Platial Shut-Down Means Nada for Local

Platial was one of the early mapping sites that allowed individuals to create personal maps, before Google MyMaps and Bing Maps “collections.” It launched in the heady period of early “mashups” along with a number of others doing similar things. The site is now winding down, having run out of money “18 months ago,” according to an interview in GigaOm with former CEO Di-Ann Eisner.

The interview semi-rhetorically asks: “what is means for geo” and other location-oriented startups. The short answer is: while investors have been spooked local is only gaining importance as mobile becomes an increasing force in consumer decision-making.

Platial itself never really had a business model. One could sort of generically say “advertising” but that was an area the company neglected for quite some time. Eventually a widget distribution strategy was developed, but there was limited scale. In GigaOm, Eisner says that local advertising didn’t materialize as fast as the company thought it would:

I’m not saying we didn’t have our own executional issues, but we were pretty well in front. We all assumed that the location-based advertising market would heat up a lot faster than it has. We’ve worked with all of them over the years: ReachLocal, AT&T/Ingenio. Advertisers are still thinking that within a city means location-targeted, so all of the benefits we were providing around a specific location were not very real.

The truth is that it’s always been hard for small startups to succeed in local given the “chicken and egg problem.” You have to build both sides of the business to gain traction. And if there are larger competitors (e.g., Google) it’s especially difficult to succeed on the consumer side. Google Maps has been so successful and had so much investment it was all-but impossible for Platial to think it could survive. It would have needed to change its model and set a new course.

Some things have improved since the heyday of “mashups.” There are now local ad networks (beyond AdSense) that are feeding ads to smaller sites: Citysearch/CityGrid, V-Enable and more to come. So the local advertising infrastructure has matured since Platial launched.

Paradoxically, just at the time that local is really becoming important — it’s always been important but most haven’t been able to see that clearly — investors are shying away. “We’ve already placed our local bets,” said one VC recently in deciding against taking a pitch from a startup that has decided not to continue.

Local will remain important for as long as there are people shopping in physical stores and there are small businesses that service customers close to home. It’s just a question of who has the fortitude, patience and funding to succeed.

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