Garrett French has an extensive post comparing MerchantCircle and Yahoo! Local Listings (the free website product). He questions why I didn't get into a comparison of the two. The honest answer is I simply wasn't thinking about it. A related reason is that the Yahoo! free website product has fallen off my radar. While Yahoo! won't share numbers, the product doesn't seem to have made a meaningful impact or hasn't had ongoing, sustained adoption (as far as I can tell).
All of the big search sites now have free webhosting:
- Google Page Creator (here's a site I created [no comments about the picture please] after I left Kelsey as a kind of test and here's my initial post)
- Windows Live (I haven't used this yet so I can't compare it to the others)
- Yahoo! Local Listings (It's pretty buried here and not truly free anymore [part of a $25 monthly package]; Yahoo!-owned GeoCities has had free sites for a long time)
The new AOL offering through AIM Pages is the equivalent of a free SME website in my view (with a tracking phone number). However the company is emphasizing the MySpace-like consumer side of the offering.
Again, I can't yet speak about the Windows Live product. But I would say that the Yahoo! free site offering (assuming it hasn't been significantly upgraded since I initially looked at it) is quite limited in most respects and the setup is not as easy as it could be. The Google product is more flexible and generally easier to use. It also offers a better URL in that the user has some control over the "domain" (e.g., "http://greg.sterling.googlepages.com/home")
Google, Yahoo! and MSFT are really not emphasizing these free products, to say nothing about exploiting them to their full potential. (For example, Google could push Page Creator and use it as a channel to "educate" and upsell local businesses into AdWords or simplified versions of AdWords that the company is no doubt contemplating.) But Google is focused on a million things and probably not going to execute here. Also, Google, unlike Yahoo!, has nothing to sell (beyond AdWords) to the local business after they set up that free site.
(Long, long ago I argued that Google ought to buy a web host as a revenue stream/sales channel into the SME market.)
Generally, the free site is really seen as a throwaway or as a "foot in the door" for an upsell to more customized sites that cost money. I understand this rationale in Yahoo!'s case, given that the company is one of the largest, if not the largest, small business web host. If they made too "robust" a free offering it might start to cannibalize their site hosting business.
MerchantCircle has put together a nice and interesting mix of features and capabilities, with some viral elements to speed adoption among small businesses in the absence of a costly local sales channel. We'll see if it works to deliver the volume of SMEs they think they can get. The weaknesses for MerchantCircle chiefly surround reliance upon Google SEO for traffic. Many of the local businesses featured on MerchantCircle have websites and are using MerchantCircle as a marketing vehicle and/or CRM tool and blogging platform. But the "structured landing page" dimension of the site, as a substitute for a website, is going to be appealing to some "late adopting" SMEs.
I agree with Garrett that the range of tools and capabilities that MerchantCircle has brought together is more impressive than Yahoo!'s free website product (as a stand alone). And there may even be an eventual advantage over Yahoo!'s Local Listings ad products if MerchantCircle gets really "good" at SEO. (Most people still go to the main domain to do local searches [e.g., Yahoo.com].) But I don't think that MerchantCircle will eventually dominate Yahoo! or the yellow pages. The market is too fragmented and there are too many aggressive competitors. And Yahoo! has some things up its sleeve that haven't yet been released.
Web hosting is a commodity business and every host must now offer marketing services to be competitive. We're going to see more consolidation in this industry in the near term. If MerchantCircle can get to some threshold (50K? 100K? businesses) it will get bought. CEO Ben Smith probably wouldn't have a problem with that.
To put things in perspective, there are between 10 and 17 million small businesses (depending on the definition) in the US and yellow pages has 3.2 million advertisers. Yet it's the largest single SME marketing vehicle.
Google, Yahoo! and MSFT have brand strength (and potentially trust) vs. startups like MerchantCircle. Yellow pages have "feet on the street" (but so do local newspapers). MerchantCircle has the advantage over the big players of being very focused and not being distracted by a million other projects and initiatives. The market is big enough to support multiple competitors, but probably not all the competitors moving into Local right now.
MerchantCircle's game plan, I'm sure, is to ramp as quickly as possible and be acquired. Local itself, however, is a complex, long-term play.