“Small business,” “marketing tools” and “viral marketing” = a new generation of Yellow Pages that will really help businesses get more local customers. Or so hopes Merchant Circle, a well-funded startup that officially launches in June.
“People who sell FEAR like the Yellow Pages cannot sell the hope that the local Internet delivers, said President and CEO Ben Smith. A more viral type of company, like Merchant Circle, needs to be built “because a $60B Local Internet advertising market depends on a low cost of acquisition channel for bringing 10M small merchants online.”
The project, still largely under wraps, began development at the end of 2004 at Rustic Canyon Ventures, the $550 million fund that The Chandler family, of Times-Mirror newspaper fame, plans to invest to catch the next wave of local and national advertising. The startup has also been joined by Bank of America Ventures and Walt Disney’s Steamboat Ventures, and several smaller investors (Maybe that means that Disney’s ABC TV network and owned-and-operated stations might end up playing a role in all this).
Since its conception, the service has been constantly tweaking; adding and deleting features based on whether or not they actually help the small business customer, and would attract their business. But viral marketing is at its core.
Like a blogroll, small businesses add other small businesses from their community to their network, trade ads, and get mutual attention from local consumers – hence the “Merchant Circle” name. Other features on the current, pre-beta version have been more come-and-go.
The current roster includes a state-of-the-art mash up of local apps: business search; coupons; lead generation (“request a deal”); image upload and management tools; Google Maps; thumbs up/thumbs down user ratings; newsletter and email management; Topix news headlines; activity tracker; and local blog postings and conversations.
Three Tiers of Service
There are currently three tiers of service. Tier one is “free.” Every local business gets a listing, and some basic tools. These include coupon creation; a business blog; a newsletter for up to 50 people; and participation in the local Web merchant net.
The other two tiers are the revenue generators. They include the “basic package” for $30 per month ($360 per year), or an “ultra package” for $800 per six months ($1,600 per year). Both packages highlight paid search deals on Google. Basic customers get one rotating ad, while Ultra- customers get four rotating ads.
Basic customers also get premium placement; a premium badge (a “good housekeeping”-like seal of approval); customized maps; and a newsletter for up to 500 people. It also has some negative inducements. These include a promise by Merchant Circle to answer emails from merchants; and the ability to place their own picture next to their listing, replacing a stock, meaningless photo.
Ultra-customers get all that for the extra money, plus a good awareness package. In addition to the Google placements, their newsletter can be sent to unlimited customers. They also get an Internet-managed, local TV ad (presumably SpotRunner); a phone ad (probably, ads that precede free Directory Assistance calls) and media consultation.
According to the CEO….
President and CEO Ben Smith, a Rustin Canyon entrepreneur in residence (who co-founded Spoke Software with Chris Tolles of Topix), told Local Onliner that everything’s in flux prior to the June launch. “It is all about testing. It is not close to being done. We are constantly revising. There is lots of new stuff coming for launch in June and then a second wave in late June.”
But some basic goals have been established. “The milestone here is to get 20 percent of merchants” in a community, said Smith. While Merchant Circle has a ways to go to meet such a goal, Smith notes that the site is not starting from ground zero. Indeed, it has surreptitiously gathered a large number of merchants via an underground campaign on Google and other sites that Merchant Circle (or its investors) already owns. This would presumably include Quigo, which is another Steamboat investment.
“We’ve been doubling the number of advertisers every four-and-a-half weeks,” he said. “You will be amazed.”
PK
Thanks for the comments. Glad I was able to get it across a bit. As I said there is alot of work to do. Like alot of others, we see the Yellow Pages as wasteful. interesting post We also see the channel it provides to small merchants as not working as you mentioned.
One thing we need is more local inventory and more local content for our merchants to leverage. We are looking for lots of both, so BD people, send us a note.
We’ve been using merchant circle since they began and every time they release a new feature, we think, “Yeah!, that’s what we need!” We’ve been in business for 20 years — there are few marketers that can give us the value that Merchant Circle can.
We saw this blog today and it made me happy for those guys who deserve it for the work they’re doing for the litte guys like us.
Checking out what Merchant Circle has been up to is always fun.
The difference from the first time I logged in to now is crazy … they’ve come a long way; From both the look & feel aspect to the offered features.
This is cool stuff
Current Merchant Circle implementation raises lots of significant questions.
1. Sniping.
Just for fun, I wanted to see what would happen if I identified myself as the owner of a business listed in merchant circle. I picked a yoga studio where I know the owner (my wife is a teacher there, and I take classes). You can see the results by searching Yoga in Encinitas, CA. The business in question is Yoga 101.
With no verification, Merchant Circle put me in charge of the listing. I changed the title and content, and made my email the contact email. I could have also changed phone number, address etc.
I was nice and only added nice info. Because I did this, Yoga 101 is now the FEATURED business.
