Jon Brod: "Local is Not a One-Ton Gorilla, It is 2,000 One-Pound Monkeys”

Jon Brod, executive VP, AOL Ventures, was keynote speaker today at the BIA/Kelsey Marketplaces 2010 conference. He gave us a good update on AOL’s local strategy centered around Patch, the hyperlocal/citizen journalism initiative at AOL.

Highlights from his keynote:

  • Local is the largest opportunity YET to be won online
  • AOL’s five pillars: content, advertising, communications, ventures, local
  • Patch’s mission: to improve communities and the lives of their residents through information.
  • Patch consists of i) a scalable technology platform, ii) structured data, iii) professional journalists in every community
  • Monetization: i) self-serve ads 2) Ad sales reps
  • Operating Patch is 4.1% of the cost of a like-size daily newspaper
  • AOL will soon to relaunch City’s Best brand (was dormant)
  • AOL will soon relaunch MapQuest as well

Additional notes from Local SEO Guide:

  • Patch has grown from 3 markets one year ago to 41 communities on four different states.
  • They have a LocalFund to invest in local startups.
  • AOL on the record as investing $50MM in Patch and City’s Best this year.

Brod mentioned they had this quote about local: “local is not a one-ton gorilla, It is 2,000 one-pound monkeys”.

BIA/Kelsey: More Than Half of All Ad Spending Is ‘Local"

[praized subtype=”small” pid=”66afa9c1b5e4cd2f613f200ec61d955d” type=”badge” dynamic=”true”] just released their forecast for US Local advertising revenues for the 2009-2014 period.

Highlights:

  • U.S. local advertising market will grow to $144.9 billion in 2014 (CAGR: +2.2%)
  • Spending on traditional media will decline from $115 billion in 2009 to $108.2 billion in 2014 (CAGR: -1.2%)
  • Spending on online/interactive media is projected to grow from $15.2 billion to $36.7 billion (CAGR: +19.3%)
  • Meaningful recovery beginning in 2012
  • 55 percent of all ad spending is with local media

BIA/Kelsey is also preparing their next conference MarketPlaces 2010. Happening at the [praized subtype=”small” pid=”a998a4e65a611a1cd4e2711025422ec1″ type=”badge” dynamic=”true”] from March 22 to March 24, the theme of the conference is “local verticals”.

Presentations I’m most looking forward to:

  • Opening Keynote Address: Jon Brod, Executive VP, AOL Ventures
  • Google @ Marketplaces 2010 Sam Sebastian, Director, Local & B2B Markets, Google
  • The New Content Aggregators: Rick Blair, CEO, Examiner.com
  • Keynote Address: Andrew Mason, CEO, Groupon
  • The New Directory/Marketplace Plays with SuperMedia, AT&T Interactive, Local Matters and Merchant Circle
  • BIA Kelsey: 10 Takeaways from Marketplaces 2010

I will be attending the conference. If you’d like to meet, ping me at sprovencher AT praizedmedia.com.

The Real-Time Local War Is Heating Up

A deluge of important news in the local social space this morning, all very relevant from a local strategy point of view.

  1. Yesterday afternoon, PaidContent detailed AOL’s, Yahoo’s and MSN’s aggressive plans for local. All three are attracted by potential local advertising revenues. The article says “Microsoft could integrate content from local bloggers”. As for Yahoo!, they recently “rolled out a new service called “Neighbors,” which lets users ask others in their neighborhood questions”.
  2. In this interview with Stephan Uhrenbacher, Qype’s founder, he reveals the site now has 17.7m monthly unique visitors. He also says that in Germany, Qype is ” larger than the yellow pages in terms of traffic”. From reading between the lines, Qype is thinking about implementing a game mechanism (or reward system) and a check-in system à la Foursquare, two features I recommended in my “perfect local media company in 2014” presentation.
  3. Google just shipped QR code stickers to the 190,000 most popular Google local US businesses. A QR code can be scanned/photographed by a camera phone and links to the Google profile page in Google Maps when activated. The Techcrunch article adds “Local businesses can also set up coupon offers through their Google directory page, which would turn the QR code into a mobile coupon”. Mobile + QR code + coupons = monetization strategy for the real-time Web. Another important data point: “There are now over a million local businesses which have claimed their Google local listing”. Does Google need the Yellow Pages sales forces anymore?
  4. Citysearch partners with Twitter to offer tools to small businesses. Citysearch will display “tweets” on merchant pages, offer the opportunity to merchants to create their Twitter account and offer a reputation management service. A Gigaom article says “Citysearch says it has direct relationships with some 200,000 local merchants”. These things will all be required features of any local search site within a few months.
  5. Techcrunch reveals this morning that Aardvark, the social Question & Answer service, is considering an $30M+ acquisition offer from Google. The service allows people to ask questions to their friends and to the network using instant messenging and social networks.

