Why Social Media is Not Just About Merchant Reviews

Merchant review functionalities and sites are all the rage currently in the Yellow Pages industry. In the last 2 months, amongst others, we have seen:

  1. Truvo launch their own social site under the Truvo.com URL
  2. Eniro launch a beta social site under the Rejta.se URL
  3. AT&T Interactive announce the launch later this year of a social Yellow Pages site under a different brand than YellowPages.com
  4. Herold, the Austrian directory publisher, make an investment in Tupalo, a Yelp-like destination site.
  5. Canpages, the independent Canadian directory publisher, acquire assets from ZipLocal, a Canadian merchant review site.

Often called Social Yellow Pages sites, the biggest representatives of that category are Yelp (US, UK, Canada) and Qype (most of Western Europe). Both are independent, venture-funded companies. As of June 2009, more than 22 million people had visited Yelp in the past 30 days according to published internal numbers. Yelp users had written over 6 million local reviews. Qype had 9M+ unique users in May 2009 (+350% in 12 months) and 1M+ reviews.

Impressive usage numbers but an important challenge remains for these sites: monetization. For example, even though Yelp has been extremely successful from a user point of view, revenues are still low in proportion. Articles from 16 months ago mentioned Yelp’s revenues were “rumored to be sub $10 million/year” (I discussed Yelp’s monetization strategy here.)

On the other side, directory publishers, even though they’ve had for the longest-time advertiser-focused web sites, have been extremely good at generating revenues out of their web sites. For example, Yellow Pages Group (Canada) generated $C 247 million in online revenues in 2008. Over the same period, Pages Jaunes Groupe (France) achieved 471 million euros in online revenues. In the US, Yellowbook’s online revenues were up a spectacular 97.5% to $US 227 million in the last fiscal year.

Why is that? Yes, we could obviously underline the fact that these publishers represent trusted media brands, that they have large sales forces and that regular merchant contacts all play a big role in their financial success. But I would posit the moment in the consumer purchase decision process when online directories are used plays a bigger role in monetization potential.  Looking at the traditional decision process (see diagram below), online directories are clearly used when consumers are doing information search and evaluation of alternatives. Consumer reviews only happen at the end of the whole decision process, at post-purchase evaluation. Consumers will obviously look at past reviews as a proxy when doing information search but I don’t think it’s as attractive a real estate for advertisers.

buying_decision_process

Figure: Consumer Purchase Decision Process (source: Tutor2U)

I’m definitely not saying consumer reviews are useless from a strategic point of view. Consumers love to provide feedback and they love to read comments on merchants to make up their mind. I’m saying directory publishers should see reviews as one of the elements on which they build their social media strategy and one that happens at the end of the purchase cycle. It should be integrated within a more complete social media consumer purchase decision process strategy.

The filter of the consumer purchase decision process is very powerful to see who’s competing against you and to identify opportunities. Google, for instance, is clearly used by consumers when they do information search and comparing alternatives. This explains why the search giant from Mountain View is perceived as a serious threat by most directory publishers.

Enter Twitter and Facebook, the new juggernauts of the real-time conversation and real-time search world. Where do they fit in that purchase decision process? They’re definitely used for information search as well. If you search on Twitter for “Can anyone recommend” or “Looking for“, you’ll see that, every day on Twitter, thousands of people are asking for recommendations and advice. That’s why, by the way, we implemented a social media broadcast mechanism in our Praized-powered Local Answers module (used here by Yellow Pages Group in Canada) to send consumer requests to Twitter and Facebook. But I think what’s even more powerful with this new real-time conversation world is the fact that people are now actually expressing needs to the world. More than 100 people per day on Twitter say:

All these consumers are facing major life events (or know someone that are facing one) and are amazing advertiser leads for any publishers that can corral them. Consumers now want to express their needs/problems and have people/companies come to them with solutions. As I expressed in my “I have seen the future of local media” blog post, this is a new and important consumer behavior online. That’s why I believe every local media publisher will be introducing locally-relevant real-time conversation and real-time search tools within their Web sites in the next three years. That’s why I believe social media lead generation, customer and reputation management tools will become more prevalent in the next few years. That’s why publishers will introduce social ratings/reviews functionality to allow consumers to close the purchase loop after expressing needs and shopping for options. But be aware that Twitter and Facebook will certainly go after this market. This is probably the biggest opportunity directory publishers have seen since the arrival of the world wide web but it needs to be a complete strategy. Merchant reviews alone do not make a social strategy.

