couple of media interviews last week on the phenomenon, one in the Montreal Gazette (here and here) and the other one in La Presse (in French), but I didn’t have the chance to blog about the story yet. Let’s fix that.
Why did Google want to buy Groupon and at such a huge valuation? For a couple of reasons.
1) Google wants to make sure they’re not seen as one-trick poney by Wall Street. Because they’re a public company, they need to show huge growth to meet expectations and expand into many ad vehicles. At their last quarterly call, they highlighted the success of their display ads business. Groupon is rumoured to have annual revenues of $2 billion and it certainly would have added interesting top-line revenues and great growth rates. Not sure Google would have liked the lower margins than what they have in search advertising, but it is what it is.
2) Google wanted to buy a local sales force. Groupon is present in more than 300 metropolitan markets and 35 countries and they’ve used their capital to scale the sales team and acquire regional players in Europe and Asia. Google has signaled many times in the past couple of years that they haven’t been satisfied with their large volume local sales channel partners (read Yellow Pages) and they’re probably wondering about having their own local sales force. Over the years, many rumors have surfaced about Google buying Yell and other large directory publishers. With the Groupon acquisition off, directory publishers stock has risen in value. According to The Street, “Three small-cap companies soared on Friday. Dex One Corporation ended nearly 49 percent higher, boosting its market cap to $335 million. It owns Yellow Pages and White pages directories. Meanwhile Supermedia, which pushes Superyellowpages.com and other local ads, soared 20 percent on a huge spike in volume. Its market cap is still just around $105 million. And Local.com, a business search engine and ad network, added 8.3 percent with a $90 million market cap.”
Both Supermedia and Dex One still have huge debts pushing the total cost of an acquisition higher (probably $3 billion +). Interestingly enough, Greg Sterling reported yesterday that Yell was thinking of selling Yellowbook, their US arm. Good timing!
Could a transaction to buy a directory publisher happen? Yes, it’s possible but I wouldn’t say it’s probable. There’s probably an underlying culture clash issue, trying to match Google with a Yellow Pages company. Google will probably be tempted to look at other options before including building their own sales force. After all, if Groupon did it, Google has all the capital it needs to create their own. It might take 12-24 months, but it would probably cost less than $3 to $6B required to make an acquisition. Could they look at ReachLocal? They had 641 salespeople as of Q2 2010 and a much smaller market cap / debt (under $1B). Maybe. One thing is sure. Google will make a strategic move in that field in the coming months.
October 8, 2010
The latest rumor in Silicon Valley:
It’s no secret in Silicon Valley dealmaking circles that Yahoo has been looking at what insiders have called a “transformative” acquisition to jumpstart the company.
And while many think that has to mean grabbing one of the big content companies–such as AOL or Demand Media–right in Yahoo’s wheelhouse, sources said it is actually training its attention on, drum roll, commerce.
That would be local commerce, most specifically, companies such the hot start-up Groupon, which dominates social couponing.
Sources said Yahoo (YHOO) has been eyeing it for possible acquisition, which would put it smack dab in the hot space around local purchasing and consumer information.
What it means: not surprising that people are sniffing around Groupon. Their success has been phenomenal. Yahoo! has always been a fan of “local”, so no surprise there but I’m not sure Yahoo! would make a good deal (no pun intended!) buying Groupon though. Their valuation is through the roof and they’ve already started to expand in Europe (and I don’t think Yahoo! is trying to build up that continent). I suspect Yahoo! must also be looking at LivingSocial, the #2 player in the space, and will probably end up buying them.
September 3, 2010
YellowPages.com has recently rebranded to YP.com and it looks like they have started to promote the new brand in print publications. I found a full-page ad in the latest print issue of Entertainment Weekly. The magazine covers everything related to entertainment (movies, television, DVDs, music, videogames, etc.) in the United States. You can see their 2010 media kit here.
As the YP.com launch press release stated, “This new brand will be the focus of a multi-media national ad campaign, “Click Less. Live More,” to debut this month. Produced by San Francisco-based Butler, Shine, Stern and Partners, the campaign is based on the foundation that the YP brand knows that there is something bigger than just the words that are typed into a search bar. With the YP brand, consumers can experience more, do more and ultimately live more locally. “
The ad copy in the Entertainment Weekly ad reads “YP believes in the power of rock ‘n’ roll” with a shot of a crowd at a concert. A search brick pre-filled with “Concert Tickets” in the what field and “St. Louis, MO” in the where field appears at the bottom of the ad.
Additional elements include:
- The YP.com logo along with the new tagline “Click less. Live more.”
- A ”The new YellowPages.com” line to let people know of the brand change
- A communication line located below the search brick ”Fewer clicks to local search, reviews, maps and tickets”
- An invitation to try YP.com on mobile “Use YP.com on your mobile”
I had a couple of reactions to the ad. The first is more of an insider reaction. The choice of St. Louis in the “where” field is amusing because it’s where AT&T Advertising Solutions (who manage the AT&T Yellow Pages and owner of YP.com) head office is located.
The second was about the choice of query terms. “Concert tickets” is not an easy category because it’s time sensitive and it’s dominated by a few huge players like Ticketmaster. My search results expectations were as follow:
- I was expecting to see Ticketmaster close to the top in the listings.
- I was expecting a list of ticketed shows happening in St. Louis today.
Here is a screenshot of the results I saw (you can also see the actual search results on the site here):
- Ticketmaster is listing number 14 (way below the fold). They also appear in the “Sponsored Web Results for Saint Louis Concert Tickets” section on the right-hand side.
- I don’t see a list of today’s St.Louis events (so, no instant gratification). There is a Zvents box on top of the results (good idea!) but I have to do the same search again (bad idea).
- The first results are very relevant (the first three are St Louis Rams Ticket Office, St Louis Symphony Orchestra, St Louis Blues Hockey Club) but I still wish I would see related events attached to these listings.
- There’s a few non-relevant travel agencies at the bottom of the results page (starting with result number 20) but they don’t impact too much the relevancy of the results.
What it means: here’s what happened. The product team focused on the “what” and the “where” (which is the bread and butter of directory publishers) but they forgot about the “when”. I blogged about the “when” a few months ago. It’s a direct consequence of the real-time Web and it will be the next big tsunami to hit the Internet. The “when” can be concert tickets but it can also be “specials” and “daily deals”. With many directory publishers entering the group buying space, they all will need to get better at embracing the “when” in their main search results.