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.

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PwC Forecast: Internet Will Soon Be #2

In a write up of a media and advertising forecast being released by PriceWaterhouseCoopers, the WSJ says the report estimates that by 2014 the Internet will be the second largest US ad medium after TV. Accordingly it will be larger than newspapers:

The online ad business, excluding mobile ads, is set to expand to $34.4 billion in 2014 from $24.2 billion in 2009, according to the report, which PwC plans to release Tuesday.

Newspapers, meanwhile, continue to suffer from a decline in advertising revenue. According to numbers released by the Newspaper Association of America earlier this year, print advertising revenue dropped 28.6% in 2009 to $24.82 billion. The PwC report estimates that print advertising in newspapers will hit $22.3 billion by 2014.

PwC also predicts that mobile will grow from $414 million in 2009 to $1.6 billion in 2014.

At once this prediction is both unsurprising and shocking. And dare I say it: despite its targeting and tracking the Internet is a relatively bland, annoying and creatively ineffective ad medium. There are isolated exceptions to this, including paid search — which can be bland but has proven very effective.

So the Internet has replaced the “art” of traditional media advertising with the “science” of targeting. Maybe the world of mobile and tablets in particular can marry the two.

Here’s something that was brought to my attention along those lines: Ads on iPad Perform Six Times Better Than on Desktop.

YPG Debuts iPad App

Canada’s Yellow Pages Group becomes the second major YP publisher (after Yellowbook) to launch an app for the iPad. It also promotes other YPG properties, such as its Urbanizer iPhone app, Restaurantica and its deals site, RedFlagDeals.com. However the buttons below take users to the Internet versions of those sites rather than specially iPad/mobile optimized versions.

Overall my sense is that the app is a good start but can be tweaked improved, especially at the profile page level.

A couple of thoughts:

Three years ago I wrote about the “PC in the kitchen” that would replace the phone book. This is it — it’s where my iPad sits much of the time.

One of the simple YPG iPad app features that I like, which is relatively common across directory sites, is favorites and recent searches. This becomes an informal list of contacts — you can also add SMBs or locations to the formal iPad contacts — for quick reference. So in the kitchen this is like a phone book in a way. The potential for engagement around this simple idea is quite high.

The next step is for the iPad to become a phone, which it is with the Skype app, and integrate calling into an app like this. So when I tap the number above, Skype launches and I can call the business. YPG could track that call and get credit for delivering it. You get the idea.

The YPG iPad app is also a potentially great “deals” platform. Coupons/deals should be integrated into this app as well. One could imagine a Groupon-like local deal of the day . . .

Twitter Places: Wheat/Chaff

Twitter yesterday announced Places — Tweets associated with a specific location:

Starting today, you can tag Tweets with specific places, including all World Cup stadiums in South Africa, and create new Twitter Places. You can also click a Twitter Place within a Tweet to see recent Tweets from a particular location. Try it out during the next match—you will be able to see Tweets coming from the stadium.

What’s new here is the local precision and the fact that all tagged Tweets about a place (Disneyland, Louvre, The Vatican, Angkor Wat, Tommy’s Burgers, etc.) will have a dedicated page or pages. Users will also be able to search for those Tweets much more easily than before.

In addition, Twitter Places incorporates Foursquare and Gowalla check-in information. There will also be an API so third parties can take the local Tweets and use them on their sites or build apps/tools around the content.

TomTom and Localeze are data partners, providing place and business data on a global basis (65 countries). TomTom owns TeleAtlas.

Matt McGee at SEL offers some thoughts on how this might challenge Google Places. However Google might incorporate Tweets from the API into Google Places as well.

In a presentation I did — The Revolution Will Be Geotagged — I argued that we’ve gone from a paucity of local data to a deluge. The challenge now is organizing and filtering all the location-based information coming out. That will be the challenge here too, with Twitter Places.

Make no mistake, this is a major move for Twitter and potentially one that will define its “next phase of growth.” The information generated could well be of high value to users; but there will still be a great deal of garbage in the stream as well.

There will be the “fun” and informative real-time posts associated with a Place (“I’m here,” “Me too,” “Whoa, check that out”). And then there will be what we might call “utility content” — tips, reviews, helpful information that’s more evergreen. Indexing, preserving and presenting that evergreen information is what I’m talking about.

