AOL Sells Bebo: What a Screw Up

In a massive case of “what were they thinking” AOL bought social networking site Bebo for $850 million; and in a case of “what are they thinking now,” the company has sold it, reportedly, for around $10 million to a hedge fund: Criterion Capital Partners.

It was stupid for AOL to pay that much in the first place and maybe naive to think that it could take on Facebook. But now, on the other end, it’s probably misguided to get rid of the site for that little.

I don’t know what the headcount and other costs associated with Bebo are. But Facebook’s privacy flap has created an opening for others to exploit. Alternatively the site could be reinvented and/or the platform could be used in various ways (a la Yahoo-Facebook) across AOL properties perhaps.

Bebo could reposition as a media-sharing site for parents or families as Multiply has tried to do. Or it could be reinvented as a mobile service. The point is there are probably several ways, now that AOL wrote off its value, to use Bebo.

I doubt the hedge fund will do much with the site. A year or so from now they’ll flip it or be compelled to shutter it entirely.

Groupon, Sure. But Is It Sustainable?

The rapid rise of the “social commerce,” “group buying” or “social couponing” (whatever you want to call it) is sort of amazing to me. One interesting question that comes up in my mind is: Will the model that these sites offer start to “bleed” into other areas of local? Perhaps a better way to frame it is the following: will these types of sites put pressure on more traditional ad models being sold and promoted by other local sales channels, including TV, radio, print — even other online?

They’re not selling leads or clicks or even calls; they’re selling customers (albeit at a massive discount so margins disappear for the SMB in some cases). There are also others in the market like RedBeacon and HelpHive, among a few others, that are taking a commission on work actually performed. These sorts of models make “advertiser” acquisition much easier: “customers not clicks.” How widespread might this become? That’s a question I’m mulling over.

Lost Remote recently  highlighted an interview with Groupon CEO Andrew Mason in which he discussed how successful a Groupon promotion was for one particular business:

“[W]e recently featured helicopter lessons in Boston and sold 2,600 in four hours. To put that in perspective, this fellow has been in business since 1985 and in the quarter century leading up to his Groupon he had acquired a total of 5,000 customers.”

On the other hand here’s a recent article from the SF Chronicle about how one local business was overwhelmed by the demand Groupon delivered:

When Philz Coffee Inc. offered half-price $20 gift cards to users of the Groupon.com coupon site, the San Francisco chain of coffee shops figured it would get a few hundred takers. It got more than 2,000.

“I nowhere near projected the amount of people that showed up,” said Philz President Jacob Jaber, who doesn’t expect to offer that kind of deal again. “We ran out of gift cards, and we just weren’t prepared for it.”

Philz Coffee’s Jaber decided his company is established enough to rely on word-of-mouth marketing. Most of Groupon users that pounced on the gift-card offer were already Philz customers, so it didn’t provide too much benefit, he said . . .

Too much demand and many buyers were already customers . . .

There’s little SMB education or “best practices” right now on how/when to use these sites and how to “acquire” new customers who take advantage of these offers. Over time I would also imagine there will also be mechanisms for managing offers to existing customers or weeding them out entirely.

I’m also starting to see Groupon ads on marquee sites, such as this ad appearing on NYTimes.com:

Yesterday I asked LivingSocial CEO and Co-founder Tim O’Shaughnessy to pick some winners in the segment (beyond LivingSocial). He said that Groupon would clearly be one because of its scale and momentum. Then he saw Gilt Groupe as another very interesting player. He also said he thought one of the larger European companies would move into the US and become successful.

I’ve had the debate recently with several people about whether the group buying model is sustainable. Right now these sites offer new business but I’m sure they’ll expand into CRM or loyalty programs over time as well. I suspect the model is sustainable although it will need to evolve somewhat over time — and some of the flaws identified above will need to be addressed.

I would also assume that Groupon is on a course to go public. But there are plenty of smaller companies that cannot and so there will be consolidation and/or M&A opportunities for traditional publishers (YP, newspapers) and others (e.g., IAC) that want to get into the game.

Facebook is also lurking here as a potentially major player. Right now Facebook really doesn’t have a product to sell to SMBs (notwithstanding Facebook Ads). This would be one that would also be extremely appealing to consumers; it’s a natural in a way.

Sugar Buys BookFresh and FreshGuide

Female-centric content and ad network Sugar, Inc. yesterday announced the acquisition of BookFresh and FreshGuide (also part of BookFresh):

In its first foray into providing local editorial and advertising, Sugar Inc. (SugarInc.com) today announced it has signed a definitive agreement to acquire FreshGuide Inc., which operates FreshGuide.com and BookFresh (BookFresh.com). FreshGuide.com is an online women-focused city guide that provides access to exclusive daily offers from a well-edited selection of local businesses in beauty, health and fitness, dining, travel getaways and other relevant categories. BookFresh provides an online booking service for local businesses, such as spas and salons.

