Living Social Raises $30 Million; Goes Head-to-Head with Groupon

March 12, 2010


The “Flash ecommerce” space got hotter today, as Washington, D.C.-based LivingSocial announced a new $30 million round led by U.S.Venture Partners. Grotech Ventures and Revolution (Steve Case’s company) are also participating.

The fund will be used to launch deal-a-day coupon sites in Chicago, Denver/Boulder, Raleigh Durham and San Diego. These cities are actually live today, along with Atlanta, Austin, Boston, Los Angeles, Mineeaspolis-St. Paul, New York, San Francisco, Seattle and Washington D.C.

Living Social got its start with Visual Bookshelf on Facebook, and has launched some additional applications since then (i.e. “Find a Happy Hour,’ “Pick Your Five”). The company appears mostly focused, however, on the hot Deal a Day space, where it competes with Groupon, which has raised a total of $34.7 Million, as well as a host of similarly themed providers (and many more on the way).

Last August, CEO and co-founder Tim O’Shaughnessy told us that he sees the Living Social Deals as “a huge opportunity” to market to customers based on their pronounced online preferences,” and to take those preferences offline.

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MerchantCircle Index: Mixed Awareness Levels for Local Players

March 11, 2010


MerchantCircle’s Merchant Index tracks merchant confidence in the economy (low). But it also yields some unexpected “real world” insight into merchant awareness and use of their local online marketing options.

The Index is based on 11,000+ email respondents , so there is likely to be an online bias in the results. Of its 1.1 million registered SMBs, MerchantCircle also has a strong base of rural and exurban members, but MerchantCircle officials don’t believe these businesses are disproportionally represented.

We’re most drawn to the low recognition accorded to many local mainstays that are “big deals” in our cyber capitals. The new LBS services, FourSquare and GoWalla, for instance, have recognition of just 7.5 percent and 5.7 percent each.

The principal city sites do better. Yelp has 39.4 percent while Citysearch has 66.5 percent. The disparity between them is not surprising given the latter’s longer track record and deeper national reach. Yelp’s awareness may be better pegged to its principal cities (i.e. San Francisco, where it is apparently the #1 resource).

The Index found that 26.1 percent of respondents are promoting on Citysearch, and 17.6 percent on Yelp. Google, Facebook and Twitter (among others) are used by more. Google is used by 59.5 percent; Facebook by 52.8 percent; and Twitter by 31.6 percent.

YouTube is a site that the respondents want to start using. 17.5 percent say they want to start using YouTube, while 14.2 percent say they want to start using Facebook.

MerchantCircle VP Darren Waddell is speaking on the New Directory Panel at Marketplaces 2010 in San Diego March 22-24 with Local Matters’ Mat Stover, SuperMedia’s Julie Miller and AT&Ti’s Greg Isaacs.

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Bay Area News Project Envisions $12 Million in Revenue

March 11, 2010

Local news cooperatives are now in development in San Diego, Chicago, Hawaii and San Francisco. The latter, known as The Bay Area News Project , is building up with a $5 million investment from philanthropist Warren Hellman, who apparently thought it would be a better idea to start fresh than buy The San Francisco Chronicle.

According to an article by James Rainey in The Los Angeles Times today, the 15 person BANP (a placeholder name) envisions potential revenues of $12 million a year with a four-pronged strategy developed by CEO Lisa Frazier, a former McKinsey consultant who is getting paid $400,000 a year.

Revenue is expected to come from multiple sources, including public radio style members and syndication payments from news outlets that use the project’s content. The New York Times, for instance, has lined up to run stories twice a week in its Bay Area edition (as it has in Chicago as well).

The site has snared New West founder and Industry Standard Editor Jon Weber as its editor. It will rely partly on paid interns from UC Berkeley, and is operating out of donated law office space. We’ll follow it –and the others — with interest. With enough of a bankroll, and much lower costs, there is no reason why these sites can’t compete against newspapers, win new types of users and advertising, and save the day for journalism.

