Yodle Gets More Funding, SMBs Still Elusive

picture-121Yodle announced a $10 million C round this morning (funding details covered on Techmeme and related articles). Yodle has a technology platform but is positioned more as a direct sales channel, like ReachLocal. Marchex and WebVisible are local SEM platforms that offer fulfillment and management for other sales channels (i.e., YP, newspapers).

Yodle CEO Court Cunningham is one of the most forthcoming of the executives in this segment. He had previously told me that he thought the company was on track to be profitable by Q1 2009 but the economy has set that back apparently. TechCrunch reports that the company will be profitable “within six months.” It also says the company has roughly 5,000 advertisers.

Five thousand is some kind of magic number it would appear: StepUp had about 5k advertisers when it sold to Intuit and Merchant Circle said previously it had around 5K advertisers. However ReachLocal had roughly 12K advertisers, as of Q3 last year. By contrast, YP publishers have hundreds of thousands of SMB advertisers. Google may also.

None of the SMB/local search marketing firms has broken out of the pack, partly because no one has done much visible marketing for themselves — not even YouTube videos.

Over at SEL I’ve written up some data from WebVisible-Nielsen on the gap between online consumer behavior and SMB ad spending. This is something I’ve written about many times in the past, but the data do a nice job of showcasing that gap.

Specifically: 26% of SMB survey respondents have used paid search while 82% of consumers use search engines (the #1 method) to find local businesses.

Consumer usage trends over the past two years

picture-111

Source: Nielsen-WebVisible (1/08), n=4,000

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16 Responses to “Yodle Gets More Funding, SMBs Still Elusive”

  1. B. Chandra Says:

    Interesting data Greg. Yodle and others have affiliate programs, but they seem to operate them passively. If they actively courted some of the local sites with a significant user base- perhaps like AreaConnect or YellowBot- which may not have built out a sales staff- they might put their brand in front of more SMBs.

  2. Greg Sterling Says:

    More marketing is in order regardless. They could do a range of things pretty cheaply I would imagine.

  3. Joe Says:

    Still a lot of challenges around finding the positioning that resonates with individual merchants across the board. Most of the success has been found so far by verticalizing. All you have to do is listen to the various executives pitch at the last Kelsey to see the marketing messaging and differentiation challenges they are all wrestling with…

    http://www.wellcomemat.com/ca/santa_clara/yodle-pitches-three-small-business-owners/events/phil-thomas-di-giulio/videographer/videos/0F96898DFE.html#wrapper

    (Marchex, Metrix4Media & Network Solutions also in there)

  4. Greg Sterling Says:

    Yes, very difficult for them to differentiate in an elevator pitch.

  5. Jake Says:

    Be carefull not to give Yodle any credibility or recognition. We are talking about a business with dubious intent. Full scale boiler room sales aproach ( telemarketing w/70 to 100 calls per day etc) no regard for client results, the worst of the worst. Tainting the waters for all attemting to actually provide the SME with real results. One of the biggest hurdles all of us in local face with search and the SME are the sins of those that have come before us. There path to “profitablity” will be conditional on there ability to outsell their churn rate.

  6. Greg Sterling Says:

    Where does your information come from on the “full scale boiler room sales approach”?

  7. Jake Says:

    Directly from current and former employees. Im sure with your network this would be easily verified. One great indicator is to call some of there new customers. SME’s i personaly talked with recently characterized their interaction with Yodel sales reps as “harrasing” .

    Im also sure this post will be removed, it was meant more as a caution to all, as an awareness that all is not what it may seem on the surface.

  8. Greg Sterling Says:

    Not going to remove the post.

  9. Court Says:

    Greg – Thanks for covering this round of funding for Yodle. As you point out, the data suggests that SMBs have been slower to adopt search engine marketing — and we at Yodle feel that we are doing the hard work of helping to educate the SMB customer.

    It’s an educational issue that takes a substantial one-on-one conversation, which is why Yodle has invested so much in building our sales force of over 125 people – to help SMBs learn more about the entire local online landscape.

    Regarding the posts made on this article that suggest we operate without regard for client results, this is absolutely false and unsubstantiated. And as for our sales approach, I’m proud of our team of smart, dedicated Sales, Product, Marketing and Support people working together and delivering great results to SMBs. They’re doing so ethically and proactively on behalf of our customers.

    Finally, an indication of the quality of service and results we deliver as well as a key driver of our 700% YOY growth, is that 1/3 of our new customers come through referrals from happy customers.

    Court
    CEO
    Yodle

  10. Matt M Says:

    Greg,
    It seems you expected to see more visible marketing from this group of companies.

    Do you think they’ve missed out by not investing more in this sort of thing?

    Do you suggest they do more?

    If so, what do you think should be the focus of their campaigns?

    Matt

  11. earlpearl Says:

    Greg:

    I just fielded my first sales call from a reachlocal salesperson and immediately went to your site to see what had been written. I thought I’d comment on the most recent blog post referencing reachlocal; this one which referenced 12,000 customers as of 3rd quarter ’08. I suppose a more germane article was the one that you wrote wherein they captured $55 million in venture funding.

    In any case it is a disservice to SMB’s in my estimation. Reachlocal sells/resells PPC. The sales call emphasized PPC, their ability to place ads everywhere, some technilogical stuff that hopefully would give customers more value, emphasized ROI, etc.

