Judy's Book To Shut Down

Excerpted from: Local Search Site Judy's Book To Shut Down at Search Engine Land (Oct. 24, 2007) by Greg Sterling

TechCrunch first reported (confirmed on CEO Andy Sack's blog) that local search site Judy's Book is shutting down and/or looking for a buyer. After struggling to monetize its traffic, the site shifted its business model to emphasize coupons and local deals. The firm had raised over $10 million in two investment rounds. This follows the sale of Judy's Book competitor InsiderPages to IAC's Citysearch and the failure of Backfence.com.

Some might be inclined see this latest closure of a local site as evidence that local's not working. The truth is that it's quite complicated with little room for error by startups. For online consumers, however, local is growing in importance. Just to put the discussion in larger context, here are some facts and stats about local that I quickly compiled:

Internet ad spending will reach $62 billion and surpass all other media by 2011; local online spending will reach $19.2 billion. Local search is projected to be $4.1 billion. Veronis Suhler Stevenson, August 2007

Local search is the second most popular online activity after e-mail
Piper Jaffray (2007)

60% of all local business searches now happen online (33% happen in print yellow pages) and 82% of the people using local search sites follow up their research with offline action
TMP Directional Marketing-comScore, August 2007

Out of the 130 million monthly unique users of Yahoo last year, 116 million of them came to Yahoo with local intent.

Hilary Schneider, Executive Vice President, Global Partnership Solutions, Yahoo!

The Internet will influence a trillion dollars in offline/local retail spending by 2010/11
JupiterResearch, Forrester Research, 2007

Here's some additional recent data on consumer usage of the Internet to find local information from WebVisible and Nielsen. I've also got some additional discussion of the Judy's Book closure on my personal blog Screenwerk.

My Take

Mr. Sack, a seasoned tech founder, has been a pioneer in the area of energizing local commerce with online tools. Via his blog, he remained very open about the lessons he was learning while leading Judysbook.

The failure of Judybook to be profitable highlights the need for:
1. a model with a new approach to monetization - membership subscriptions and ad revenue fall short
2. achieving an early break-even - minimization of advertising expenses.

Connecting With Customers

Excerpted from Connecting Clients to Customers through Social Media Optimization | 7 Pillars of Internet Marketing (October 18, 2007 – 8:25 am)

Every few years major changes take place on the internet and often times this is driven by the way the internet is used. A major shift in the use of the internet has been taking place. The shift is one of transformation from finding information through search engines and buying things through portals to one where people turn to other people for their recent in depth knowledge of an issue or experience buying a product.

Google actually finds itself in a precarious position as a company attempting to protect old revenue streams resulting from search, while simultaneously moving into new social media territories that make Google Search as we know it obsolete.

How Does Social Media Marketing work?

If you had a good experience with a realtor, and a friend asks you, "Do you know a good realtor?" Odds are you might tell them about your experience and the name of the realtor. Offline this is as old as money, possibly as old as bartering, its called word of mouth. Online when a person shares their experience about a good or even a bad experience, its called social media marketing.

Google Search relies on an old derivative of word of mouth marketing online. That derivative is powered by the ability of a person or company to put together a website and take the time to mention the value or non-value of a product or service or even a subject. It used to be technically somewhat difficult to launch a website. Not everyone knew how to do it, nor had the money to hire a pro.

My Take

Social Media Marketing is happening. It will heavily impact the local market where millions of small business owners and professionals serve the needs of consumers and other businesses.

But these business people won't engage an ad agency to energize their social marketing. They need an effective, simple tool that captures the word-of-mouth that is already happening.

Can this model be monetized? (The crucial question.)

The answer depends on whether or not the model can demonstrate to these business owners that paying for advertising after it's already made them money beats the old way of thinking. Whether it's valuable to stay close to their loyal neighbors and customers vs. to essentially ignore them with their ad $ and to spend their budget on the Yellow Pages.

My prediction - a revolutionary model - a "Connect-gine"^TM will come along.