“You know what I’m sayin'”?

Third parties may actually be in a much better position than Twitter itself to organize and filter the flood of new LBS Tweets that will be generated.

Matt McGee, crediting Steve Espinoza, discusses the notion of dedicated page for locations (a la Google Places) that offers an opportunity for SMBs (and others) to claim listings and presents a structured profile. I agree. That will undoubtedly come. Either Twitter will do it itself or somebody else will. That approach could address the wheat/chaff issue.

As Steve argues in the reverenced post, it then  presents monetization scenarios for Twitter of various sorts beyond Promoted Tweets. Yet if users start to conduct local searches on Twitter because the information about locations and businesses is getting better and more useful, Promoted Tweets become very interesting in that context as well.

How all this plays out remains to be seen of course. But I regard this evolution of location on Twitter as a potentially very significant development. It will help to create a new “culture” and set of behaviors around location among Twitter users.

Twitter’s COO Dick Costello recently said that the site sees 190 million users per month (globally), who are posting 65 million Tweets daily. That makes Twitter and its UGC “firehose” a potential force to be reckoned with in local.

Yelp & Foursquare: Utility vs. Hipster Chic

I told myself this morning I wasn’t going to write any blog posts to work on a couple of client deliverables. But I can’t resist commenting on a Robert Scoble post: “Foursquare’s Yelp problem.”

Scoble makes a number of points about Yelp and Foursquare and then serves up a set of recommendations to the latter. Here’s what he says about Yelp’s recent adoption of badges:

Yelp has now copied the checkin gesture that Foursquare introduced to us all and also they added badges of their own. I already am the baron of my favorite Mexican restaurant in Half Moon Bay.

This copying behavior demonstrates to me that Yelp is definitely jealous of the attention Foursquare is getting and isn’t able to innovate on its own . . .

Yelp is jealous of Foursquare’s serendipity and gaming. But they haven’t nailed that yet. I think that’s why Foursquare’s CEO, Dennis Crowley, says that Yelp hasn’t copied the right features yet. But he’s gotta be nervous that they’ll figure it out in a couple of more months and totally take away Foursquare’s air supply.

I’m not going to discuss Scoble’s recommendations to Foursquare, which just got some new funding. But I want to offer an alternative analysis.

I don’t think, as Scoble argues, that “Yelp is jealous of Foursquare’s serendipity and gaming.” Yelp was in Foursquare’s position (the cool/hot upstart) for several years. Foursquare has usurped that position and the associated mindshare. Foursquare is the darling of the blognescenti right now.

Yelp is not threatened by geo-social gaming per se. The perceived Foursquare threat to Yelp comes from the possibility that some of Yelp’s top review writers and cool cats might be siphoned off by the newer and shinier service. In other words, the concern is that Foursquare might look like the “hipper” party. I think that’s what Yelp is partly trying to guard against with its recent moves, adopting check-ins and badges, which seek to retain those enamored by Foursquare and its features.

I also don’t think Yelp is “unable to innovate” but I do agree with Scoble that the extent of the imitation is somewhat disappointing.

Yelp is a truly mainstream site today with something around 32 million uniques. Foursquare by comparison is not (perhaps yet), with just over 2 million users:

One paradox at the heart of Foursquare is that the features that have driven success to date are potential barriers to mainstream adoption. Here’s what I wrote several months ago in a client only report on LBS and geo-social games:

Geo-social gaming services must strike a balance between their competitive and utilitarian aspects in order to gain broad appeal. The “Mayor” concept in Foursquare provides a case in point. It generates engagement and fun as participants compete to be the Mayor, the most frequent check-in at popular venues.

While this drives engagement among the most committed users it could discourage casual users from participating. However, Foursquare and its peers need these more casual users in order to go mainstream; they need people to use these apps in the same way people now use Yelp or Citysearch or a directory site – for local recommendations.

You may or may not agree with that perspective. I’ll offer a kind of ironic rejoinder to that view: Yelp, by adopting check-ins and badges, is now exposing a much larger audience to these game concepts and thereby potentially helping to mainstream them. By copying Foursquare, Yelp could be helping the site ultimately by “acculturating” people to LBS gaming.