What it means: expect these kind of partnerships, acquisitions and features deployment to speed up as industry players try to capture market share of the real-time local/social Web. Expect Facebook to make a lot of noise as well in the next few weeks (the aforementioned Gigaom article asks “who wants to take bets on how many hours till Facebook Local launches?”). They are the 900-pound gorilla. In 12 months, we will already have a good idea who will win and who will lose in that space.

I don’t want to sound like an informercial but my company Praized Media foresaw the rise of social Q&A services like Aardvark and that’s why we introduced our Answers module (currently used by Yellow Pages Group) which enables consumers to ask local questions to their network of friends. Based on market evolution, we’re also developing a white-label reputation management service that will enable social media monitoring and small merchant Twitter sign-ups (like what Citysearch is doing) because we believe it’s going to be needed in every local media company in the future. Our real-time search module also allows any media publisher to display related “tweets” on merchant profile pages. And we’re also preparing an eCouponing module to monetize all that real-time activity. We’re basically building the whole social media toolkit for local media publishers. End of infomercial. 🙂

In Orlando Next Week For The Kelsey Group DMS '09 Conference

I will be in Orlando next week for the Kelsey Group DMS ’09 conference. I haven’t missed many of those great events over the years and I’m looking forward seeing my industry colleagues in person.

Here are the presentations/panels I don’t want to miss:

Tuesday Sept. 22, 2009

  • “Moving Multiproduct Selling Beyond Bundles”. The interesting challenge directory publishers face today is to transform their sales organization into one that’s able to sell online advertising-only, not just print/online bundles. There’s also the new real-time Web which will create opportunities to launch time-sensitive offers and coupons, requiring multiple touch points during the year. That’s something directory publishers need to improve. See this conversation between Michael Taylor and myself on Linkedin (you need to be a member of the Kelsey Group Linkedin group to see it)
  • Kelsey’s User View and Local Commerce Monitor. Always interesting data points on users and advertisers.

Wednesday Sept 23, 2009:

  • The keynote from David Swanson, Chairman and CEO, R.H. Donnelley. As RHD prepares to exit bankruptcy protection, it’s going to be interesting to see how RHD is expecting to reinvent itself.
  • “The Global Yellow Pages Leadership Forum: Answers to the Tough Questions”. This should be the highlight of the three-day conference. Six global industry leaders will discuss the opportunities and challenges of the local industry. I wonder who will replace John Kannapell from AOL who was just let go.
  • “Mobile Search & Yellow Pages: The Business Model”. Four senior mobile managers from directory publishers talk about the importance of mobile, their strategy, and the business model. Curious to ask them about their “big ideas” around mobile.
  • The second keynote of the day, David Krantz, President & CEO, AT&T Interactive.

Thursday Sept 24, 2009

  • The keynote from Donat Rétif, CEO, Truvo. I saw him speak at the EADP conference back in May but given that Truvo wants to be innovative in the directory space, it’s going to be interesting to get an update from them.
  • “Print Yellow Pages 2013: Critical Changes to the Core Product”. Very curious to see if we will finally hear about real print innovation.

The conference is held at the [praized subtype=”small” pid=”79b0fad769b11f4b8998b682a0374edd7f” type=”badge” dynamic=”true”]. If you’d like connect in Orlando, send me an e-mail sprovencher AT praizedmedia.com

In Orlando Next Week For The Kelsey Group DMS '09 Conference

I will be in Orlando next week for the Kelsey Group DMS ’09 conference. I haven’t missed many of those great events over the years and I’m looking forward seeing my industry colleagues in person.

Here are the presentations/panels I don’t want to miss:

Tuesday Sept. 22, 2009

  • “Moving Multiproduct Selling Beyond Bundles”. The interesting challenge directory publishers face today is to transform their sales organization into one that’s able to sell online advertising-only, not just print/online bundles. There’s also the new real-time Web which will create opportunities to launch time-sensitive offers and coupons, requiring multiple touch points during the year. That’s something directory publishers need to improve. See this conversation between Michael Taylor and myself on Linkedin (you need to be a member of the Kelsey Group Linkedin group to see it)
  • Kelsey’s User View and Local Commerce Monitor. Always interesting data points on users and advertisers.