A Better Local Ad Model

Excerpted from SearchEngineWatch:

Searching for a Better Local Ad Model
by Michael Boland

Local search is a paradox. At least, its current ad models are. In one sense, online pure plays, such as search engines, have done the best job building local search products with online mapping, social search and Web 2.0 appeal.

Local search products from online pure-plays eventually hit a wall. Ad models rely on self-service. Advertisers sign up and manage search-based ad campaigns on their own. The vast majority of doctors, restaurant owners and bricklayers are simply too busy being doctors, restaurant owners and bricklayers to become search engine marketers.

On the other hand, yellow pages publishers with fleets of eager young sales reps knock on every small business' door in town to sell, launch and optimize their online ad campaigns. If only that were the case.

The truth: yellow pages companies have this capability, but haven't yet fully executed. Why? They're staring at the potential loss of core offline revenues. Undermine a model that brings in 40 percent plus margins? Not the lesson taught in B-school.

More to the point, yellow pages publishers have what online pure plays are missing (physical sales channel), but lack what they do have (better search-based products).

The fact remains: local search players have an edge from a product development standpoint. The natural tendency to cram an offline model into an online product doesn't work.

Worlds Collide

So, local search players lack sales channels, while yellow pages publishers lack the Web 2.0 gene. Can't we breed them to create some kind of mutant super local search monster? (I call him Yattoogle.)

Buy or Build?

As for building from scratch, we're also seeing a lot of action. Citysearch announced the launch of a 150 person Atlanta-based sales center in January. Online marketing firm ReachLocal received a $55 million investment to continue building out its own feet on the street earlier this month, while Weblistic continues to staff local sales reps.

Meanwhile, hyper-local site Smalltown has built up a small but successful local ad sales strategy in the San Francisco Bay area. The company brings local businesses online with low barrier "Webcards," a de facto Web presence that is easier and cheaper than starting a Web site. Webcards also have the portability, functionality and social elements of being easily e-mailed, shared and embedded with pictures and video.

Taking it to the Streets

To put the local ad sales opportunity further into perspective, it comes down to the wide swath of local advertisers -- representing billions in untapped ad dollars -- who aren't advertising in the yellow pages. Local advertising in the print yellow pages is a $16 billion industry, according to The Kelsey Group.

"In the century or so that the yellow pages has been around, the industry only has about a 30 percent penetration of the small-business marketplace," said Marc Barach, CMO of Ingenio. "There is an opportunity to grow this with new products."

Given that many of these businesses don't have Web sites to begin with, low barrier ways to get online such as landing page or microsite offerings (i.e. Smalltown's Webcards), could complement this product bundle.

Throw in hosting and other services, and this could represent the opportunity to be the trusted source that provides the training wheels for SMBs to get online and advertising. Develop this hand-holding relationship early in a company's transition to the Internet, and you could have an advertiser for life.

My Take

A new model is inevitable. In my opinion it will be completely contrarian.

But I do not think the next model will require an army of sales representatives. After all, who sold you on using Google? Or Facebook?

It will grow like Craigslist, involve people like MLM and benefit the community like SETI.

The infrastructure (persistent broadband, mobile messaging, etc.) is in place. Users are already conditioned and ready to accept it. Advertisers would dive in to be the first ones to benefit.

The only thing stopping this is the creativity of marketers.

Tags: localsearch, socialsearch, yellowpages

Friday October 19, 2007 - 11:50am (EDT)

The Missing Metric

Excerpted from: Offline Conversion Tracking: The Missing Metric

"I know that half of my advertising dollars are wasted...I just don't know which half." It's not a joke: it's an astute observation from pioneer marketer John Wanamaker. John was a Philadelphia businessman who conceptualized the department store in the early 1900s. Today, 100 years later, we share the same problem Wanamaker faced of identifying which advertising works and which doesn't.

Online search drives offline sales

In March 2006, comScore conducted a study for Google that showed 63% of purchases by consumers who conducted online searches were made offline. This means consumers called or went to their local stores rather than purchasing an item from a web site.