Yelp and Foursquare share monetization challenges. Yet Yelp now has a very large telephone sales channel that it uses to sell ads. One could argue, however, that well-reviewed SMBs on Yelp don’t need to advertise — a fundamental problem. Yelp has answers for that point of view of course.

For its part, Foursquare has been busy working with traditional media companies (Bravo TV, Conde Nast, etc.) and brands but it faces some obstacles in generating SMB ad dollars.

In the first Foursquare marketer survey (n=125 SMBs currently using Foursquare to promote themselves), which I collaborated on, this was the response to the “would you pay for it?” question:

Only 10.4% said they were willing to pay for services on Foursquare. If push were to come to shove that could change; however the slide above illustrates the resistance to paid Foursquare advertising at the SMB level.

Foursquare is something of an unlikely, or perhaps more accurately, unexpected success. The next-order challenge is to broaden the consumer appeal of the service without diluting it beyond recognition for early users.

Yelp by contrast has “arrived.” Its founders may see a challenge in maintaining its “cool” vs. newer sites like Foursquare. But I would suggest that Yelp now should focus on being a better utility and cityguide for everyone and not worry so much about holding on to its hipster image.

Can Hulu Make Subscriptions Fly?

Hulu is reportedly about to expand to a range of other devices, following in the footsteps of Netflix’s successful move to the iPad, Xbox, Roku box, Wii and now the iPhone. The price point that has been reported in the past is $9.99 per month. It’s not clear if that would eliminate commercials, however. My suspicion is no.

It appears from the recent Reuters report that Hulu will likely provider broader content access to subscribers:

Hulu, which generated an estimated $100 million in advertising revenue last year, will continue to offer newer episodes of shows like Fox’s “Glee” free of charge, but it will also charge viewers a monthly fee to see older episodes and other content, two of the sources said.

Given that consumers have long demonstrated a willingness to pay for movie rentals and cable TV, the market is arguably already conditioned, especially by Netflix, for the Hulu paid service. But given the fact that people already pay for cable there may be a reluctance to embark on another monthly subscription. Also the question arises: will Hulu expand what’s available to paying customers (as the Reuters article suggests) or will it remove some of what’s available for free, perhaps in addition to an expanded offering on the paid side. The former approach is more likely to succeed.

Mobile TV has failed in the US, because people are unwilling to pay for it. But Netflix on the iPad (and soon the iPhone) is a success. Why? It’s partly because of the brand and nature of the service and partly because of the broad array of content available on Netflix. Also the user experience Netflix created  on the iPad is terrific. Mobile TV has been very uneven.

YouTube wants to go into this area as well but it’s not clear that the site can make the transition. Past experiments with movie rentals have largely failed.

Hulu has developed a much stronger brand for “premium” content and I believe there’s at least some willingness out there to pay for what it has to offer. That same “demand” doesn’t seem to exist with YouTube, which also has less professional content.

One reason why this is interesting to me is because its a free model moving to a hybrid model. This is challenge even more acutely faced by newspapers as they try and negotiate a similar transition. However newspaper content has been massively devalued by the “commoditization” of news online. Only a few publishers are likely to be able to gain any meaningful subscription revenue from the PC Internet. Tablets may turn out to be a different story.

Then there’s the interesting angle that asks how these emerging services on TV and other devices will impact cable: Netflix + Hulu through a set-top box or Google TV (or a comparable service). There’s lots of pent up demand I believe to ditch cable for cheaper and more flexible services such as Netflix and/or Hulu on “all my devices.”

The cable companies will obviously try and block or pre-empt this scenario. Let’s talk in three years and see where we are.

Would you be willing to pay a monthly fee for an enhanced version of Hulu and at what point would you cancel cable?

4Square & SMBs: First Survey Data at SMX

Will Scott, Matt Siltala, Chuck Reynolds and I collaborated on the first survey I know of that polls SMBs using Foursquare to promote themselves. This is not a random group of small businesses that may or may not have heard of Foursquare, this is 125 SMBs currently offering rewards and incentives on the LBS site.

We had a call about the survey results on Friday and they’re very interesting.

In some ways these businesses are very typical SMBs and in other respects they’re absolutely not. Will and Matt will be presenting the data as part of the #SMX panel “Location Services: The New Local Search?” on Wednesday.

