This blog has been extremely quiet in the last 6 months and there’s an excellent reason for that. Turns out it’s much more work operating a company that’s successful than one that’s not! Six months ago, Needium, our social media lead generation service officially came out of beta and it became the sole focus of our company. With a full-team in place (currently at 16), we’ve started conquering the local/social space. But before we talk about where we are now, after 6 months, let’s go back a bit in time to explain the insights that lead to the creation of the service.
When I joined Yellow Pages Group (YPG) in 1999 (actually, its ancestor Bell ActiMedia), one of the first things I learned, talking to an experienced sales manager was that, the biggest competitor to Yellow Pages was actually word-of-mouth, that small merchants get most of their referrals through personal recommendations. At the time, it served as a great answer to show there was indeed “competition” in the business directory space but it wasn’t a real threat (yet!).
That thought stuck with me as we saw the arrival of new social media sites like LinkedIn. I was one of the early adopters in late 2003 (user #46,750 in fact) and I started using the site as a rolodex, adding all my contacts in there. When I quickly reached 200 direct contacts (I’m now close to 2000), I discovered that LinkedIn had become extremely useful in my role as head of online business development at YPG. I could reach out to almost anyone working in the Internet industry and it proved very convenient many times.
I realized that there was something bigger in this nascent social media space. If you could assemble a network of contacts readily available at your fingertips, you were really building this huge word-of-mouth network that you could use to ask any questions, find answers, connect with people, get recommendations and interact with brands and businesses.
In the summer of 2006, when I first met with my co-founders Sylvain Carle and Harry Wakefield (who left the company in 2009), we knew something big would be happening at the intersection of local and social. We set out to build technology to capture, aggregate, structure and make sense of local content being generated in social media, hereby creating value for local media companies and/or local advertisers. Over the years, we developed core technology expertise in local questions & answers, real-time local search and real-time local content which would become the backbone of Needium.
Early 2010, I was fascinated by reputation management software but felt these technologies were too reactive for most small businesses. I’ll oversimplify but with reputation management, you wait until someone express an opinion about your brand/business, the technology detects it and you reactively jump in to thank the person or try to solve a problem. This is not how small merchants see the world. Small merchants are proactive; they’re always promoting their business. They’re not sitting on the sidelines waiting for people to comment on them. They want to engage consumers; they distribute leaflets on the streets, they offer samples in grocery stores, they give away their business cards in networking events. Why would small merchants behave differently in social media?
Another key insights that lead to Needium was all those questions publicly being asked in social media (take a look at one of my 2008 post for an early look at that insight). You’ve all seen them: “Can anyone recommend a North East photographer for a wedding on Sat 27th August?” or “Can anyone recommend a cool/modern or cosy/lovey hotel in Berkeley, CA?”.
Thinking about local search and Yellow Pages usage, we started thinking about those explicit needs but also about life events and situations that trigger an implicit need. You’ve seen those as well. “I need to eat .. I’m hungry”, “Well Since My Laptop Got Stolen Guess I’ll Get A Macbook Or iPad .”. Taken all together, this means that, every day, millions of needs are expressed by consumers in social media. These represent a huge amount of potential leads for local businesses. Yet, very few of these needs get acknowledged or answered. What if businesses could quickly identify local leads that are relevant to them? Could they convert those into real customers? And this is where Needium steps in. We’ve created this short video to clearly explain what we do. Watch it before you continue reading this blog post.
Whats is Needium?.
Needium is a customer discovery service that monitors, identifies new local business opportunities in real-time based on expressed explicit and implicit needs found in Twitter. These opportunities are surfaced in a dashboard where Needium community managers select which consumers to engage with and we do that using the merchant’s own social media presence. Needium is invisible in the whole process.
Basically, with Needium,
- We create the social media presence of a merchant if they don’t have one (Twitter and occasionally Facebook and Foursquare)
- We identify business opportunities in social media for them
- We engage in conversations with potential consumers
- We transform those conversations into sales.
- We listen and reply to existing consumers.
Our retail price for the service is $150 per month, no set-up fees.
Using hundreds of keywords and expressions, our semantic formulas surface relevant tweets based on merchant categories (restaurants, hotels, bars, auto dealers, plumbers, etc.). We currently cover 88 business categories in 73 cities in North America. Altogether, we cover 197,548 Km2 of North American metropolitan areas.
We currently have 300+ advertisers using Needium and are growing at 30% per month in the last few months. We’ll reach a thousand advertisers by the end of the year. Our sales strategy uses a two-pronged approach. First, a small local sales force in Montreal has enabled us to quickly build up revenues but most of all, it has allowed us to refine the sales process iteratively.
That’s key because our core sales and distribution strategy is executed via large-scale local media sales channels. We have a white-label platform and processes and a wholesale price based on volume. Reseller either bundle the service within an existing offer allowing them to increase share of wallet by having a solid proactive social media solution or as a standalone service. Eight sales channels are presently reselling the white-label version of our service. That includes four large North American local media publishers who have started reselling the service in the last 8 weeks and we’re starting to see some explosive sales from a few of them.
We’ve pitched the service to hundreds of potential advertisers, sales channels and venture capitalists. Here are the most frequently recurring questions about our business:
Q: Right now, you’re mostly focused on Twitter. Is there enough activity in Twitter to create a robust and scalable lead generation business?