With the holiday season fast approaching, small and local businesses should sit up and take notice. History repeats itself in marketing, just as in life, so there's a good chance this upcoming holiday season will produce similar statistics as previous years.

Local search behavior dictates purchase method

A Neilsen//NetRatings and WebVisible local search study revealed some interesting insights on local search behavior. The study found that consumers using a search engine to find a local service shopped very differently from a searcher on Amazon or eBay where the transaction occurred online.

According to the study, the local searcher would find a local business via search, but then use the phone 68% of the time to make contact with and/or purchase from the business.

The results of this study send two loud and clear messages: if you're a local company that is not advertising online, you should. And secondly, if you are advertising online and your company completes much of its transactions offline, you need to track offline conversions to get a complete picture of your marketing performance. And just which methods are proven to offer accurate offline tracking?

Methods of tracking offline conversions

Here are a few methods used to track conversions offline.

1. Simple Methods for Offline Conversion Tracking

2. Intermediate Methods of Offline Tracking

3. Advanced Offline Conversion Tracking Techniques

4. Graduate level offline conversion tracking

...The preferred method for conversion was the phone. This particular client does over 90% of its business by direct phone calls driven from their web site, but none of that is captured in their online analytics.

Offline conversion tracking gives you the information you need to make better marketing decisions and to better allocate your advertising resources.

Christine Churchill is President of KeyRelevance.com, a full service search engine marketing firm. The Small Is Beautiful column appears on Thursdays at Search Engine Land.

My Take


The gist of this article applies to all local businesses - they need a way to track the efficiency of their advertising.

It is revealing that most companies that spend large amounts for online advertising are struggling with monitoring which of their ad campaigns really produce sales.

What if local small business owners had the power to immediately harness and measure their most effective advertising channel - and only pay as much as they want to - and pay it after they have earned their revenue?

Wouldn't that be something?


- - Tim

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Tags: localsearch, socialsearch

Thursday October 18, 2007 - 02:32pm (EDT)

Is viral marketing the same as word of mouth?

Is viral marketing the same as word of mouth?

From the blog of Seth Godin: Marketing Wed, 10/17/2007 - 5:13am.

I got a note from a college student last week, explaining that his professor told him he couldn't use the term 'viral marketing' in a paper. It doesn't exist, apparently, it's just a new-fangled form of word of mouth.

I found the interaction fascinating ("I'm not certain what benefit is gained by arguing with an instructor" is my favorite quote from his teacher) but I got to thinking about whether the instructor had a point.

"Viral marketing" shows up 2,000,000 times in Google, "ideavirus" shows up 200,000 times. Of course, you could argue that just because millions of people are using a term doesn't make it legitimate (though you'd be wrong).

Anyway...



Viral marketing ≠ word of mouth. Here's why:

Word of mouth is a decaying function. A marketer does something and a consumer tells five or ten friends. And that's it. It amplifies the marketing action and then fades, usually quickly. A lousy flight on United Airlines is word of mouth. A great meal at Momofuku is word of mouth.

Viral marketing is a compounding function. A marketer does something and then a consumer tells five or ten people. Then then they tell five or ten people. And it repeats. And grows and grows. Like a virus spreading through a population. The marketer doesn't have to actually do anything else. (They can help by making it easier for the word to spread, but in the classic examples, the marketer is out of the loop.) The Mona Lisa is an ideavirus.

This distinction is vital.

For one thing, it means that constant harassment of the population doesn't increase the chances of something becoming viral. It means that most organizations should realize that they have a better chance with word of mouth (more likely to occur, more manageable, more flexible) and focus on that. And it means, most of all, that viral marketing is like winning the lottery, and if you've got a shot at an ideavirus, you might as well over-invest and do whatever it takes to create something virus-worthy.

And yes, I happen to think that arguing with the instructor is a very good idea.

My Take

If you are a successful business owner who sells in your local area and are not generating substantial revenue from word-of-mouth leads, then your business is dying. Your failure to generate word-of-mouth referrals indicates a structural failure in your business model.

