Jake Winebaum: “An Incumbent’s Brand, Scale and Business Model are Both Blessings and Curses”

Jake Winebaum, President, RHDi, CEO, Business.com, took the stage yesterday afternoon with a very interesting keynote address at the Kelsey ILM 07 Conference in Los Angeles. Winebaum joined RHD three months ago following the acquisition of Business.com by RHD in July and he offered his first observations on the local search market and the blessings/curses of being an incumbent publisher.

On the blessings and curses of being a media incumbent, he listed “brand”, “scale” and “business model” as both blessings and curses with the only differentiator being strategy and execution.  RHD has a great brand with Dex but that brand does not necessarily mean local search.  Scale (especially in sales) can make you very successful but at the same time can be very bureaucratic. The yellow pages business model is an amazing one as it is an pure advertising model with great cash flow and margins but it’s tempting not to question it and protect its large margins.  He added that incumbents usually start with a defensive strategy when competitors attack and that they need to attack their own business in order to be win in the long run. He concluded that the strategy needs to be focused on offense, that it needs to take into account the needs of both advertisers AND users and finally that execution has to be efficient and crisp.

On his first observations about local search, he listed the following challenges:

  • Local search is fragmented from both a user and advertiser point of view.  To compete effectively in local search, companies have to aggregate a critical mass of local queries and local advertisers to create a true performance-based ad marketplace.
  • The IYP user experience is compromised by selling rules as it is built on print model and rules. It needs to become relevancy-based.  Companies that create a better match between users and sellers will create more loyal users and generate better ROI for the advertisers.

He also listed the following opportunities:

  •  The yellow pages advertiser base and sales force offers unmatched market coverage and advertiser penetration.  Companies that effectively leverage their existing sales force and advertiser base will be winners in local search.
  • Ad dollars follow usage. As the local search market is in its early stage of development, local usage currently exceeds local advertiser adoption. Companies that make it simple and easy for SMEs to harness the Internet efficiently and effectively will be winners.
  •  Vertical user experience. Current local search user experience is generic. Companies that can aggregate deep vertical local content and create unique vertical user experiences will be winners.

What it means: again a very honest look at the local search market from one of the top executives in the US directory industry.  I had the same feeling when I listened to Scott Pomeroy at the last Kelsey conference in September.  I think Winebaum is right when he says it’s now time for clear strategy and crisp execution.

 

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Kelsey ILM 07 Conference: Next Week!

I am attending the Kelsey Group’s ILM 07 conference next week in Los Angeles (e-mail me at seb AT praized.com if you want to connect). Taking a look a the various speakers and presentations, here are the ones I’m most looking forward to:

Kelsey ILM 07

Wednesday November 28

1) Industry Overview by the Kelsey Group Analyst Team. Always interesting and insightful.

2) Jake Winebaum, President, RHDi, CEO, Business.com. I’m dying to know how RHD will leverage Business.com in their core strategy.

3) Jay Herratti, President, Citysearch. Will Citysearch’s strategy change with Herratti on board?

Thursday November 29

1) Chamath Palihapitiya, VP of Product Marketing & Operations, Facebook. Will we learn about Facebook’s local strategy?

2) The “Localized E-Commerce” panel. I’m a strong believer in the “last-mile of local search” (local product inventory, in-store navigation, tuangou, etc.) but it’s very difficult to execute.

3) The “Future of Local Mobile” panel. As local and mobile is on the verge of exploding, this will either be an incredible panel or will be very boring.

4) A Conversation With Webpreneur Jason Calacanis. Now, this should be fun!

Friday November 30

1) Marchex and The Vertical Opportunity in Local. Marchex has some amazing local assets (localized URLs, VoiceStar, SEM platform, etc.). I’m always interested in learning more about their local strategy and how these assets work together.

2) Injecting ‘Social’ into Local Media. It’s the theme of the Praized blog…

For people attending, see you all next week!