BookFresh began as HourTown and is an online booking platform for SMBs. I wrote about it and the segment previously:

• HourTown Rebrands, Now ‘BookFresh’
• HourTown Adds Features for Service SMBs
• HourTown Adds Online Payments
• Hourtown and SEO (+ Time Inventory)
• Online Booking for SMBs and CPA

FreshGuide was a second effort by BookFresh CEO Ryan Donahue and team and is a group-buying site, although Donahue describes FreshGuide as a cityguide (more fodder for TheDealMap and Yipit):

Donahue will now run local for Sugar. He said the following to me in an email exchange:

[I will be] GM of FreshGuide and run Sugar’s local business. I am excited to create a female-focused local advertising platform that will leverage the offers capabilities of freshguide and the online bookings capabilities of BookFresh. I think local advertisers with an interest in wooing women, will find that we offer a compelling combination of merchant tools and a hyper-targeted female audience.

Deal terms were not disclosed.

Why Yahoo! Should Consider Buying Zvents

Yahoo!’s interest in beefing up local news and location-based content should lead it to consider buying Zvents. Yes, Yahoo! owns events destination Upcoming. However Zvents has more data and an ad/distribution network that includes many of Yahoo!’s newspaper partners.

Zvents is really a platform and media play that Yahoo! could develop further in many interesting ways. It could also exploit Zvents’ data in mobile.

If I were Yahoo! I would buy the site and also put CEO Ethan Stock in charge of local for Yahoo!

Zvents has raised just over $30 million to date and so the acquisition price would likely be comparable to or slightly more than what Yahoo! just paid for Associated Content.

I have no financial interest or stake in this outcome; I just think it makes sense for Yahoo!

Yell (Finally) Buys UK’s TrustedPlaces

UK directory publisher, and parent of Yellowbook in the US, Yell.com  has acquired social directory site and Yelp competitor TrustedPlaces. According to the press release out this morning:

The combination of Yell’s database of over two million businesses with TrustedPlaces’ proven expertise in generating recommendations from local consumers represents a major shake-up of the fast-growing local reviews market.

It will drive strong benefit to Yell’s 399,000 mainly small business advertisers, through generating additional leads and providing a richer online interaction with existing and potential new consumers . . .

Initially, TrustedPlaces reviews will be added to Yell’s business listings, leading to full integration under the Yell.com domain.

The company also expects that the techniques and technologies that have made TrustedPlaces successful in the UK will be shared with other Yell Group operating companies in the US, Spain and Latin America.

Under the deal, Sokratis Papafloratos, chief executive and co-founder of TrustedPlaces, is joining Yell as head of social products in the UK.

This is a smart move by Mark Canon, Matthew Bottomley and company. It complements what they’re doing with Yell.com and provides reach to a younger and more “urban” demographic; it’s sort of like AT&T’s Buzz.com. The difference is that TrustedPlaces is an established site with an existing following.

Among the social directories in the UK, there are three main players: Qype, Yelp and TrustedPlaces. These three sites, I would imagine, had more traction in selected verticals with specific demographics vs. the more traditional Yell. The company will also have the benefit of Sokratis Papafloratos’ thinking about social media across its European properties and in the US to some degree.

I was urging Yell to do this in 2007:

Yell has pushed its digital properties in many interesting directions: products, mobile, classifieds. Though weighted down by regulatory controls in the UK, it also benefits by being the sole owner of the yellow pages brand.

Yell might want to look at acquiring or developing a property like TrustedPlaces to complement its traditional online directory product — if that isn’t an oxymoron.

TrustedPlaces had developed a strong property but was challenged to sell effectively to small businesses. I had this conversation a number of times with Papafloratos over the past couple of years. Most US local startups were in the same position; however emerging local ad networks such as CityGrid help take some pressure off by helping monetize page views and lookups.

As part of new digital-centric momentum and strategy, Yell recently did a major overhaul of its site, introducing several useful new features but most dramatically providing street-level photography to make the site more engaging and challenge Google Maps in greater London and several other UK cities.

TrustedPlaces has (or had) a partnership with the newspaper-owned LocalPeople, a network of “hyper-local” community sites. It isn’t clear whether that will continue beyond any existing contract period. It’s also not entirely clear whether the TrustedPlaces domain and brand will remain after “full integration under the Yell.com domain.” I would hope that the company doesn’t shutter the property.