Yet, as Mr. Godin points out, word-of-mouth is itself a decaying function. What you need to achieve is viral growth.

What if - with no additional effort - you could tie your word-of-mouth leads to a virally spreading engine? A "Connect-gine^tm". What if you could give your friends, neighbors and clients a means for passing along the leads that they normally give you - along with an incentive and a means of benefiting the community?

Now that would be cool :-)

- - Tim

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Tags: wordofmouth, viralmarketing

Thursday October 18, 2007 - 12:58pm (EDT)

Local Online Advertising Up for Grabs

Excerpted from: Times Online

Local businesses are still too hard to find on the web, but the big web companies are queueing up to help

For the most part, small businesses have been slower than big businesses in shifting marketing dollars to the internet, and it's not hard to see why: many small business owners don't have the time or expertise to learn about the new medium, and ad purveyors don't have the time or expertise to create the products and services that will work in small local markets.

Both of those things will undoubtedly change over the next decade or so. That's why a start-up company like ReachLocal can raise an incredible $68 million (£33.5 million) to position itself as the ad sales force for local online advertising.

The sleeping giants in the local ad business are the Yellow Pages companies, and they are rushing to build out their online offerings. But it's not obvious that they'll be able to translate their one-time stranglehold over sectors like plumbers and injury lawyers into similar dominance on the internet. In fact, Google and Yahoo!, with their local initiatives, are a big challenge, and lots of new players are rushing to get involved.

A new survey sponsored by a company called Webvisible shows a great deal of variety in how people do "local search." They use search engines, they use local directories, they use local newspapers, they use consumer review sites. There's a whole sector of companies - Yelp is probably the leader – whose premise is that getting a community to post reviews of businesses is the key to effective local search.

Certainly, the current experience when searching for small businesses online is often quite disappointing, with strange aggregations of generic directory listings leading to an unhelpful maze of links. A lot of money is being spent trying to do this better, but the smaller and more local the geography, the more difficult it will be for big national directory platforms to provide a good experience.

This online market, more than most, is still very much up for grabs.

by Jonathan Weber (founder and editor in chief of NewWest.Net a regional news service focused on the Rocky Mountain West in the United States; previously the co-founder and editor in chief of the Industry Standard)

My Take

The local ad market is primed for a major upgrade. Social networks will soon alter the way major consumer purchasing decisions are made.

Like Facebook and MySpace changed the social lives of high school and college students; like Craigslist introduced online/offline community shopping; soon the selection by homeowners and families of merchants, contractors and professional services will be influenced by their network of trusted friends and neighbors.

Tags: localsearch, socialsearch

Monday October 15, 2007 - 08:14pm (EDT)

Facebook LinkedIn Face-off

Excerpted from "Facebook Has LinkedIn In Their Crosshairs" by Michael Arrington

Facebook may be used for professional networking (particularly in Silicon Valley), but it sure isn’t set up to be. People’s profiles are all about their dating status, pictures, videos and other very personal information. It’s perfect for college dorm networking, but not so much for job or business development hunting.

LinkedIn, by contrast, is set up perfectly to network. You can see your extended network many levels deep, so you can quickly find out if you are connected to a person even with a few degrees of separation. With Facebook, you can go to your friends’ profiles and see who they are friends with, but you can’t go deeper into the social graph than that.

But that’s changing, fast.

• Facebook is creating friend grouping last month.
• Facebook is quietly making changes to their data structure to allow for the concept of “networking.” ... But networking was recently added as a desired relationship type to the API (note that it is not yet an option on Facebook itself yet).

Once launched, Facebook (or third party developers) could add a lot of functionality around networking. Applications could be developed that show a social graph for users who’ve said they want to network that goes much deeper than one level of friends. You could, for example, use Facebook’s people search (which is now public) to not only find people, but see exactly how you are connected to them. In effect, Facebook could build a LinkedIn-type networking application within the overall Facebook network. And that could be very bad for LinkedIn in the long run.

My Take

Promising development.

Monday October 15, 2007 - 01:08pm (EDT)