There are many people who may never forgive MerchantCircle for its early “robocalling” customer acquisition strategy. I’m told by the company that’s not happening any longer. But let’s put that issue aside for the time being because MerchantCircle is doing some really interesting things that are worth discussing.
As background for the rest of this post, I was recently told by Darren Waddell, MerchantCircle’s marketing VP, that the company now has 750K small businesses that have claimed a listing or are engaged with the site’s services to some degree (this is obviously not an advertiser number). He said that “member” number would be over one million before the end of the year.
While many of these merchants aren’t doing a great deal on the site (or may have shown up only once), there are many thousands of SMBs that are very actively using it to market themselves. And that’s turning into spontaneous Twitter recommendations in some cases:

Another impressive statistic: Waddell said “We’re driving 35 million page views, 17 million uniques per month of local traffic.” All of this is coming through SEO/search traffic.
As a result of this traffic the site is making a fair amount of money off ads that are getting very attractive CPMs vs. the rest of the market. All the SEO-based traffic the company is receiving has, according to Waddell, brought its customer acquisition cost down to nearly zero.
There is a range of advertising products that the company is selling to SMBs, from fixed fee to performance-based PPCall and PPC (WebVisible is a partner). According to Waddell, while there are several ad programs and products, there’s an overall emphasis on simplicity and low cost. Most services utilized by merchants are free.
Now, in order to enhance the value proposition for SMBs, MerchantCircle quietly expanded into consumer content. The new program is called “Neighbors” and it offers consumer-users a profile and personal “dashboard” where they can connect with one another, collect coupons, track merchants, generate favorite lists and reviews.
The following image is a screenshot of a community page from MerchantCircle’s Tulsa OK site:

Here’s an image of the consumer dashboard:

The dashboard enables the consumer-user to track (tabs across the top):
- Coupons (I’ve collected from various merchants)
- My reviews
- Merchants I’m following (more on that in a moment)
- Lists I’ve created and my “friends” (on MC). Here’s a snapshot of new lists created by consumers in San Francisco:

On to following; users can “follow” merchants in the same way that one has Twitter followers. Note the follow link under the phone number in the profile below:

After I click to follow, I’m connected to that business and it can directly communicate with me:


In much the same way that MerchantCircle has sought to create a social network of merchants, it has now begun that same work on the consumer side. But the object here is not so much to link consumers to one another as generate more interaction between consumers and merchants and stimulate demand, further activity and content creation. The content and pages populated by consumer-users in turn become more fodder for Google and SEO as well. The company appears to have hit some sort of inflection point with traffic from SEO.
Currently the way that MerchantCircle prompts consumers to join the Neighbors program is through the reviews process. When consumers land on a page via organic search results, some number of those users wind up writing a review of a local business on one of MerchantCircle’s merchant pages. Those review writers are then targeted by MerchantCircle for the Neighbors program:



MerchantCircle is also part of Facebook Connect. And if users log in with their Facebook username and password, their actions and activities on MerchantCircle are broadcast back to through their news feeds on Facebook.
If MerchantCircle is successful in getting consumers to join, create reviews, clip coupons and follow businesses, it will build considerable additional value for its merchants at no cost to itself. Waddell says that the SMBs active with MerchantCircle (mostly in smaller markets) and consumers may not line up 1:1 at the start. But given that MerchantCircle is making money and has been so successful getting SMBs to join, at the rate of 20K per month, it can afford to take the long view.