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.

Jean-Pierre Remy Named CEO of PagesJaunes Groupe

On May 17th, the Board of Directors of PagesJaunes Groupe appointed Jean-Pierre Remy as Chief Executive Officer to replace Michel Datchary, as of May, 25th, 2009. (…)

Jean-Pierre Remy, 45, graduated from Ecole Centrale Paris and holds a PhD from HEC. After having spent several years as a Partner at Bain & Company (specialized in Internet and new technologies), Jean-Pierre Remy founded Egencia in 2000, now a worldwide leader in corporate travel. Following the acquisition of Egencia by Expedia in April 2004, Jean-Pierre Remy was appointed as European and then Global Managing Director in charge of corporate travel for the Expedia group, and was a member of the Executive Committee of Expedia Inc.

via EuroInvestor.co.uk – PAGESJAUNES GROUPE: Jean-Pierre Remy Appointed CEO of PagesJaunes Groupe.

What it means: when a CEO is replaced, it’s always interesting to look at the background of the new executive that’s coming on board. It helps to understand what will be expected of the company in the next three to five years, especially when he replaces someone who’s been in that job position for a long period of time (Datchary had been the head of Pages Jaunes France for 13 years and had joined the company in 1979).

Remy (his Linkedin profile is here) comes from management consulting (Bain) where he ran the Internet practice and, according to this bio, “he advised large international companies on their growth strategies, new ventures, mergers and acquisitions, and reorganizations.” He also has a PHD in Strategy from HEC Paris. But he is primarily an entrepreneur, founding Egencia in 2000, a corporate travel startup that was later acquired by Expedia (in 2004). He had been a senior executive at Expedia since the acquisition and resigned two weeks ago. So, in terms of skill set, he has Web, entrepreneurship, strategy, growth, M&A and management expertise and he’s had the chance to work in an industry (travel) that was severely disrupted by the Internet and in a large company in that space (Expedia).

So, I suspect he will be looking at implementing strategies to properly transition Print to Online (more aggressively), possibly looking at key online acquisitions to grow. He will hopefully bring an Internet culture and an entrepreneurial management style to the company while having a good understanding how a large organization like PagesJaunes Groupe behaves to avoid sending it into complete chaos.

Pages Jaunes Launches Paris in 3D

Just found this. Pages Jaunes, France’s official directory publisher, just launched 3D versions of Paris and Rennes. You can see top tourist attractions in beautiful 3D glory and you can search for businesses as well. Their web site mentions that it was done in partnership with Archividéo, the City of Rennes, the Institut Géographique National and InterAtlas.

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What it means: beautiful execution. I am a strong believer that we will eventually navigate and find businesses through 3D interfaces. I think Pages Jaunes Groupe in France has taken yet another important step to continue locking up France’s online market via great innovations.