WebVisible has just closed another financing round of $20 million, “led by Focus Ventures and Adams Street Partners. Existing investors Redpoint Ventures and Sutter Hill Ventures also participated.”
The company will use the money for additional R&D and to grow its direct sales force. I spoke with CEO Kirsten Mangers this weekend and she said that the direct sales channel efforts are being conducted in the white spaces where its partner sales channels (e.g., AT&T) are not operating. WebVisible has a presence in Europe as well.
The “big three” companies in the “local SEM” space, which is rapidly evolving beyond SEM alone, are ReachLocal, Yodle and WebVisible. WebVisible is really the incumbent in many ways, having been in the market the longest (roughly since 2002). There are many (emphasis on many) other companies of course that are either selling directly to SMBs or operating as platforms or service providers to support existing local sales channels (e.g., Marchex, Kenshoo, ClickFuel, Clickable).
Indeed this intensifying competition makes for confusion and “noise.” See my earlier post: SMB Market Getting ‘Noisier’ by the Day
Mangers said she considered the various major players to be engaged in a “land grab” right now. That led directly to a conversation about churn, the vexing and persistent problem for the local interactive industry. Nobody reveals their numbers directly and everyone says “we’re better than the average.” But the industry sees 90%+ churn on an annualized basis, not all of which can be attributed to product dissatisfaction. But it’s ugly.
Mangers and I discussed, as a hypothetical matter, that after ReachLocal goes public the company will need to maintain retention levels that are acceptable. (Reach itself says it has churn levels significantly below others.) Top-line growth will be the focus for investors for a little while but then they will shift toward retention. Out of necessity the churn issue will have to be addressed.
As the WebVisible press release says, “Local interactive is the emerging market right now . . .” Indeed, everyone’s buzzing about local because of mobile LBS and the shift of local ad spending to digital. Yet there’s resistance to investing in local startups even as the market is hitting its stride. VCs have been “burned” time and again by local investments because they failed to appreciate the difficultly on the advertiser side or had time horizons that were too aggressive.
But the market is certainly hot and will continue to be for some time. Why? Because consumers will continue to consult digital media (PC and mobile) for buying advice before spending money in local markets, offline. Small businesses and large brands that sell locally will continue to need to do a better job of getting in front of those consumers to influence those decisions.
Folks, this is what the Internet is about: influencing offline buying decisions.
Screenwerk 
February 16, 2010 at 3:13 pm
What’s wrong with this:
“Nobody reveals their numbers directly and everyone says “we’re better than the average.”
and
“Reach itself says it has churn levels significantly below others.”
February 16, 2010 at 3:20 pm
Nothing is “wrong” but everyone is coy about saying anything specific. It’s paradoxical that the numbers are so large but most companies say we’re better than the others.
February 16, 2010 at 3:57 pm
I mean with RL saying that they “know” that their churn levels are “significantly” lower than others’ when no one knows anyone’s numbers…I guess unless there’s been some transfer of exec talent between the companies, then it would make sense.
February 16, 2010 at 4:47 pm
[…] reading a new article regarding the internet SEM investments and recent venture capital funding to WebVisible (another $20M), Reach Local (original $55M back in Oct 2007), and Yodle (recently funded with another $38M) I […]
February 16, 2010 at 4:56 pm
Greg, as always- Thanks for the inspiration. I have much respect. Since the infant days of your blog, I have been stalking your comments, insights, and wisdom.
The satisfaction from being able to positively impact the future of organizations and people through proper education, awareness, and analysis is critical.
As a 10 year veteran in local SMB advertising sales and area search marketing counselor to some of Dallas – Fort Worth’s top competing companies…. THEY DON’T WANT CHURN. THEY WANT BUDGET FLEXIBILITY. THEY ALSO WANT TO LEARN. TEACHING IS A VITAL COMPONENT TO SUCCESSFUL SEO/PPC. Local SMB’s understand that distribution and content is important. The competitive area category killers who had the first ad in printed media are no longer 1st on Google.
I personally believe that local SMB ad agencies are just now forming and that higher overhead and margin corporations are not capable of meeting this demand.
Cheers,
Mike Stewart
February 16, 2010 at 4:58 pm
Thanks Mike. Your prediction could well be correct.
February 16, 2010 at 5:03 pm
Folks…. what is churn?
Churn happens when a client does not want to invest. Results don’t happen. Or a clear plan is not in place.
Churn is preventable with measurement and management. You can’t manage what you can’t measure in internet marketing.
Google analytics, call tracking, recording, landing pages, KS, content, distribution…… it is not that difficult to invest the time and energy to do it right. You just can’t afford to pay investors in the process. Investors need to educate themselves on ad agencies. Have you ever seen this sort of investment in http://BooneOakley.com or http://sksw.com/our-clients.html ?