Almost 50% of these respondents have a marketing budget of less than $2,500 per year. But the overwhelming majority have websites and Facebook pages. Another interesting fact: these businesses are geographically distributed all over the US, not just in the “broadband metros.”

Lots more interesting stuff on Wednesday.

Yelp’s ‘Hidden’ PPCall Opportunity

Pay per call is not something that Yelp currently sells, to my knowledge. However this little bit of data caught my eye in a Yelp blog post last week:

Last month, over half a million calls were made to local businesses directly from our Yelp iPhone App. That’s about 1 call every 5 seconds to a business as a result of Yelp.

Imagine if Yelp were to start to monetize these calls. There are several challenges in doing that of course (e.g., they’d be intercepting calls going to those businesses arguably anyway). But the volume suggests the company has an opportunity with PPCall.

And when other smartphone platforms are included the call volumes could approach a million monthly calls.

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Related (though nothing about the data above): Mercury News interview: Jeremy Stoppelman, Yelp CEO

AT&T Now a Big Liability for the iPhone

AT&T has become a giant liability for the iPhone. While in other markets around the globe (e.g., the UK) multiple carriers offer the handset, in the US it’s still only AT&T. And despite the speculation and hope for a Verizon iPhone it’s quite likely that AT&T will remain the exclusive US carrier for at least the duration of 2010. I hope I’m proven wrong.

AT&T’s network and reputation have taken a big hit from iPhone users struggling to “get on” and who experience dropped calls — although it was just rated “fastest” by PC Magazine:

But PC Magazine also found AT&T’s network to be the “least consistent” of those it tested. Interestingly, AT&T’s 3G network was as fast as Sprint’s 4G network.

Speaking of Sprint, I remain a Sprint customer despite my desire for the iPhone because I won’t switch to AT&T. I got the EVO at the Google I/O event and intend to use it as my personal phone.

I’m an AT&T DSL customer at home and what a disaster that has been: inconsistent connection, slow speeds and poor customer service. (We all now know about the recent, ham-handed “cease & desist” episode re AT&T wireless.)

When my DSL went out earlier this week I switched to the EVO hotspot and was able to restore the various devices in our house for the several hours that DSL was down. That’s a great feature of the device.

As much as I like the EVO I would replace it with the forthcoming iPhone in a heartbeat if it didn’t mean I had to switch carriers to AT&T.

AT&T has rewarded its iPhone data users, as you know, with a complex, new usage-based rate plan. While financial analysts and the “industry” applauded the move to tiered pricing, it’s actually the opposite of what consumers want. Verizon may follow but Sprint and T-Mobile are holding the line for now.

So beyond the inconsistent service, the complex and opaque new pricing scheme will further “punish” iPhone users.

Cumulatively all these factors make AT&T a growing liability for the iPhone and limit its further penetration in the smartphone market. Apple, at least in its public statements, seems blind to this.

RedBeacon Poised for National Rollout, Growth

I was an early critic of RedBeacon when it first launched. I  thought the site’s founders had created an elegant platform but were naive about the small business market. Here’s what I wrote last year:

I’ve got nothing against RedBeacon and wish them well. But they will find, like many others before them, that the local space is much much harder to crack than it appears from a distance. There are many failed startups in local. In most cases they failed because they didn’t realize how tough it would be to get businesses to advertise or sign up.

Since that time there have been many changes at the site and it has evolved considerably. I’ve been impressed with these enhancements and the “sensitivity” to the market shown RedBeacon’s management. I also recently compared RedBeacon to other lead-gen type sites (including ServiceMagic) and found it, while imperfect, to be overall the best of the several sites I examined.

Today after several weeks of trying I spoke to Ethan Anderson, RedBeacon’s CEO. What I learned in that conversation convinces me that RedBeacon has Yelp-like potential in the market and, as it prepares to close a funding round and roll out nationally, is poised for tremendous growth.

IAC-owned competitor ServiceMagic is on track to do $150 million (or more) in revenue this year. I can imagine that RedBeacon could approach those numbers in three years.

Anderson told me that the site is going to shortly announce some major partnerships and a self-service widget strategy that will enable any publisher or developer to embed a contextually relevant widget/lead-gen form on its site.