A: Yes. Twitter recently disclosed that they generate 200 million tweets a day. Out of those, in all the cities we cover, we’re indexing 10 million tweets a day (and growing as we expand into new cities).
Q: How do you know if a tweet is “local”? And are there enough “local” tweets?
A: we use implicit and explicit geo-location. Explicit is obvious enough. It’s the location shared by the Twitter user. Implicit is derived by words used in tweets like city names, neighborhoods, points of interest, merchant names and local events. And if you’re wondering about volume of local tweets, these examples are telling:
- Los Angeles: 1 million+ tweets
- London, UK: 1 million+ tweets a day
- Atlanta: 800,000+ tweets per day
- Chicago: 700,000 tweets per day
- Washington, DC: 600,000+ tweets a day
- Toronto: 500,000+ tweets a day
- Boston: 400,000+ tweets per day
Q: Are there enough local needs being expressed?
A: Yes in every B2C business categories. For example, we’ve been able to extrapolate that about 10% to 15% of all local tweets are related to food, entertainment and travel needs. Right there, you find a substantial volume to sustain thousands of advertisers in every large metropolitan area in North America and the UK. Other more specialized categories like dentists for example will see a few hundred leads per day. We are also working on integrating other social networks where “needs” are expressed: Facebook, Yelp, LinkedIn, Foursquare, Localmind, etc. to increase that number even more.
Q: Do small merchants understand what Needium does? Do they require a lot of education?
A: They understand quickly because they already know what Facebook is and they’ve heard of Twitter. They’re often Facebook users through a personal account and understand that Twitter is similar. Most of them don’t have a corporate Twitter presence. We show them in real-time the local opportunities they’re missing out and they understand the need to have a proactive presence. Our direct sales team can close the sale in one meeting if the right decision-maker is in the room.
Q: Is Needium generating return on investment for the advertisers?
A: Yes. Needium helps increase consumer awareness, strengthen loyalty, increase social media follower count and drive store visits and sales. As soon as you can show a few great conversations where consumers say they’re going to come visit you or tweet that they visited following a merchant suggestion, advertisers are extremely happy. Most telling, our churn rate is in the single digit percentage, much lower than other popular online products.
Q: Can you prove that you’ve generated an actual sale?
A: Yes and no. We can anecdotally but we don’t purely sell the product on “leads”. We sell the service on a variety of metrics, number of tweets sent, conversations, number of followers being three key ones for most merchants. Advertisers see the value of the conversations we’re generating but they also see the value of having an active Twitter account and new followers joining month after month. We’ll soon be indexing Foursquare and Facebook check-ins to track actual visits following a Needium conversation but we want to get closer to a pay-for-performance model. We want to explore the pay-per-call model and the pay-per-action model. Is there a pay-per-check-in model in the future? A revenue share on transactions? Maybe.
Q: Don’t consumers think what you’re doing is spam?
A: We’ve sent over 40,000 tweets so far and only a few hundreds have generated a negative reaction. This is much lower than I expected originally. This is key for us as we don’t want to create a product that’s seen as spammy or in a negative light. We want to add value to the ecosystem and even if that number is extremely low, we’ve learned from them and know which situations trigger negative reactions.
Q: How different are you from the hundreds of social media monitoring tools out there?
A: We don’t see ourselves competitive to social media monitoring solutions. We’re focused on “consumer need” discovery, which leads to commercial conversations for our advertisers, something that’s highly monetizable. It certainly has more upside in the long term than pure social media monitoring usually priced at $10 to $50 a month. We’ve shown that the service can sell for $150 per month and a performance-based component will probably bring us higher revenues. My experience with local merchants has shown me that only a small percentage (5%?) will be sophisticated enough (or have the time) to operate social media tools themselves. By partnering with large local media publishers, we’re going after that other 95% who will not buy self-serve and will not operate tools themselves. Finally, through the API we’re developing, we will be able to integrate Needium in any social media monitoring solutions providing instantly the local lead gen portion as a paid service.
Q: Any additional learnings?
- SMB advertisers are hungry for social media solutions tailored for them but they need managed service. For the bulk of SMBs, self-serve still doesn’t work.
- Small merchants can outsource their social media efforts without losing credibility or their voice.
- At the intersection of local and context (need expressed), consumers welcome conversations with businesses.
- B2C works much better than B2B because companies and company owners are not yet expressing corporate needs in social media (although nothing prevents them!).
- Large local media companies sales forces can easily sell Needium
When we set out to pivot Praized Media to Needium last year, we knew we were unto something big. I had created DirectoryPlus at Yellow Pages Group, an online ad product that’s very successful, and I know what a great local ad product feels like. Needium is my next DirectoryPlus. This will be a huge space. Our early success has generated a lot of good buzz. We’ve shown the product works, that advertisers will buy it, that it’s generating ROI, that sales channels can sell it and that it can generate explosive revenue growth. We’re now heading for breakeven and, with the support of our current VC firm, we might not need funding from a new VC. Still, we’ve had meetings in Canada, in Silicon Valley and on the East Coast to see if there’s an opportunity to raise a new round of funding to accelerate our growth. The best compliment we often get is “We’ve never seen this” and “you guys are onto something” (if you’re a VC, you can see our AngelList page here).
In addition, we’re always looking for new sales channels to resell our white-label service. If you’re interested, send us an e-mail at firstname.lastname@example.org. This has been an interesting ride and I’ll try to keep you updated regularly over the next six months.