News Grab Bag: ContactAtOnce!, Bret Taylor and Jim Norris, DexKnows.com, New Headings in Canada

A selection of some of the praized-worthy news in the last few days:

1) ContactAtOnce!, a provider of presence-aware solutions (click-to-call, IM, etc.) just announced that BargainNews.com, one of their customers, improved the conversion rate of its auto classified website by 77% after adding the ContactAtOnce! service (see screenshot below) to their enhanced advertising packages.

BargainNews Listing Contactatonce

2) Bret Taylor and Jim Norris (both seen below), two of the masterminds behind Google Maps and several other Google products, have joined Benchmark Capital as “Entrepreneurs in Residence.” This gives them paid positions to hang out at Benchmark’s offices on Silicon Valley’s Sand Hill Road and think through starting a business. They have a specific idea in mind, but are secretive about it, telling VentureBeat only that it’s a “consumer Internet” company. I’ve had the chance to work closely with Bret when Google launched their Local site in Canada and it was great fun. I wish them both good luck! (via VentureBeat)

Bret Taylor Jim Norris Google Maps

3) R.H. Donnelley officially launched DexKnows.com, their new local search web site powered by Local Matters (previously known as Dexonline.com). It now includes comparison shopping, a better mapping experience and some personalization tools.

DexKnows.com home page

4) Yellow Pages Group in Canada released their latest heading modifications. It’s always interesting as it gives us a perspective into changes in culture and society. Amongst others, Pilates, Organic Products, Geothermal Energy, Tapas, Brunch, Vegetarian & Vegan Foods are in. Telephone Booths, Shoulder Pads, Chewing Gum and Buttonhole Makers are out.

Industry News: Agendize, Mobivox, ClearSense

A potluck of industry news this morning:

Agendize previewed some usage data in their latest newsletter regarding increased call volume when click-to-call is combined with a click-to-save functionality. According to their release, “a major European online directory publisher who recently added AgendiZe Click-to-Call to the already-implemented Click-to-Save & Share options experienced a 90% call volume increase in the January – March time frame compared to the last three months of 2006”.

ClearSense, a subsidiary of World Directories, announced a strategic alliance with LocalLaunch!, a subsidiary of RHD, to help World Directories sell SEM products to their SMEs.

Mobivox, a Montreal-based mobile application company, announced the beta launch of its hosted service that allows people to bring Skype to any mobile device without downloads. The service is now available in 23 countries.

Insider Pages Acquisition May Be Announced Next Week

According to TechCrunch, InsiderPages has been sold to a public company. They add: “Our understanding is that the acquisition price is more than the total capital raised by the company, but not by much.”

SFDaddyo commented that “Rumor has it that they were for sale for less than $10 million”.

Peter Krasilovsky adds on The Kelsey Group’s blog: “I would speculate that possible purchasers are probably CitySearch, Yellowpages.com, or RH Donnelley. Theoretically, Yellowpages.com and RHD would have the most to gain from such an acquisition, since they could use the 600,000+ reviews as a building block for their own review archives. Yellowpages.com, in fact, has just rolled out a review feature, and it is going to be tough to ramp it up quickly. They could also use Insider’s crack tech team. But some people’s money would actually be on CitySearch as a buyer. While CitySearch wouldn’t incorporate the technology, it would like to get ahold of the 3 million+ unique viewers that come to the site every month. It could also gain from SEOing all the businesses that are covered. I bet there isn’t even ten percent overlap with CitySearch. Theoretically, City could also integrate “Insider Advice,” a Yahoo Answers-like feature. Still….$9 million or so is a lot for what are –basically– aging reviews.”

What it means: I had tried last week to do a “back-of-the-envelope” valuation model (based on the Switchboard.com acquisition by InfoSpace) which put their value at around three to four times the total raised by the company. If TechCrunch is right (and they’re usually pretty good!), my model was faulty as it looks like they we will be sold for a little
bit more than $10 million. Which might mean that the original investors will not get much out of the transaction (there were two investment rounds). I’m not sure Citysearch would get much out of Insiderpages though. I suspect the acquirer might be one of the big three US directory companies (YellowPages.com, RHD or Superpages).