Wednesday Sept 23, 2009:

  • The keynote from David Swanson, Chairman and CEO, R.H. Donnelley. As RHD prepares to exit bankruptcy protection, it’s going to be interesting to see how RHD is expecting to reinvent itself.
  • “The Global Yellow Pages Leadership Forum: Answers to the Tough Questions”. This should be the highlight of the three-day conference. Six global industry leaders will discuss the opportunities and challenges of the local industry. I wonder who will replace John Kannapell from AOL who was just let go.
  • “Mobile Search & Yellow Pages: The Business Model”. Four senior mobile managers from directory publishers talk about the importance of mobile, their strategy, and the business model. Curious to ask them about their “big ideas” around mobile.
  • The second keynote of the day, David Krantz, President & CEO, AT&T Interactive.

Thursday Sept 24, 2009

  • The keynote from Donat Rétif, CEO, Truvo. I saw him speak at the EADP conference back in May but given that Truvo wants to be innovative in the directory space, it’s going to be interesting to get an update from them.
  • “Print Yellow Pages 2013: Critical Changes to the Core Product”. Very curious to see if we will finally hear about real print innovation.

The conference is held at the [praized subtype=”small” pid=”79b0fad769b11f4b8998b682a0374edd7f” type=”badge” dynamic=”true”]. If you’d like connect in Orlando, send me an e-mail sprovencher AT praizedmedia.com

My Thoughts on the Friendfeed Acquisition by Facebook

Facebook, the leading global social network, dropped a bomb on the sociosphere on Monday by announcing they had bought the very innovative social streaming service called Friendfeed. I gave an interview to Marketing Magazine (Canada’s Advertising Age) explaining the rationale behind the acquisition. Here are the highlights:

  • First and foremost, Facebook bought a great engineering team and excellent technology assets. The 12 Friendfeed employees and co-founders were innovating at a breakneck speed. Two of the co-founders, Bret Taylor and Paul Buchheit, used to work at Google where they respectively created Google Maps and Gmail.
  • It’s all about the search war. Google vs. Facebook. Algorithmic search vs. real-time search. Machines vs. humans. Facebook had pretty much been beaten by Twitter on the real-time activity and real-time search front. Rumor has it that when Twitter turned down a rich offer from Facebook to buy them, Facebook decided to take a better look at Friendfeed.
  • The transaction has been estimated at close to $50 million by the Wall Street Journal. According to the newspaper, “The company paid roughly $15 million in cash, with the rest in Facebook stock that vests over several years and would be worth roughly $32.5 million based on the $6.5 billion common valuation an investor recently placed on the company.”
  • Such an exit for Friendfeed is very good given that their traffic had plateau-ed at 1 million users per month, they didn’t have any revenues and they never managed to become popular outside of the Silicon Valley digerati. They created amazing and innovative technology though.
  • The founders did not sell because they wanted to cash out. They already did that with their Google options (Buchheit was employee #23 at the Mountain View search engine). They must have felt integrating Facebook was the right move at the right time.
  • The Friendfeed team will pretty much become Facebook’s R&D department.

What it means: Smart move by Facebook. Very good move for Friendfeed. Working inside Facebook will give the Friendfeed team more resources to execute on their innovative ideas. It gives Facebook great technology, amazing people and faster execution.

I’ve seen similar moves happen in the Local Media industry in the last few months. For example,

  • Truvo, a directory publisher in 6 European countries, acquired yelloyello, a startup from the Netherlands, in December 2008. Truvo transformed yelloyello into Truvo Labs to leverage social media technologies within the Truvo network.
  • AOL, who recently restructured to put “local” as one of their corporate strategic pillars, bought Patch, a US citizen journalism startup, and Going.com, a US local event portal in June 2009.
  • Herold, the Austrian Yellow Pages owned by European Directories, made a strategic investment in Tupalo, a social Yellow Pages site from Austria, in June 2009.
  • Canpages, a Canadian directory publisher, acquired ZipLocal, a social Yellow Pages destination site in June 2009.

MySpace, Citysearch, Google Local, AutoTrader and AOL Local Execs to Speak at Next Kelsey Conference

The Kelsey Group organization just released the list of the keynote speakers for their next conference.