    When I asked about organic and maps rankings the sales person fairly adeptly worked to move me off the topic. I asked about customers of my general ilk….he couldn’t provide any right off the top of his head…he was going to have to research that.

    How misleading to the world of smb’s that for the most part are mystified by effective use of the web and where and how they should put their ever shrinking ad budgets to best utilize the web.

    I’ve been pretty web smart for years, though I continue to learn and be exposed to ever more effective methods. Of interest, in speaking with an effective full service web marketing firm recently and discussing things my own businesses could do….and their effectiveness…versus how his firm could provide services on a level that gives good service and keeps his firm profitable…..he referenced me as one of those “pain in the arse” clients….that wouldn’t be effective for him. Ha ha…how true. I was in his shoes as a vendor for years.

    In any case the sales pitch that discounts search to grab as much money as possible for PPC is a sales pitch that does massive disservice to the SMB.

    Most recently I noticed one hole in a very comprehensive marketing effort on the web for one of our businesses. For this one effective phrase our relatively highly ranked site is overwhelmed in search via an authoritative one-map (of recent appearance) a competitor ranking above us with a space grabbing authoritative ranking that includes site links into the competitors pages. We rank 2nd organically.

    We also dominate PPC with the 1st ranked PPC ad.

    The impact is more revealing than the many phrases in which my business ranks first; some with organic #1 rankings, some with #1 rankings and authoritative ranking with site links into our site, some with authoritative one maps and the #1 ranking ranking organically w/ an authoritative site with site links into our site.

    All are accompanied by PPC ads in which we are either first or second.

    How dramatically our traffic has fallen off for this one phrase since the organic visibility has been driven down by a huge web page real estate sucking authoritative one-map and below it a #1 organic listing with site links. And that includes the visibility of a consistent #1 PPC ad for our site.

    It is the clearest indication of the critical importance of organic rankings and high maps visibility. The PPC reporting shows how minimally we are capturing traffic for that particular phrase. Fortunately for us it is one of about 20 significant phrases that work for us and then myriads of others that contribute to widespread visibility.

    I do so hope that David Mihm’s newest effort is successful and visable to the SMB universe.

    I realize reachlocal is one of very many viable web marketing/advertising alternatives to the SMB community. Unfortunately most or many of them feast on lack of knowledge and understanding by the smb community.

    Dave

  12. matt martone Says:

    I would disagree with Dave.

    I don’t think its fair to say that companies like reach, ‘feast on lack of knowledge and understanding by the smb community.’

    I have heard other search pro’s say this. But I think they’re taking for granted the value companies like reach and yodel bring to smbs.

    Reach – these companies execute and manage ppc campaigns across yahoo, google and msn…the smb owner rarely goes beyond google on her own.

    Cash and time savings – smbs that do venture into local search often spend a bunch of cash learning the ropes and I can only imagine the amount of time they would spend setting up and managing ppc campaigns across all major engines…it’s just too much for a smb owner to handle when she’s still got to get payroll done, complete the project she just won, hire a new employee, train another and make it to her son’s ball game on time.

    Companies like reach and yodel are low cost solutions for smb’s looking to get online. For that low cost they tend to capture some pretty valuable long tail traffic, provide the smb with a greater likely hood of converting and tracking that lead as well as an easy to use panel to manage the lead. (or at least that the case for yodel. Im less familiar with reach)

    In the case of yodel, they take it a step further and provide basic websites optimized or conversion. Those sites alone are worth more than yodle’s setup fee.

    That’s really the value of these companies. They put smb’s in front of more local customers at a low cost and provide an easy to use dashboard.

    I don’t think there models are predatory at all.

    Matt Martone
    ClixLocal

  13. Greg Sterling Says:

    Dave:

    I agree that most of the offerings for SMBs in the market are incomplete. The businesses themselves often don’t know enough to penetrate the claims or know what they should be looking for.

  14. John Says:

    I’m a web designer working with a client who is going to use Yodle. My concern is the mirroring of the website to a .net and the changing of the businesses phone number so things are routed through Yodle. I think that in itself is confusing to the consumer, AND my real concern is what Yodle does with the Phone Numbers of potential clients it collects. I guess my question is . “Does Yodle collect the phone numbers of clients who try to access my clients businesses through yodle’s phone forwarding, AND do they sell what could be MY potential clients phone numbers as leeds to other direct marketers? If someone could answer this I would greatly appreciate it!

  15. Greg Sterling Says:

    John: Don’t know the answers to your questions but I wouldn’t imagine that Yodle would sell your client’s number as a lead. I hope someone else can answer your question re the mirroring strategy. ReachLocal does this as well.

  16. Court Says:

    Hi John,

    This is Court Cunningham, CEO of Yodle. We have multiple ways to implement a client website one of which involves a dynamic mirror or reverse proxy which you reference above. This is pretty standard in the industry and does not hurt SEO as we block indexing of the mirror site. The client can continue to to use their main phone number on their primary site.

    In terms of consumer phone numbers and leads. We do not resell leads multiple times. Unlike other lead aggregator we work exclusively for the merchant. any call or web form is directed exclusively to him and NOT resold or reused in any way.

    If you you have any other questions please email me at press@yodle.com.

    Thanks

    Court

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