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.

Praized Media News: Praized Media Announces Partnerships with Yellowbook, Yellow Pages Group And Localeze

We’re very excited today to announce pre-launch partnerships with three world-class organizations: Yellowbook, Yellow Pages Group and Localeze. More details in the press release:

PRAIZED MEDIA POWERS UP FOR LAUNCH, ANNOUNCING PARTNERSHIPS WITH YELLOWBOOK, YELLOW PAGES GROUP AND LOCALEZE

Local Search Platform Prepares for Public Beta Launch this Summer; Builds Service with Distribution Agreements and Millions of Local Business Listings

MONTREAL, Quebec – June 25, 2008Praized Media, Inc., the first distributed local search platform designed for social media, today announced strategic partnerships with leading local search providers, bringing the new company to the forefront of the local search industry. Praized has formed partnerships in the United States with business directory and data provider, Yellowbook, the nation’s largest independent publisher of print and online yellow pages, and Localeze, the largest online content manager serving local search engine publishers, businesses and ready-to-buy consumers. In Canada, Praized has partnered with Yellow Pages Group Co, Canada’s leading local commercial search provider. Praized is building a platform that will help social media publishers capture and organize local conversations occurring within their communities, and plans to launch its public beta this summer.

Yellowbook and Yellow Pages Group Turn to Praized to Reach Social Media Users
Praized has formed distribution agreements with Yellowbook, whose yellowbook.com network was recognized as the top gaining web property in the US by comScore in April 2008, and Yellow Pages Group Co., positioning the company for further success and leadership in the local search industry. Praized communities will have access to direct links to relevant local search results on yellowbook.com and YellowPages.ca websites, providing truly comprehensive search results and options for users.

“Yellowbook is focused on reaching more users in the social media landscape and now through Praized’s innovative platform, we will be able to instantly deliver targeted, relevant local business information to all types of Web communities that we have not been able to reach in the past,” said Patrick Marshall, chief new media officer at Yellowbook. “We are excited about this opportunity to reach these active online audiences and to be an integral part of the Praized platform from the get-go.”

Immediate Access to More Than 17 Million Local Business Listings
Praized has also formed data partnerships with Yellow Pages Group Co. in Canada and Localeze in the US, a company that delivers the largest, deepest, richest and most accurate set of local business content verified directly by merchants. These partnerships will provide Praized communities with access to a pre-loaded database of more than 17 million searchable, North American business listings.

“Our partnerships with Yellow Pages Group Co. and Localeze demonstrate the data-rich, robust local search platform that Praized will offer its multitude of communities across the Web,” said Harry Wakefield, chief executive officer at Praized Media. “By working with these comprehensive local data companies, Praized’s platform will provide relevant, quality content to its communities and create valuable local search user experiences.”

Praized will be announcing the public beta launch of its platform and first Praized communities this summer.

Source: Praized Media corporate Web site