From the release, “The agenda features more than 40 influential executives from across the industry, including keynoters Jeff Berman, president of sales and marketing, MySpace; Jay Herratti, chief executive officer, Citysearch; and Chris LaSala, director of local markets, Google, as well as featured speakers Chip Perry, president and CEO, AutoTrader.com, and Chris Spanos, general manager, AOL local and search verticals.”

It will be interesting to hear from Google’s Chris LaSala to see if the recession is impacting their local ad sales or if they’re benefiting from their ROI-driven Adwords product. Also curious to hear from Jeff Berman (MySpace) to discover his thoughts on the “localization” of social networks. I also wonder if AutoTrader.com is hurting from the double whammy of the economic slowdown and the US car manufacturers meltdown or if people are doing more shopping online to get the best prices possible.

The next Kelsey Group conference “Marketplaces 2009” is in Los Angeles, March 16-18, 2009. I will be there if you’d like to meet.

Facebook Was Never Worth $15 Billion

Back in December, Valleywag and Silicon Valley Insider tried to estimate the current valuation of Facebook by calculating the price at which employee shares are transacting on closed markets.  Valleywag wondered if Facebook was only worth $1.3B while Insider said it might be worth around $2B, thereby facing the prospect of a down round in their next financing round. As we all remember, Microsoft had invested a $240M in Facebook for a 1.6% stake in the company in October 2007, valuing the company at $15B.

I don’t buy it.  Not Valleywag or Insider’s calculations of Facebook’s current valuation. I don’t buy the fact that Microsoft thought Facebook was once worth $15B (even though their press release says so).

Let’s review what I think happened. In October 2007, Microsoft announced that they had taken a 1.6% stake in the company. The Wall Street Journal wrote at the time: “Facebook sells ads on its own and also struck a deal last year that allows Microsoft to broker display ads on Facebook’s U.S. site until 2011. (…) As part of yesterday’s agreement, which lasts through 2011, Microsoft will sell advertisements on international versions of the Facebook service”. The press release adds “Microsoft will be the exclusive third-party advertising platform partner for Facebook” Interesting.  An exclusive search/contextual/banner ad deal is part of the agreement.

Go back one more year, in 2006.  Fox Interactive Media announced in August 2006 that they had “entered into a nearly $1 billion, 3+ year deal with Google to exclusively power search across most Fox online sites, including Myspace.” That deal had minimum revenue guarantees for Fox. If I remember correctly, Microsoft had bid for that business and lost it.

Go back further, in December 2005. Google and AOL announced the expansion of their strategic partnership through a $1B investment from Google in AOL (for a 5% stake).  Microsoft had previously lost that one as well.

With a fledgling search advertising business and a recently acquired ad network/ad technology (through the purchase of aQuantive in May 2007), Microsoft needed strategically to have at least one sexy partner. When Facebook exploded into the scene, they had found the deal they needed to absolutely make. I remain convinced today that the partnership business case was mostly built on the ad deal, which allowed Microsoft to claim Facebook as a partner, offer more inventory in their ad network and keep Google at bay. The small investment made sure the Facebook’s exec team remained aligned with that goal. Facebook must have made the request to include the valuation in the press release and Microsoft obliged. In a sense, this really worked for Facebook given that the Microsoft deal might have helped them strike two subsequent consecutive funding deals (for a total of $100M) with Li Ka-shing in November 2007 and March 2008.

In conclusion, Facebook raised (hopefully) enough money ($340M!) for a good runway and Microsoft got the strategic partner they needed while shutting off Google. But I don’t think Microsoft ever really thought Facebook was worth $15B.

A Look Back At 2008's Most Important News and Trends in Local Search and Social Media

As the year ends, here are, in my humble opinion, the most important news and trends of the year in local search and social media (in no specific order):