RedBeacon currently has a very generous revenue share that comes out of a 10% commission on the value of jobs actually performed. There’s another model that charges a flat fee to up to three businesses when an on-site consultation or estimate is required, in more complex jobs.

One of the keys to RedBeacon’s model is that it doesn’t need to sign up that many businesses in each category to reach “liquidity.” The company qualifies 12-15 businesses in major categories that the site feels are the best in the group — they do this by looking at other sites. Then they reach out to these businesses with a CPA pitch: you only pay a commission on jobs actually performed. “You’re buying a customer not a click,” is the essence of the conversation. This is analogous to Groupon’s pitch and model but the SMB doesn’t pay 50%; in this case it pays 10%.

This relatively small number of businesses required to populate each category means that each job request will receive several bids. Anderson told me the average is five. In my two experiences with the site (landscaping and fencing) I received more than that.

Anderson also told me that 50% of consumer come back and use RedBeacon within a month after booking a previous job. The company is also considering a loyalty program.

There were several other roadmap features and developments that Anderson described, but I don’t want anyone visiting me in the middle of the night so I’ll restrain myself.

Regarding the issue of communication between SMB and customer — an area of particular skepticism about the model from me and others — RedBeacon recently implemented chat on the site. Anderson said that about 70% of consumers are utilizing it. There was obviously a need for more direct, real-time communication with service providers and RedBeacon has accommodated that need. In addition SMBs and customers can communicate through email facilitated via the site to ask and answer questions as well.

In terms of whether SMBs “get it” or are sophisticated enough to take advantage of this platform, clearly enough of them do. Right now it doesn’t matter if 80% of the market doesn’t utilize or can’t utilize the system. Anderson just cares that there are a savvy group in each category and city that can.

He even told me that some SMBs have gone out and bought iPhones or Android devices so they can respond to RFP request from the field. RedBeacon has SMS notifications but is also working on mobile apps.

As the tone of his post suggests, I’m no longer the skeptic I was when they launched. Had the site not changed and evolved my criticisms would have remained, but RedBeacon is rapidly improving the service in anticipation of the coming national roll out.

As a final matter I asked Anderson about use of the phone and call tracking: would they consider it? He said they wouldn’t totally rule it out but right now he didn’t think they needed to implement it. Despite the fact that defies conventional wisdom, he may be right.

I would all but guarantee that a year from now (or in less time) the site will have several suitors hoping to buy it.

NY Times’ Scoop App a Model for Others

The NY Times now has four iPhone apps: its main site, real estate, crosswords and a new city and entertainment guide “The Scoop.” In my relatively quick perusal of it The Scoop seems to be a very useful New York restaurant, bar and entertainment directory.

It uses the paper’s editorial content and selectively extracts those listings and reviews that are relevant to the app, also taking advantage of location-awareness on the iPhone. Here are some screens:

This kind of app will give UGC sites a genuine run for their money. And, as you can also see, there’s great ad inventory for contextually and locally relevant advertisers — including rich media.

Other newspaper publishers could equally create mobile apps along these lines. For example the SF Chronicle should build an app around its popular “top 100” restaurants guide.

Fail: What the ‘Insider’ Debate Misses re the iPad

John Battelle’s prediction about the iPad’s all-but-certain failure was itself a #Fail:

Apple’s “iTablet” will disappoint. Sorry Apple fanboys, but the use case is missing, even if the thing is gorgeous and kicks ass for so many other reasons. Until the computing UI includes culturally integrated voice recognition and a new approach to browsing (see #4), the “iTablet” is just Newton 2.0. Of course, the Newton was just the iPhone, ten years early and without the phone bit….and the Mac was just Windows, ten years before Windows really took hold, and Next was just ….oh never mind.

Later, after the announcement of 2 million in sales, he explains why he’ll be proven right eventually:

I think my prediction was right in the short term (when the iPad was announced, nearly everyone was disappointed at what it wasn’t, see the headlines from January, above), and I was totally wrong in the medium term (the thing has sold two million plus and probably has a shot at being Time magazine’s “man of the year” for 2010). However I still believe I’ll be entirely correct in the long term, in particular if Apple doesn’t change its tune on how the iPad interacts with the web.

But Battelle’s logic misses the larger point.