But if it HAD been my yoga studio, I wouldn’t have stopped there. I could have just as easily sniped ALL the yoga studios in the area, and changed their listings… From Soul of Yoga to Joe’s Suckypants Yoga, etc. Changed or removed legitimate phone numbers and addresses to confuse potential customers. I could spend a few minutes giving all of them multiple negative ratings. (Clear your cookie and vote as often as you want!!)
There is no method for the REAL owner of Yoga 101 to repossess her listing.
Maybe everybody will be honest and nice. Maybe it will be only a few moments before some merchants decide to change whole cities of listings to suit themselves.
Guarding against such sniping seems an obvious business process. But my guess is that it is prohibitively expensive and will not be done with this free, viral paradigm.
But unless there is some sort of verification, Merchant Circle listings will quickly degenerate into doubtful garbage.
2. Request a Deal
Boy, is this an odd feature.
User can “Request a Deal” of any listed merchant.
If the merchant’s email address is known, the form sends the user’s email (for example Yoga101’s email address has now been set BogusMerchantCircleEmail@hotmail.com so this form sends an email there).
If the email address is not know, the form “saves” the email.
The actuall email received by the merchant is “xxx@yyy.com requested a deal”. That’s it. There’s no place for the user to specify the deal request, nothing.
I suppose, when I get this email, I can respond to the user:
“What deal are you proposing?”
And then the user can respond back “I want free yoga” or some such.
And then I can answer “We don’t do those kinds of deals”.
And the user can then reply, in a snit: “Well if you don’t do deals, why do you have Request a Deal as part of your listing.”
To which I might respond: Because Merchant Circle doesn’t allow me to remove that function.
Anyway, what’s the point of all this? After 2-4 email exchanges, what: Somebody’s going to request a deal of a dry cleaner? Press my pants for Fifty Cents?
Clearly this feature is designed to suggest that someday there will be online commerce. Shopping carts, auctions, god knows what. All the buzzwords that VCs like to hear.
As built, it’s a cumbersome joke.
3. Those God-awful Picutres.
Bikrams Yoga College of India has a picture of an empty restaurant.
Coast Athletics has a picture of an empty beauty parlor.
Yoga 101 (“my” business) has a picture of something; liquor bottles I think.
(a) I spent 20 minutes trying to change the picture. I am a computer geek. I had no luck.
(b) What sort of goodwill comes from putting a picture of an empty restaurant or beauty parlor next to yoga studio listing. God knows where these pictures come from, or how they are selected.
Suppose I created on my OWN a website a page listing “info about people”. I suppose the bio of Ben T Smith IV on that page — his info is on the internet; I suppose I can copy it to my page. Then next to it I put a picture of say Chuckles the Clown, or Stalin, or Nick Nolte’s drunk mug shot. Why not? It’s my page?
What sort of legal difficulties will MC get into when Bikram’s yoga gets wind of the empty restaurant pic?
4. Attractive, yes. Easy, no!
Remember that 90+% of internet browsing is done on Internet Explorer, guys!
That site is wonderfully legible when viewed using a mac with Firefox or Safari. On Internet Explorer for the PC, however, the type is so small as to be practically invisbile. 8pt Gray type on basic instructions, like Here’s how to sign up?
Us middle-aged guys shouldn’t need magnifying glasses to figure out how to be part of the viral marketing campaign that will make merchant circle a success. The virus won’t spread unless people spread it.
Conclusions:
Unless some basic commercial intelligence gets added to this high-concept enterprise, I believe that the site will generate a raft of business problems.
Appreciate the feedback on the early work.
We had reviewed the site on May 11 at 10:43am after it was created around 10am on the 11th. Our systems had not flagged it as an issue. We will have to work to improve that. (by chance I had personally looked at it becuase when I saw it go across I thought it was one of the early sign ups in that city, the picture seemed off, but I let it go)
We put alot out early to get as much early feedback as possible. As I pointed out to PK, the actual experience changes every day and even based on where you sign in from so we can test a number of different options and flows.
If you would like to take the time to help us understand the issues more clearly, feel free to shoot me a note. We learn more every day.
In terms of request a deal, you are right there is alot of work to do. Having said that, our merchants are already seeing new customers from this process. We are going to improve and expand it over the next few weeks.
Anyway, keep the feedback coming. We are a pretty small shop so we love to learn.
What I see is that you have now not only removed my changes, but completely delisted Yoga 101, a legitimate business.
The changes I made to that listing were in place for more than 36 hours. The ad that I made for Yoga 101 appeared on EVERY Encinitas search that I performed for more than 8 hours.
The picture I posted, which you say “seemed off” is a picture of Hanuman, a Hindu God, part of Yoga 101’s branding. I suppose it might seem off to someone unfamiliar with that business. Just as I suppose the thumbnail of an empty restaurant might seem off to a person interested in Bikram Yoga.