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Yell’s CEO and CFO are leaving the company. This is an appropriate time for a leadership change given the larger context of advertising in the UK around Yell and the shift more aggressively into digital.

Y!’s Associated Content Buy Not ‘Game Changing’

Whether or not you think it’s confusing, misguided or “opens a can of worms,” Yahoo!’s $90-$100 million Associated Content buy seems to have a clear rationale in Sunnyvale. At Search Engine Land Matt McGee calls it an SEO play, which is a very interesting angle and largely accurate:

Yahoo is, of course, getting out of the search business — turning over its search engine to Bing. But in buying Associated Content, Yahoo is making a big SEO play. Hitwise told Danny Sullivan on Twitter a few moments ago that 55% of traffic to Associated Content in April came from Google. The Econsultancy interview I mentioned above cites a comScore statistic: 90% of AC’s 16 million unique monthly visitors come from search.

PaidContent has an interview with Yahoo!’s Media Vice President James Pitaro. I’ll give you the most relevant bits from the interview regarding the justification for the deal:

—rounding out content offerings within its own media sites.
—producing content directly in response to audience needs, “which is by the way something we’ve done historically but really will be able to scale now.’
—offering the the ability to get more local.
—providing the infrastructure to build content specifically for advertisers, allowing Yahoo to partner more easily, so the thinking goes, with advertisers and produce branded entertainment at a much lower cost with scale.

Advertiser-specific content is one of the three major ways Yahoo sees to make money from Associated Content . . . The other two: using their content to grow Yahoo’s own audience reach and engagement leading to more ad dollars and partnering with Associated Content to create new areas across Yahoo’s sites.

So very clearly there’s an SEO strategy, as well as the hypothetical ability to generate more “niche” (including local) content for Yahoo!’s O&O sites. Display ads, re-targeting and behavioral targeting will be a part of all of this. And one can see this as a further extension of Yahoo!’s network “off site.” Accordingly there’s a bit of Marchex in this strategy. Alternatively perhaps this acquisition can be seen as comparable to RightMedia in some respects, a kind of “RightMedia for content.”

Yesterday I argued that Yahoo! made a mistake by not buying a blogging platform (and the related content it would throw off). This is one answer to that objection. All these underpaid Associated Content freelancers (almost 400K) are essentially bloggers.

Yahoo! and others argue that the quality of articles produced by these legions of “digital serfs” is high. Perhaps. But the Internet is awash in crap content or, more politely, what might be called “perfunctory content” — content produced solely to generate page views and ad impressions.

In my view the content explosion that Associated Content, Demand Media and others are a part of is a long-term threat to Google and will have to be dealt with in some more aggressive fashion. It seems like I’m finding more and more “thin” content and general garbage in search results these days.

Yahoo! has always aspired to create its own content and this acquisition is consistent with that. Certainly there will be many more targeted page views to monetize with video and display ads. So Yahoo! could well see a near term lift. And it’s also possible that some of Yahoo!’s own properties will benefit from Associated Content. I don’t, however, think it’s a “game changer” for Yahoo! as CEO Carol Bartz has asserted.

Unsolicited Social Media Advice for Y!

I just got off the phone with someone talking about Yahoo! and social media, and that triggered some thoughts.

Yahoo! has been involved with social media for a long time. Yahoo! Groups and Answers are two early examples. There are also Flickr and Delicious and MyWeb (shuttered). And Yahoo! Local was one of the most “robust” user-generated local review sites in the pre-Yelp era. There was also the “smart in-box” Y! Mail strategy.

Yahoo! has thus enjoyed successes as well as failures and, in my view, seen some spectacular missed opportunities.

For example, back in 2006 I suggested that Yahoo! buy a blogging platform like WordPress or Six Apart. The company offered the relatively awkward Yahoo! 360 at the time. That service was subsequently shut down. And there are other examples of Yahoo! services shuttered before their time or insufficiently supported and emphasized (Yahoo! Fire Eagle is one of those, Neighbors is another).

Putting aside the rumored attempt to buy Foursquare, Yahoo! is planning on building out its social media assets further and reportedly going to be rolling out some new things in the coming months.

I think one potential acquisition the company should consider is Multiply. Originally a social network with a rich set of tools and capabilities, the site has become primarily a media sharing and storage site for adults/parents. Kind of an anti-Facebook, it would be a solid asset that Yahoo! could use and integrate with Flickr — and Shine, as well as other properties, I suspect.