The iPad’s vulnerability is not to a more “open” tablet or system but to cheaper devices that ape its functionality. Neither Battelle nor the developers and blognescenti obsessing on the “open” vs. “closed” debate that surrounds Apple really understand the consumer mindset. They’re distracted by an “insider” argument that has little relevance to consumers.

Consumers don’t think like tech insiders, bloggers or developers, they think like buyers of products. They don’t care about “Flash” per se or whether HTML5 is “ready for prime time.” They don’t care whether Apple has to approve all the apps in the app store or whether Apple is “open” or “closed.” They want devices to work and be affordable.

Steve Jobs is absolutely correct when he says that consumers care about products. Jobs says Apple is trying to make “great products.” You can be cynical or not: whatever motivations Apple has or doesn’t have for rejecting Flash, if the company makes great consumer electronics people will buy them.

While some people are clearly annoyed that some Web video doesn’t work on the iPad and iPhone, people focus on “video” not Flash itself.

The iPad is a great product — if slightly imperfect. And it has done (with some help from Kindle) what Microsoft was unable to do with its hardware partners for years: establish the “Tablet PC” as a bona fide consumer category. Now 20 tablets or more are coming into the market on the heels of the iPad’s success. All but a very few of them will use Android because it’s really the only alternative they have. Windows 7 the PC version is unlikely to find success on a tablet — except in some narrow circumstances at the higher end  (e.g., laptops or netbooks with removable tablet screens). Nokia-Intel’s MeeGo is a possibility as well.

There will be two factors — and mainly one — in terms of whether these Android-based iPad challengers will succeed or fail: do they “work” and are they affordable? Very few consumers will be making buying decisions based on Flash itself or the idea that Android lives at the center of a more “open” ecosystem.

Retrevo’s consumer survey data (which earlier incorrectly interpreted iPad demand) echo the pricing variable as probably the most important in the Android challenge to the iPad:

WebVisible Documents ‘The Great Divide’

But for the mentions of “yellowpages.com,” “Yahoo” and “Facebook,” it plays like a commercial for Google. WebVisible’s “documentary” shows the gap between some small business owners and consumers in terms of how they find one another.

Some of the local business owners in the short film reference traditional media and yellow pages, while the consumers and a later group of SMBs interviewed only discuss smartphones, search engines, the Internet as resources they use to find local business.

WebVisible is also running a contest in association with the release of these shorts. The SMB winner will get three months of free ads.

Addafix Rolls Out in Denmark

Social caller ID and next-gen DA service Addafix (formerly Yellix) has launched in Demark. The company also operates in Austria and Germany. The caller ID function integrates with Facebook but also identifies numbers not among the user’s contacts through a look-up via a directory partner. In Denmark the partner is publisher De Gule Sider.

The business model is a revenue share based on local business lookups. As mentioned, in each country there’s a directory (yellow pages) publisher partner, which provides advertiser listings to Addafix for distribution.

Here’s Addafix’s discussion of how the business model works:

The caller unsuccessfully calls a pharmacy for instance, a pizza delivery service or a craftsman and receives additional data of the recipient such as other mobile or fixed line phone numbers. Furthermore, three alternative companies are displayed which are located within direct geographical vicinity of the dialed phone number. If a user dials a number of a plumber in Copenhagen and can’t reach the company because the line is busy, ADAFFIX will show additional contact information as well as three other plumbers nearby within seconds. Another call is initiated simply by pushing a button, contact details of companies can also be added to the contacts list on the mobile phone.

I asked CEO Claudia Poepperl if she could provide any additional color or data on how things were developing. Here’s the note I received:

All I can share with you at this point is that in the countries where we are live adaffix is one of the top mobile search traffic drivers for our publishing partners…it’s running in the background all the time and continuously generates local searches as phone calls happen…and a lot of phone calls happen all the time.

As I’ve said before it’s something of an unlikely success but the service has now won multiple awards and seems to be doing quite well.

Citysearch Now Just One Publisher at CityGrid

Jay Herratti is now the CEO of CityGrid Media — not Citysearch. Kara Nortman runs day to day operations for Citysearch, InsiderPages and Urbanspoon, the three local properties owned and operated by the new entity CityGrid Media. There are also strategic investments in OrangeSoda and MerchantCircle.

