Knowledge@Wharton profiles new local SEM firm NatPal. The article is long and partly about the genesis of the company and partly about its strategy, which is to focus (initially) on specific geographic and vertical markets. (The article cites local search data which are incorrect.) MarketHardware, a website hosting and local search marketing firm (via Leads.com) is doing something quite similar strategically in terms of its vertical strategy.
The article has a limited understanding of the local search market and the fact that these simplified SEM services are on the verge of commodity status. Here’s my previous post on NatPal (and related vendors).
As the article does point out, the challenge will be to offer a differentiated service when there are so many competitors. Of course in such a fragmented market there is room for a range of competitors.
There are two broad markets for these firms: “retail” and “wholesale.” ReachLocal and Leads.com are examples of the former and WebVisible or Marchex’s TrafficLeader are examples of the latter. Although most firms, including Reach and Leads, offer both; that is, they have partnerships with sales channels or aggregators and sell direct to the SMB market as well.