Multiply has raised about $27 million in funding and could be acquired probably for under $100 million. Clicker is another company that Yahoo! should take a close look at because it’s social and cross-platform. And in some ways it’s a model of what Yahoo!’s social media strategy should be: a useful tool or content site, with community integrated into its fabric. RedBeacon would be yet another one. But direct involvement with lead-gen might not be where Yahoo! wants to go with its local strategy.

If Yahoo! hadn’t backed away somewhat from Shopping I’d also argue the site ought to get deeper into social shopping — a place where it was an early pioneer with the now dead Yahoo! Shoposphere. This sort of thing appeals to women in particular and is a very fertile area for promotions and advertising.

I’ll add one more: Yahoo! should look very seriously at the just-launched local coupon aggregator DealMap from Center’d. CEO Jennifer Dulski was GM of Local, as well as occupying other roles at Yahoo! before she left. She’d probably be ambivalent about going back but it would be a great asset for Yahoo! both in Shopping and Local.

Finally, in addition to any new acquisitions or product offerings, the company needs to exploit its existing assets. That includes renewed attention to Local (extending into mobile) and better exploitation of Answers in mobile.

Related: Yahoo! announced the acquisition of Associated Content. Below is the press release:

Yahoo! to Acquire Associated Content

Extending Leadership in Content With the Addition of 380,000 Contributors

SUNNYVALE, Calif.–(BUSINESS WIRE)–Yahoo! Inc. (NASDAQ: YHOO) today announced it has signed a definitive agreement to acquire Associated Content Inc. This strategic move extends Yahoo’s ability to provide high quality, personally relevant content for the benefit of more than 600 million users as well as tens of thousands of advertisers. As Yahoo! enhances its social, mobile, local, and media offerings, the acquisition of Associated Content reinforces the company’s longstanding promise to offer the best of the Web — by combining Associated Content’s approximately 380,000 contributors who provide rich and varied content on a broad array of passion points, with Yahoo’s leadership in partnering with established content brands and the award-winning team of editors and experts from Yahoo!.

“Combining our world-class editorial team with Associated Content’s makes this a game-changer,” said Carol Bartz, CEO, Yahoo! Inc. “Together, we’ll create more content around what we know our users care about, and open up new and creative avenues for advertisers to engage with consumers across our network. These are important aspects of building engaging consumer experiences on Yahoo!, and one of the reasons why we’re one of the most visited destinations online.”

“The Associated Content team and our 380,000 contributors are looking forward to joining Yahoo! and to the opportunities that being part of a global Internet brand presents,” said Luke Beatty, Associated Content founder and president. “Combining our crowd sourced content with Yahoo!’s distribution, world class editorial team and online marketing leadership will accelerate our growth as we continue to leverage our best-of-breed platform to deliver high quality compelling content on more than 60,000 topics.”

For advertisers, this deal will expand Yahoo! into more topic areas and real-time content generation. The combination promises to offer advertisers even more opportunities to engage groups of passionate consumers in ways they will find uniquely appealing to their interests and tastes. Having insight into user intent through its leading search products enables Yahoo! to identify topics important to advertisers and users. Yahoo! plans to use Associated Content to create content around those topics and leverage Associated Content to contribute content to existing media properties. Associated Content also provides more opportunities for Yahoo! to partner and collaborate with publishers who can help the company shape the tremendous variety of content coming in, into something bespoke and even more engaging.

While current Associated Content content is U.S.-centric, Yahoo! expects to scale the platform globally.

Associated Content was founded by Luke Beatty in Denver, Colorado, in 2004. Associated Content receives more than 16 million unique users per month (comScore) and the editorial staff reviews more than 50,000 pieces of content per month, including articles, images, audio and video.

Yahoo! expects to complete this acquisition in the third quarter of 2010. Financial terms were not disclosed.

American Towns: ‘Fastest Growing’ Hyperlocal

Last week AmericanTowns.com put out a press release that asserted the company was the “fastest growing hyperlocal digital media company in America”:

• Having achieved profitability at the end of 2009, AmericanTowns reported that revenues grew an additional 35 % during Q1.
• According to Quantcast, AmericanTowns ranked in the top 800 websites in the US in Q1, and one third of its traffic was from “regular users.”
• Revenues continue to be driven by local advertisers seeking local customers, at over 75% of advertising revenues.

The release also promotes a partnership with non-profit “Meals on Wheels.” Here’s the quote:

AmericanTowns is our second largest source of web traffic, second only to Google for referral visits,” explained Michael Flynn, Director of MOWAA.

AmericanTowns is a slow and steady network that doesn’t get lots of attention but has been gaining and growing largely “under the radar.” It would make a good acquisition for a newspaper publisher or other local media player (or online player). For example if Local.com were sitting on a mountain of cash it would make sense for them to acquire the company.