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Red Beacon Teams with BigTent, Adds ‘Friendly Advice’

March 11, 2010


Red Beacon, one of the new breed of social/local leads providers for SMBs, said it is now available throughout the entire Bay Area and teaming up with BigTent, a mega-moms network in the Bay Area with more than 100 local cells. BigTent will receive a revenue share carved from Red Beacon’s 10 percent commission.

The deal between BigTent and Red Beacon positions the company not only against Yellow Pages and other newbreed leads providers (i.e. ServiceMagic, AlikeList, HelpHive, ThumbTack and Sears’ ServiceLive) but also against other sites that specifically tailor to moms (and women generally). These include sites such as Angie’s List and Center’d. It plays on the theory that some women are intimidated by home and trade professionals and may be more likely to seek out a social network for advice and recommendations.

For BigTent, the partnership marks the first time it has partnered with an organization to promote local businesses. It had previously worked deals with a number of national brands.

The BigTent news caps off a campaign to land associations and other organizations as partners. The results of the effort means that the site now boasts listings of 16,000 service pros with the badges of their organizations – a major trust factor. One of the key prizes has been the local branch of the Better Business Bureau, which previously hadn’t loaned out its list.

In other site developments, Red Beacon, which won the top prize as best new idea at TechCrunch 50 six months ago, is adding “Friendly Advice.” The feature lets friends comment on job bids (and the bidders). This complements the company’s matching engine, and reviews and ratings found on other parts of the site — including both positive and negative reviews.

“We’re crowd-sourcing recommendations and sharing,” says CEO Ethan Anderson. One added benefit is the viral element and the added exposure for Red Beacon: 500 views may become 2,500, he says.

Anderson notes that the company has been in a constant state of “iteration” since launching, and will only begin the process of raising money when it is satisfied with the end product. So far, the site has added several features, such as enabling private communications between consumers and providers in the middle of a bid; and allowing providers to additional information upon request. “Consumers need lots of information to make a decision,” he says. The site has also syndicated reviews from Yelp, Google and Yahoo to complement its own.

One milestone reached by the site is that it can now successfully furnish a quote for every job that is bid. In fact, it had over 1,000 service providers almost immediately after launch, and continues to rapidly grow its base. “We don’t have a chicken or egg problem,” says Anderson. “Signing up (service providers) has been easy.”

Red Beacon CEO Ethan Anderson will join AlikeList CEO Jim Delli Santi and Reply.com COO Sean Fox on the “SMB Marketplaces” panel at Marketplaces 2010. ServiceMagic CEO Craig Smith is a keynoter at the conference.

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Local Mobile Coupons: Analog Analytics Pushes Publisher Solution

March 9, 2010


Coupons are hot in a down economy, and printable online coupons –and even mobile coupons –are gaining share in the coupons business. But local SMBs aren’t always in on the game, as coupon sites frequently gravitate towards one stop national accounts.

Now, Analog Analytics, a San Diego based vendor, is pushing a clever mobile solution that allows online local publishers to feature display ads that have SMS promotion codes built in. Consumers show the coupon on their phones to retailers for conversion.

Use of the mobile coupon provides complete analytics (impressions, click-thru rates, texts, email and conversions). Among the 850 publishers currently working with the solution are Media News Group, Village Voice Media, Local.com, Wick Communications, Freedom Interactive and The San Diego Reader. More than 25,000 ads are being supported, and the company has just expanded beyond the U.S. with a new Australian operation. Chinese operations are currently being eyed.

Company founder Ken Kalb, a longtime search vet, says the mobile coupon solution is the natural successor to low click display campaigns. The engagement of a local promotion typically boosts click-thru rates by two-to-10 percent – 10 times higher than national online ads. Revenues might see a 20-30 percent boost within six weeks of launching.

Kalb notes that the coupons are sold via local sales forces, or alternatively, via a self serve platform. Affiliate marketing programs from other online coupon companies just aren’t a good alternative, he says. They typically pay just three cents per click. They also don’t offer much support for local advertisers in terms of analytics or upsells.