  • The major challenges of the newspaper industry. Declining print readership, challenges with monetizing the Web, user fragmentation, lay-offs, stock value decline, etc. 2008 was a very difficult year for the newspaper industry and I don’t think 2009 will be easier with the slowdown in ad spending.
  • Mobile, iPhone & the app store. The launch of the iPhone 3G and the arrival of new “iPhone-killers” devices signaled the beginning of a real tipping point in mobile local search and social media usage. The launch of the iPhone app store also created a new ecosystem leveraging the iPhone’s installed base. At the end of 2008, building an iPhone application is as “hot” as building a Facebook app was a year ago.
  • Social Media (Facebook, Twitter, Friendfeed, LinkedIn). Continued usage/buzz growth in social media especially around these four Web properties. Social and user-centric functionalities are a must-have today. Some difficulties around monetization of social media inventory though.
  • Identity (Facebook Connect, OpenID, Google Friend Connect). With the rise of social media come major challenges around personal identity on the Web. Large social properties want to become that official provider of identity. Will explode in 2009.
  • Local video. This was the hottest new ad product at directory publishers everywhere. I’m convinced that the technology is now a commodity but I’m wondering if the product itself will also become a commodity in the near future (i.e. you need videos in your local search site like you need maps, URLs and click-to-talk buttons)
  • Sobering presentations from directory publisher executives at each Kelsey conference in 2008. More realistic, a clearer view of opportunities and challenges in the industry (great assets, local search industry is booming but erosion in major metro areas, etc.). What used to be said behind closed doors is now mentioned openly.
  • Drastic drop in directory publishers stock prices. Deadly combo of credit crunch, slowdown of the economy, too much debt and market perception. Idearc is delisted after losing 99% of its value. RHD also loses 99% of its value. Similar (although less drastic) situations in Europe and Canada.
  • Microsoft’s failed Yahoo takeover (a proposed buy-out at $31 a share) occupied a good portion of tech news early in the year. This would have a created a very interesting company to compete against Google (desktop technology + social media + search). Jerry Yang, Yahoo!’s co-founder, made sure the deal wouldn’t go through. Yahoo!’s share is now hovering around $12.00.
  • AOL buys into the social-networking game with Bebo. A cool $850 million…
  • Geolocation in browser (geode, loki, Google Gears). We’ve seen the first elements of this in 2008 but this is a potential game changer, transforming every web site into a local destionation
  • Facebook replaces their own classifieds with the Oodle platform. In a move I found very surprising, Facebook outsourced local classifieds clearly showing that they don’t realize they’re in the local search space.

A Look Back At 2008’s Most Important News and Trends in Local Search and Social Media

As the year ends, here are, in my humble opinion, the most important news and trends of the year in local search and social media (in no specific order):

  • The major challenges of the newspaper industry. Declining print readership, challenges with monetizing the Web, user fragmentation, lay-offs, stock value decline, etc. 2008 was a very difficult year for the newspaper industry and I don’t think 2009 will be easier with the slowdown in ad spending.
  • Mobile, iPhone & the app store. The launch of the iPhone 3G and the arrival of new “iPhone-killers” devices signaled the beginning of a real tipping point in mobile local search and social media usage. The launch of the iPhone app store also created a new ecosystem leveraging the iPhone’s installed base. At the end of 2008, building an iPhone application is as “hot” as building a Facebook app was a year ago.
  • Social Media (Facebook, Twitter, Friendfeed, LinkedIn). Continued usage/buzz growth in social media especially around these four Web properties. Social and user-centric functionalities are a must-have today. Some difficulties around monetization of social media inventory though.
  • Identity (Facebook Connect, OpenID, Google Friend Connect). With the rise of social media come major challenges around personal identity on the Web. Large social properties want to become that official provider of identity. Will explode in 2009.
  • Local video. This was the hottest new ad product at directory publishers everywhere. I’m convinced that the technology is now a commodity but I’m wondering if the product itself will also become a commodity in the near future (i.e. you need videos in your local search site like you need maps, URLs and click-to-talk buttons)
  • Sobering presentations from directory publisher executives at each Kelsey conference in 2008. More realistic, a clearer view of opportunities and challenges in the industry (great assets, local search industry is booming but erosion in major metro areas, etc.). What used to be said behind closed doors is now mentioned openly.
  • Drastic drop in directory publishers stock prices. Deadly combo of credit crunch, slowdown of the economy, too much debt and market perception. Idearc is delisted after losing 99% of its value. RHD also loses 99% of its value. Similar (although less drastic) situations in Europe and Canada.
  • Microsoft’s failed Yahoo takeover (a proposed buy-out at $31 a share) occupied a good portion of tech news early in the year. This would have a created a very interesting company to compete against Google (desktop technology + social media + search). Jerry Yang, Yahoo!’s co-founder, made sure the deal wouldn’t go through. Yahoo!’s share is now hovering around $12.00.
  • AOL buys into the social-networking game with Bebo. A cool $850 million…
  • Geolocation in browser (geode, loki, Google Gears). We’ve seen the first elements of this in 2008 but this is a potential game changer, transforming every web site into a local destionation
  • Facebook replaces their own classifieds with the Oodle platform. In a move I found very surprising, Facebook outsourced local classifieds clearly showing that they don’t realize they’re in the local search space.