Yahoo could also probably do some interesting things with the network. And AOL might be a logical acquirer. Then of course there are the yellow pages publishers . . .

UBL Expands Scope of Mission

The company behind Universal Business Listing, which began with the idea of being the single place for SMBs to submit and manage their data online, is broadening its mission. Here’s some information from a curious press release that went out early this morning:

BounceBack Technologies, a global technology company specializing in business intelligence, today released an open letter to shareholders, customers, and employees announcing that the company is changing its name and expanding with innovative new services and expanded capabilities. Moving forward, the company will focus its efforts on acquiring and developing services that improve the way businesses promote and protect their identity online. This new direction is designed to strengthen BounceBack Technologies, renamed as Name Dynamics, Inc., and help shape the future growth of the company in demand markets such as online search, interactive marketing, and business identity security.

BounceBack acquired the assets of UBL in January, though UBL co-founder Doyal Bryant is CEO of the venture, which is being renamed “Name Dynamics.” At any rate, the mission now appears to be much broader than listings data submission:

Moving forward, the company will focus its efforts on acquiring and developing services that improve the way businesses promote and protect their identity online. This new direction is designed to strengthen BounceBack Technologies, renamed as Name Dynamics, Inc., and help shape the future growth of the company in demand markets such as online search, interactive marketing, and business identity security.

The concept behind UBL was pioneered by the old LocalLaunch (acquired by RHD, now DexOne) with its “master business profile.” And several companies have been trying to executive on a variation of this theme for some time: the idea of a “one-stop shop” that provides access to a broad network of sites for SMBs (or multi-location businesses).

I briefly ran into Bryant at the SMX West conference and he was promising new/big things, which this release hints at.

Yellowpages.com ‘Redirecting’ to YP.com

AT&T’s Yellowpages.com site is now “redirecting” to YP.com:

I misspoke as a technical matter when I said that. It’s not actually redirecting; rather it’s showing YP.com as the brand for the URL “yellowpages.com.”

Apparently is the Yellowpages.com “brand” that BellSouth and SBC paid nearly $100M to acquire a number of years ago. However the YP.com site offers an expanded “definition” of yellow pages in accordance with a rapidly shifting local online landscape.

AT&T Interactive’s new effort Buzz.com is slated to launch in the relatively near future.

YPG Buys Canpages, Consolidates .Ca YP Biz

Not that it wasn’t already dominant, but Canada’s Yellow Pages Group (YPG) has bought its most successful/threatening remaining directory publishing rival, Canpages, in a $225 million transaction that includes US assets.

According to the press release out this morning:

Yellow Media Inc. (“YPG”) announced today that it has reached a definitive agreement to acquire Canadian Phone Directories Holdings Inc. (“Canpages”) from an investor group led by private equity firm HM Capital Partners for a purchase price consideration of approximately $225M. Canpages is a local search and directories publisher in Canada . . .

Headquartered in Vancouver, Canpages publishes 84 directories for a total circulation of approximately 8 million copies. The company’s website, Canpages.ca, attracts more than 3.5 million unique visitors each month. Canpages generates annualized revenues of $110M with an online contribution of approximately 23%. The Company employs about 700 people in Canada of which more than 450 are sales consultants . . .

In addition to the Canpages acquisition, YPG announced the contribution of its U.S. directory operations, YPG Directories, LLC, publisher of Your Community Phone Book (“YCB”), to Ziplocal, LP. YCB is the publisher of independent directories in selected Mid-Atlantic and Southeast American markets and was acquired from Volt Information Sciences, Inc. in September 2008. Ziplocal is a leader in providing an innovative source of information for the businesses and communities it serves. The company operates ziplocal.com, and once the two entities merge, Ziplocal will reach over 300 markets across the United States.

There are essentially two transactions: the acquisition of Canpages and the transfer of YPG US operations to Ziplocal, an online local search provider that had previously been acquired by Canpages. Previously Canpages announced a partnership with Utah-based Phone
 Directories
 Company (PDC). The latter was contributing its US online operations to Ziplocal. I would imagine that will still be in place, but may set the stage for another YPG acquisition.

One person described this transaction to me in email in this way: “This would be the equivalent of pulling AT&T, SuperMedia and DexOne together” in the US.

As the quote implies, YPG will be the dominant local media company in Canada. It will compete against a few smaller players in the directory industry and independent channels such as ReachLocal for local advertisers. There are also some newspaper publishers that may decide to make a bigger push into “local search.”