I asked Herratti what he will be doing on a daily basis now? He laughed and said that he will primarily be helping evangelize and promote the CityGrid network and overseeing the ongoing development of its platform and infrastructure.

CityGrid has quickly emerged as the most prominent of the new group of local ad networks, which also include Where, Local AdXchange and to varying degrees LSN and Verve Wireless. However all of these are either exclusively or predominantly mobile ad networks, while CityGrid is “platform agnostic.” In addition, some of these use CityGrid to provide fill for their own networks. There’s also Google AdSense of course, as well as various more traditional ad networks that also offer geo-targeting. (Local.com’s white label IYP network is a version of this as well.)

CityGrid however is the most visible and arguably the best positioned of the bunch. It also offers the most direct alternative to Google AdSense for publishers, although CityGrid can be used beside AdSense as well.

According to the official material from IAC:

CityGrid aggregates more than 700K paying advertisers including YellowPages.com, SuperPages.com and Dex, and reaches over 140M unique users across more than 150 web and mobile partners including Bing.com, MapQuest, AOL and more.

The CitySearch sales force now becomes the CityGrid Media sales force. It will be selling Citysearch as one of many properties in a much broader network. But that pitch is not far removed from what has been going on at Citysearch for some time. And because it owns or controls a considerable amount of its own traffic, CityGrid is in a stronger position than some of its independent sales channel competitors, which must get a substantial chunk or a majority of their traffic from Google.

A couple of years ago Citysearch seemed to really be faltering vs. Yelp, which had reinvented the city guide model that Citysearch helped pioneer. But a couple of acquisitions later and with the arrival of CityGrid the business has almost been totally reinvented. And in some ways CityGrid Media has a brighter future and is now more valuable to corporate parent IAC than Ask.com.

I asked Herratti what happens if “a 100 new sites” now come at him to become part of the network? Can they integrate them? Can they control quality?

He said that developer self-service will allow publishers to join CityGrid rapidly without the bottlenecks that would otherwise accompany the process. He also said that before anyone is paid there are quality checks that CityGrid does to ensure publishers measure up.

I asked about what happens to clicks and calls that come through the system from sites that have integrated (via self-service) CityGrid content and advertisers but have yet to be “certified” officially on the network? Herratti said those are free calls and clicks to the advertiser. Until approval of the publisher site there’s no charge to advertisers for traffic or leads coming through. Accordingly Herratti said that there was lots of “free” traffic to advertisers on the network.

I questioned whether small publishers and developers “could really make a living” off the revenue generated by CityGrid. Herratti was emphatic that they could: “Absolutely.”

Herratti said that Urbanspoon was a beta partner before it was acquired and they saw the revenue being generated there. “That’s one of the reasons we decided to buy them,” he explained.

Snapfinger Points toward ‘M-Commerce’ Future

The lines between online and offline commerce are blurring. The idea of “buy (or reserve) online” pick up in store is fairly well established today. Open Table is a cousin of that for the restaurant industry: online inventory management, offline fulfillment.

In the same vein, a company called Kudzu Interactive (no relation to local directory Kudzu), which owns site/app Snapfinger, just announced a new $7 million round, for a total of $11 million to date. As you may have read the company enables “remote ordering” (online, mobile) from chains and franchise restaurants for “in-store” pick-up:

The company integrates at the point of sale with the restaurant, like Open Table. And like Milo with independent local retailers, Snapfinger is working to bring independent restaurants into the system:

Snapfinger enables users to access more than 28,000 restaurants from leading national chains such as California Pizza Kitchen, Outback Steakhouse, and Boston Market, as well as local independent restaurants currently in its network. The product uses location-based technology to find nearby restaurants and enables the user to order food and complete the payment transaction in a matter of minutes. Snapfinger is fully synchronized with the restaurant’s POS (Point of Sale) system, ensuring order accuracy, real-time menu updates and accurate prep times.

Snapfinger has competitors such as GrubHub, among others, and several chains offer their own mobile ordering apps: e.g., Pizza Hut, Chipotle. Because of their convenience, however, it’s likely that centralized ordering will win out over individual restaurant apps for most consumers. Regardless the idea of mobile inventory/ordering/purchasing for offline pick-up will continue to gain steam as consumers overcome security fears.