Eniro Signs Content Deal with Google

Google Maps -  Eniro content

The Eniro Group and Google have signed an agreement for an expanded partnership. The new agreement means that company information from Eniro will also be visible on Google Maps, Google’s local map service, which is launched today in Sweden.

“Expanding the partnership with Google is part of our continuing effort to enhance online advertisers’ visibility and increase the value of their participation in our channels. We are very pleased to have signed this agreement,” says Tomas Franzén, President and CEO of Eniro.

Google and Eniro have had a partnership since 2003 through which Eniro’s web searches are based on Google’s web indexing. Google is also a partner for paid search.

(via company press release)

Update: the Google Maps blog has the news.

What it means: in a fragmented online world, make sure your content is pushed in front of users, wherever they are. The Walled Garden era is clearly over. Great move by Eniro.

EADP Conference: Eniro and User-Generated Content

Barcelona Arts Hotel

At the EADP conference last week, I had the chance to listen to a great presentation by my friend Christer Pettersson from Eniro, the Nordic Countries directory publisher. Their online strategy has always been very progressive but this presentation has convinced me that they are amongst the most innovative directory publishers worldwide.

Here are the highlights:

  • They’ve introduced moderated reviews and ratings within their directory site a year ago with great success. They want this database to become a new competitive advantage that cannot be easily replicated by competition. They offer an opt out for merchants who don’t want it but very few have done it. Some advertisers even include their review scores within their print ad! Users love it.
  • They now offer free user-generated classifieds
  • Eniro acquired 50% of Bubblare.se, the Swedish YouTube. They’re placing a bet on the explosion of online video advertising and want users and advertisers to upload videos.
  • They want to encourage tagging
  • They want people to upload pictures and are introducing picture navigation
  • They want users to update/improve their residential listings
  • They’ve launched a corporate blog

Update: just before publishing this post, I received news that Eniro had acquired Krak.dk for 400M DKK ($72M). According to what I’m reading (my Danish is quite poor…), Krak.dk is one of the leading local search and mapping site in Denmark.

What it means: Eniro has clearly decided they would experiment with all sorts of Web 2.0 applications and features within their network of sites. Kudos!

Eniro Buys 48.1 Percent of Bubblare.se, a Video Site

Found on TheLocal.se:

Eniro has acquired 48.1% of the shares in Netclips AB, which owns Sweden’s answer to YouTube, bubblare.se. Eniro, the leading search company on the Nordic market, will also receive an option to acquire the remaining 51.9% of the shares. At bubblare.se, users can view others’ home videos and upload their own. Traffic figures released in September showed that Bubblare.se had up to 30 times more viewers for Scandinavian film clips than YouTube.

“We see exciting opportunities in video communities, video searches and video advertising. With this acquisition, we can increase the dynamic content of our services, primarily on our portals, but also in search services, such as eniro.se. Bubblare.se is a popular site in Sweden and will generate additional traffic to Eniro’s other services,” said Cecilia Geijer, Vice President of Eniro, in a statement.

Bubblare.se was started on September 1, 2006 and is also established in Norway, Finland and Denmark. The site operates along the same lines as YouTube. The only difference is the language.

What it means: Eniro, the directory publisher from the Nordic Countries, strikes again and acquires a user-generated video site. Given that they also operate a popular search engine & portal, this makes complete sense. But I think they’ve clearly positioned themselves in the very hot online video advertising market. As Michael Taylor from the Kelsey Group blog says: “While many think of YouTube and other mainstream video sites such as Yahoo! as the most likely vehicles for online video, why couldn’t online Yellow Pages emerge as a leader?”. I think Eniro made a very forward-thinking acquisition. Bravo!