On the consumer side, it will compete with Yelp, Citysearch, Google and some newspaper owned city sites like Torstar’s Toronto.com. Foursquare is also in Canada and has a deal with daily newspaper Metro.

YPG is the supplier of local data to Google Maps in Canada.

The US local market is much more competitive than in Canada and Ziplocal is a minor player. But he US represents a growth opportunity for YPG.

This is just the latest in a series of transactions for YPG, which include the acquisition of sites like Restaurantica and several shopping-related destinations such as RedFlagDeals. The company now has a broad portfolio of local digital assets beyond its flagship yellow pages directory site.

Citysearch Revamps SEM, Buys into OrangeSoda

This morning Citysearch is unveiling a new local online ad program called “CityGrid Complete,” managed and fulfilled partly by OrangeSoda. The IAC-owned company has also invested in OrangeSoda as part of the new relationship. 

I spoke last week with Citysearch CEO Jay Herratti who said that the company chose OrangeSoda because Citysearch believes it has the best SEO solution in the  market. OrangeSoda has been offering SEO, paid-search and what it calls “loccal search maps optimization.” The latter is now the chief focus of “local SEO.” 

According to the press release: 

The first of its kind, CityGrid Complete is the only online advertising solution that gives local businesses the ability to reach millions of consumers monthly by building customizable content ads that are distributed across the web. In addition to content ads, CityGrid Complete includes SEO services designed to drive consumers from all the major search engines directly to their own websites. CityGrid Complete customers also receive access to an integrated web-based dashboard allowing advertisers to actively monitor and manage their campaigns, ensuring they receive the highest quality leads for their advertising budgets.

CityGrid Complete will source leads through Citysearch’s CityGrid network, which the company says has “500K paying advertisers, enhanced listings and content for 15M businesses, and reaches more than 140M unique users across 100 web and mobile sites.” OrangeSoda will be managing SEO and paid-search campaigns. CityGrid  Complete is, as the name suggests, the most complete of the Citysearch ad programs. There will be less ambitious programs for those with smaller budgets.

Herratti was asserting to me that this new offering is the most effective and comprehensive for SMBs available online — a true “one-stop shop.” To the SMBs themselves Citysearch’s ad programs may not look very different than before, but the platform, sourcing and fulfillment on the back end is going to be quite different. 

It appears that through CityGrid Citysearch has now built a way to deliver leads to its advertiser-customers that is substantially cheaper overall — without a corresponding loss in quality — than pure PPC reliance, which is the way most of these programs began. (ReachLocal and V-Enable also offer “local ad exchanges.”)

This is also great validation for OrangeSoda, which is always mentioned as the fourth local SEM firm: ReachLocal, WebVisible, Yodle . . . and OrangeSoda. 

I’ve been writing quite a bit about the evolution of the ad products that are being offered to the local market and how they’re “diversifying” into SEO, data monitoring and reputation management. The new CityGrid Compete program is another general example of that phenomenon. 

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See this previous, related post about CityGrid.

Outside.in vs. AOL Patch: Win-Win?

Matthew Ingram at GigaOm has a nice profile of Outside.in and interview with CEO Mark Josephson. The piece points out that AOL is planning to spend $50 million to build Patch into a giant local network, and asks whether sites like Outside.in should be worried. First here’s what AOL said in a 10K filing about its plan for Patch:

The Patch acquisition did not significantly affect our consolidated financial results for the year ended December 31, 2009. As part of our plan to expand our local strategic initiatives, we currently anticipate investing up to $50.0 million in Patch during the remainder of 2010.

Should Outside.in be worried?

In the GigaOm article, Josephson correctly points out that “If AOL spends $50 million and brings a lot of attention and advertisers into online hyper-local then we all benefit.” Indeed, the entire segment will win if advertisers wake up to the real potential of local online, which they’re now starting to (almost as an indirect result of mobile). 

It will also be really interesting to see how “good” Patch is. The $50 million is undoubtedly for headcount and writing fees to those creating original content. The danger as with Examiner.com is that you get a lot of mediocre stuff. Outside.in’s approach is one of aggregation of existing content, which is both cheaper and more scalable. 

Outside.in has received about $14 million in funding. AOL ought to take a hard look at buying Outside.in if it’s really as serious as it claims to be about “hyper-local.”

Will AT&T Wind Up Buying Yahoo!?

Some time ago, before the original attempted takeover of Yahoo! by Microsoft I speculated that AT&T might be interested in buying the company (Yahoo! that is) given their complementary assets and historical partnership. While there would be “culture” issues, AT&T might still get the chance at some point.

