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.