Kudzu Interactive/Snapfinger is a company (and app) that, as it grows, will become increasingly attractive as a takeover target — including by OpenTable.

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!

Placecast Cleans Dirty Location Data

In the couple of months since Placecast launched its Match API the company has seen great traction and discovered how compromised much of the location data is “out there” — especially when it’s user-generated. The Match API “cleans” individual data sets and helps de-dupe and correct data where publishers are drawing upon multiple data sources.

Placecast CEO Alistair Goodman described it like a laundromat: dirty data in, clean data out. According to the press release out this morning:

Placecast is finding traction with its solution for cleaning and managing location-based data. The creators of Placecast MatchAPI announce that in fewer than 60 days since it was initially launched, more than 200 LBS-related companies have signed up to use the data management tool, including WCities, Socialight, Buzzd and AlikeList . . .

Initial experience with location-based companies using the MatchAPI platform reveals interesting insights about the quality of location data. Statistics from datasets uploaded indicate that when the Placecast MatchAPI platform cleans a data set, there is an average fault rate of over 8%, growing to as much as 40% in data sets with high proportions of user-generated content . . .

With the strong initial interest, Placecast is now rolling out a developer portal in order to continue to provide free services for correcting duplication and matching across different location data sets, two of the biggest challenges in building location-based services that scale. The portal is live at http://www.placecast.net/developer/

Alistair Goodman also corrected some faulty assumptions I held about the product. Placecast isn’t working with a master database and comparing individual data sets to that master list. Nor are they generating one — yet.

It would be hypothetically possible through the involvement of all these parties for Placecast to develop a common, clean LBS database. This is my speculation, however, and not anything Goodman said the company would be doing. At the present time it’s not sharing data among partners. But “collaboration” is one of the features or “values” in the Match API developer portal.

This master LBS database is, in a way, “low-hanging fruit” as a phase II for this product. There’s also the potential for a local ad network or “exchange,” which could eventually emerge from this as well.

Geotoko: LBS App Marketing Tool for SMBs

BrightKite created master consumer check-in tool Check.in, which enables users to check in to multiple LBS apps simultaneously:

Now in a parallel way Geotoko seeks to make it easier for SMBs to utilize multiple LBS services and contests for promotional purposes:

Apple & Google Battle for ‘The Master Screen’

And now for the battle of the living room . . . blah, blah, blah.

However, the report from Engadget today that Apple TV 2.0 (or 2.5) would be more connected to the iPhoneOS, run apps, have new features/content and, most importantly, be super cheap ($99) is pretty interesting:

A tip we’ve received — which has been confirmed by a source very close to Apple — details the outlook for the next version of the Apple TV, and it’s a doozy. According to our sources, this project has been in the works long before Google announced its TV solution, and it ties much more closely into Apple’s mobile offerings.

The new architecture of the device will be based directly on the iPhone 4, meaning it will get the same internals, down to that A4 CPU and a limited amount of flash storage — 16GB to be exact — though it will be capable of full 1080p HD (!). The device is said to be quite small with a scarce amount of ports (only the power socket and video out), and has been described to some as “an iPhone without a screen.” Are you ready for the real shocker? According to our sources, the price-point for the device will be $99. One more time — a hundred bucks.

It’s the price point that’s the most compelling part of this.

In a long post at SEL I tried to second guess and predict what the price of the Google TV Logitech box would be. I came in at under $300 (probably $200 – $250). If in fact Engadget is correct and we see a $99 Apple TV box it’s going to force a corresponding price reduction or adjustment from Logitech and/or any other Google TV hardware partners (though not Sony). It’s very much like the smartphone market: you can’t hope to sell a subsidized smartphone in the US for more than $199 these days.

I was at a UBS conference earlier this week where a speaker argued that TV was now irrelevant because of the cloud and all the other screens we use for content. I quite disagree.

The living room (or family room) TV is arguably the “master screen.” And it’s going to morph into a multipurpose media center that includes Internet access, phone/video chat, social media, transactions, local search, apps, games and so on.

Things like yellow pages search on AT&T’s U-Verse or the “Visual 411″ widget for Verizon FIOS TV are going to seem very primitive by comparison to what’s coming.

Indeed, it’s time to prepare for the coming of “Internet TV” in earnest.