On CNBC yesterday Yahoo! CEO Carol Bartz indicated (via PaidContent) she would consider selling the company:

A notable exchange during Yahoo CEO Carol Bartz’s rather rowdy appearance on CNBC’s Power Lunch today. Moderator: “Is Yahoo better off as a trinket on someone else’s charm bracelet?” Bartz: “A trinket? What are you saying? Yahoo isn’t a trinket. Yahoo is the bracelet.” Moderator: “Would you get taken over? Would you get bought?” Bartz: “Absolutely. Any company at the right price.”

She later clarified that she wasn’t shopping the firm, so it would be “inappropriate” to name that “right price,” although she reiterated that if she had been CEO when Microsoft made its offer she would have taken it.

AT&T is worth $147 billion, while Yahoo!’s market cap is $22 billion.

ReachLocal Buys CloudProfile Owner

ReachLocal has acquired SMBLive, which created “Cloud Profile,” to help it build a reputation management offering. According to the release:

With the technology acquired through the SMB:LIVE acquisition, ReachLocal is developing a digital presence and reputation management solution designed to enable an SMB to publish multimedia content from a single interface to a business profile page hosted by ReachLocal, as well as to local directory sites, search engines and social media sites, including Twitter and Facebook. In addition, ReachLocal will provide automated monitoring of local review sites, social media sites, and local blogs for references to the SMB or comments related to the SMB’s business that will provide an SMB with feedback, alerts and analytics to assist it in managing its online reputation.

Reputation management is now becoming an important part of the overall SMB marketing offering. Long ago MerchantCircle was the first to aggregate and track reviews for SMBs. Marchex was the first with a formal product offering for SMBs, AmIVisible and Clickfuel also offer variations on the reputation management concept. All the major players will need to offer something in this arena in the near term to be competitive.

ReachLocal is aiming to go public this year.

YPG Buys Deals Sites, 411 Brand

I’ve been thinking recently that yellow pages providers increasingly should think of themselves as “local holding companies,” with a portfolio of sites and brands to address different audience segments and/or advertiser needs. The “yellow pages” will be an effective tool for some consumers and advertisers but not everyone — one size doesn’t fit all anymore. 

There are going to need to be other brands and sites that publishers operate in order to reach audiences and advertisers for whom “yellow pages” is no longer as meaningful or effective a tool. This is the concept in part behind AT&T’s Buzz.com

YPG appears to be moving in this general direction having recently acquired a restaurant vertical Restaurantica. And today the company announced that it had acquired RedFlagDeals.com, “a leader in providing online promotions and shopping tools to Canadians. With 2.2 million unique visitors every month.”

YPG also said it was buying the 411.ca brand and making an investment in the company that previously owned it:

Yellow Pages Group (YPG) and 411 Local Search Corp., operator of 411.ca™, announced today that they have signed an agreement under which terms YPG will purchase the 411.ca brand and domain names and acquire an ownership interest in 411 Local Search Corp. The agreement will further enable both companies to leverage the online traffic between YPG’s leading Canada411.ca™ and YellowPages.ca™ properties, and 411.ca, a fast-growing online directory. This agreement that unites two of Canada’s largest local search engines will provide enhanced online reach for advertisers and a greater experience for users.

The deals site acquisition is particularly timely because coupons and offers are very hot (extending into mobile). There are two other shopping-related destinations that come with that deal according to the release:

• RedFlagDeals.com, the largest aggregator of discounts and coupons on the web and mobile with hundreds of new deals posted every week.
• PriceCanada.com, a price comparison engine, allowing users to search dozens of online retailers, compare product features and make informed purchases.
• Scarlett Lounge, the leading source for deals in fashion and beauty for women.

As an aside, YPG has a site with great potential in Answers (from Praized), but it’s currently underdeveloped. It could morph into a FourSquare or Aardvark-like site in mobile. 

But what do you think of the general idea I’m asserting above: that YP publishers should operate a range of brands and sites in the local segment rather than relying on a single YP-branded site or more than one, similar YP-like sites?

AOL Places Massive Local Bet on News Sites

SAI is reporting that AOL wants to create a massive network of local news sites and is recruiting writers to populate these sites. AOL wants to expand its Patch network from 30+ sites to “hundreds.”

Obviously this would mean lots of page views and a bona fide local ad network. The questions that arise, however, include:

• Can they generate sufficient quality to achieve sustained readership and “brand” status?
• What’s the ad model? It’s geotargeting for nationals and partnerships with local channels for SMBs
• Will they pick the right partners and have the right content mix to create a compelling product?