In fact, Analog’s self-serve platform also offers an upsell gift certificate program, which brings in immediate revenue for advertiser and publisher alike; as well as the “Bigger, Better Deal,” a daily promotion special. It also encourages frequent updating of ad copy and promotions. The platform also enables the development of opt-in marketing lists.

Is it too soon for mobile coupons on a mass media basis? It might be. As a backup, Analog Analytics does support print-out options. But this solution is an interesting one that might bring a source of renewed interest for local media companies. They continue to bring in more eyeballs than other media on their websites, but often have a hard time proving their value.

Analog Analytics CEO Ken Kalb is a featured speaker at Marketplaces 2010. He’s on the “Back to Square One: Refocus on Revenues” panel with Adicio CRO Tony Lee and Matchbin CEO Reed Brown.

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Citysearch Launches ‘CityGrid Complete’; Invests in Orange Soda

March 9, 2010


Citysearch announced today that it has shifted its ad model for small businesses, moving from the cost per click model that it pioneered several years ago to a new model that will drive consumers directly to their own websites. The new model provides advertisers with a complete range of SEO and marketing services across the CityGrid network of 100 Web and mobile partners.

The new services are being offered as “CityGrid Complete,” and will use Orange Soda as a partner. As part of the announcement, Citysearch also announced an investment in Orange Soda, which competes with the likes of ReachLocal, Yodle, WebVisible, Marchex and Matchcraft to resell search engine advertising and optimize content. Orange Soda currently works as a reseller for media companies such as Gannett and Freedom Interactive, and also works with franchise operations such as Remax and Jiffy Lube.

Citysearch EVP of Sales and Service Neil Salvage said the announcement is consistent with the enlargement of his own job description, which now includes product development on the merchant side. Salvage acknowledged that Citysearch has had a “not robust” search engine marketing platform, and has been searching for a better solution for 18 months.

“We talked with everybody,” Salvage said, and came to the conclusion that Orange Soda is a superior solution with a “robust back end oriented system.” Its SEO solutions “fit somewhere between ReachLocal and Yodle,” he added.

To Salvage, what’s really important about the announcement is that Citysearch is moving away on from Citysearch’s complex cost per click sales model and towards a fixed fee model that will boast a wide bundle of services. The move should allow Citysearch to increase its monthly yield from$600-$800 per advertiser to over $1,000, said Salvage. “That’s where we need to be.”

Cost per click over-emphasizes the reseller factor and has become “old school,” added Salvage. “It was built to go after Yellow Pages, but wasn’t really appropriate because the Citysearch product set did not really support that. It was an entertainment site. Now we want to focus our time and energy on platforms and the process,” he says. “We are focused on signing up more publishers, not on owning the (SMB) relationship. ”

Citysearch CEO Jay Herratti is a keynote speaker at Marketplaces 2010, which is taking place March 22-24 in San Diego.

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Vermont’s Front Porch Forum: Half of 15,000 Members Post

March 8, 2010

Vermont’s Front Porch Forum is a hyperlocal network that has thrived, usage-wise, without relying on much of anything other than its authentic community voice. As recounted in an article in this month’s Yankee Magazine by enviro-writer Bill McKibben, the hyperlocal network has expanded to 100 neighborhood nets, reaching 15,000 households. Each neighborhood is limited to 400 homes, and pseudonyms are discouraged in comments.

Penetration of each community is high, with the “flagship five sisters” communities in the Burlington area getting 90 percent reach. There are 25 “issues” published per month, and 98 percent of reviewers read each issue.

Participation is also said to be good, with 50 percent having posted recently. The communities stand out for their activism as well. Active networks of neighbors are using Front Porch to loan or give away items when needed (i.e. canoes).

But revenue remains limited, limited to sponsored email ads and city government public notices. “With a few hundred thousand dollars of development money, we could put this software in a box and set it up anywhere,” says founder Michael Wood-Lewis.

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