A recent MediaWeek piece celebrates an existing version of this plan in Examiner.com:

Consider startup Examiner.com, led by former AOL Digital Cities exec Rick Blair. The company has tapped a staggering 29,000 writers, including former reporters, bloggers and passionate locals, in 240 U.S. cities. Blair says that Examiner.com now reaches 18 million unique users. But the majority of its writers are part-timers. “We tell people, ‘Don’t quit your day job,’” says Blair.

Most of the content flowing through Examiner.com (by my assessment) is crap content, however. It’s largely aimed at generating low-cost page views for ads — a variation on arbitrage. 

Yet if it’s all about page views and “shelf space” (SEO) for AOL and not about quality the effort will certainly fail.

YPG Buys Restaurant Vertical

Canada’s Yellow Pages Group added to its “portfolio” of sites by buying restaurant directory Restaurantica. The site operates in the US, Canada and, curiously, Barbados.

If the benefits of this acquisition for YPG aren’t obvious, here they are:

• Restaurants are a high usage, low revenue category for print publishers.
• They’re a very high usage category online and in mobile; the site already has an iPhone app.
• The reviews content collected here can also be “distributed” on YPG’s YP site as well as its city guide (if desired)
• This gives sales reps something specifically to sell to restaurant owners (which can include video)

In an ideal world, YP publishers would think of themselves as “local holding companies” and would make a bunch of acquisitions like this that could address high value verticals and could be developed into stand alone brands.

Publishers need to continue to enhance and improve their YP “flagship” sites but also move beyond them with homegrown alternatives that address different use cases and demographic segments, as well as acquisitions. AT&T Interactive’s forthcoming Buzz.com is a potential example of the former. Restaurantica is an example, obviously, of the latter.

What I want to know is: Where is the local site targeted toward moms?  Right now Center’d is probably the closest version of that.

Bloomberg on Yelp’s Funding Round

Bloomberg writes about the potential $50MM Elevation Partners investment in Yelp:

Yelp is in talks with Elevation Partners LP, the biggest investor in Palm Inc., to raise another funding round, the person said. The deal, which isn’t yet certain, may include an option for employees and investors to sell shares, said the person, who requested anonymity because the talks are private.

The move mirrors agreements struck in the past year by Facebook Inc. and Zynga Game Network Inc., which took investments from Russia’s Digital Sky Technologies. The deals helped fund the companies’ growth while giving investors and employees a way to sell their stock without the scrutiny and distraction of an initial public offering.

Also:

Yelp has so far raised $31 million in funding and was valued at $215 million after a $15 million investment by DAG Ventures in 2008 . . .

And this was interesting:

Yelp was profitable for part of last year before deciding to re-invest its earnings to fuel more growth, the company has said.

Yelp has had tremendous success on the consumer side of things. Notwithstanding the above remark about being profitable it has had less success among SMB advertisers. And the fact that it only sells its own traffic is another potential challenge over time as the Internet fractures and fragments further. Most local sales channels sell a network of sorts that includes O&O properties as well as third party traffic. In this way Yelp and Google are more similar than Yelp and IYPs like Superpages or Yellowbook.

Finally there’s the (remote) possibility that another site/company or collection of sites could become more interesting, sexy, cool, etc. to a core of Yelp users. While FourSquare was unlikely to unseat Yelp or materially threaten it (the way say a Facebook potentially could) Yelp isn’t taking chances, adopting a mobile “check in” feature in its iPhone app upgrade. That feature is also one of the central aspects of FourSquare; however it in fact pre-dates FourSquare.

Like Google but on a smaller scale, Yelp has had great success in making the leap into mobile, which presented an opening for other companies to siphon away users. But that hasn’t happened.

Some investment is coming; some employees may cash out but the question becomes where does Yelp go from here?

Yelp to Gain $50 Million Round?

TechCrunch is reporting that Yelp will soon announce a new funding round of roughly $50 million. I had heard something like this during the Google-Yelp acquisition talks: that an “alternative” to the acquisition would be Yelp raising a “Zynga-like” funding round.

Let’s assume it’s an accurate report. What might that fund?

It might fund some employee buyouts/payouts, as the TC report suggests. But that’s not especially interesting, except to the employees getting the money.

It could fund further European or potentially Asian expansion. It could also fund an increase in the sales force, now standing at roughly 200 reps. It might fund a small acquisition or two.

There’s also the possibility that some money might be used for advertising to consumers or outreach to SMBs in some way other than sales.

If you were the Yelp board/management how would you spend the money, especially now that Google is coming after you with improved mobile offerings, maps everywhere and Place Pages?

Related: Inc. magazine provides a sprawling profile of Yelp. There are some revenue estimates and a few anecdotes that are interesting but there’s not much here that you don’t already know.