It took you more than 36 hours to remove the offending entry, in a city, that so far as I can tell, had NO OTHER ACTIVITY during that period.
You removed the entire listing — based on what criteria, I can’t imagine — so that now, because of my actions (an independent agent with no direct business connection) Yoga 101 is NO LONGER INCLUDED as a listed business.
You removed that listing based on this blog, apparently, and never contacted the owner, or me about this decision.
In other words: You acted late, arbitrarily, and without process or reason.
You took no action when the changes occurred, but only when you became aware of them through this blog.
This when one person made one change to one business in one small town, that apparently had never had any other activity at all. (I certainly couldn’t find any other Encinitas listing that had been adapted by anybody, and I looked.)
Take a look at your goal of supporting listings of 20% of a community. Your Encinitas pages, by my count, list almost 2000 businesses.
How do expect to monitor the actions being done to 400 business in Encinitas.
How will you decide who is legit in making changes?
How will you determine when a picture “seems off”?
How will you do this when you hope to address thousands, even millions of businesses? How many changes do expect to see per day?
One of the reasons why traditional local advertising is expensive, slow and cumbersome is that these methods include a human component: People make the changes on behalf of businesses, and make value judgements as change occurs.
Typically those people have local ties, and local reputaions, and have an interest in maintaining them. This makes them careful and cautious.
Your site has a very different paradigm, one that I support 100%. It tries to increase efficiencies and lower costs. It tries to provide greater information availiability, and to keep that information fresh.
But the methods your site employs are open for misuse, as I have shown. And you have no process in place to deal with that misuse, as you have shown, except on the most gross and haphazard way.
So how will your site maintain the trust of its users in the legitimacy of the information it presents? Absent a competent, knowledgeable reviewer with a personal stake in its accuracy, as traditional local advertising has by its history and the nature of its processes.
To ignore these less obvious qualities of local advertiising is a smug conceit.
Your trade off is now obvious: Efficiency vs Accuracy & Trust. You business processes and design are weighted entirely to efficiency. Do you presume that accuracy and trust will simply take care of themselves?
Do you presume that local customers (not your advertisers, but the presumed local users of your site) will be so interested in efficiency that they will simply ignore the accuracy of its listings?
At least with a phone book, those local customers can be reasonably assured that the address, phone number, and ad content were approved by the business. After the first snipinig attack, will a customer return to your site as a trusted source? After the first sniping attack, will your advertisers want to pay $150/month?
I ask these questions because I believe that they are fundamental to the nature of the enterprise.
I simply can’t imagine that there’s a $550 million fund backing this site, and these questions haven’t been asked and answered. They are fundamentall and obvious.
Again thanks for your feedback. We love it when people take so much time to work with the experiments we have out there and give us such generous feedback. You clearly know something about the business from your work with your online ad efforts and around the classified space.
As we have all seen frm Craig’s List and other sites, we believe these problems can be addressed over time. If not we wouldn’t be working so hard at it. In fact, we learned alot from Google on how to confirm the site owners indentity
We are huge believers in the competency and knowledge of Local Merchants about thier business and other businesses around them. We have found that as they engage, they use the system to correct the data about themselves (and they can do it alot easier than waiting on the Yellow Pages) and even point out to other Local Merchants opportunties to improve thier listings. They also have proven very effective ad flagging bad behavior, and we look forward to enabling this even further.
In terms of this site, our process will be followed to ensure the legitimate owner has control of the site. We place a few sites a week on hold at this point and are working the kinks out on the process to confirm. I am not very technical, but the ability to run down fraud is pretty interesting. When we had over 10 outlets of a major company sign up in a few hours, we did the same process. It ended up being quite legitimate, they had just passed the idea around as part of thier community marketing program after finding out that it worked.
Finally, to be clear this is not the only or the first issue we have seen. Yes- there has been an attend to create a busines in Nigeria for “special deals” but sense Nigeria was not available they place it in some unsuspecting town in the Southeast. We learn more everyday. And we will keep at it with the help of people like you.
In the meantime, we enjoyed providing new local opportunites to communicate with local customers to local businesses all over the country over the weekend and will be working hard to do it again next week too.
And to be clear, our goal is 100% of local merchants in fact more than are currently able to afford the overpriced Yellow Pages. So of course we are working hard on systems and processes to handle things on scale.
Love the feedback, keep it coming..
Great, Ben. Looks like you’ve got these problems licked!
Gee, I get the warm fuzzies from the marketing for MerchantCircle.com.
Today I got an automated call claiming that someone had entered a review on your web site. No one had, of course. It was phone spam.
Automated calls are illegal in many states.
- John
I got the same automated call that John did. It caused me to explore the site and claim my listing. I like what I see in the free service and I appreciate the exposure. I don’t understand how people will find me though, I can hardly find my listing and I’m looking. Is it expected that prospects will go to merchant circle like they go to the yellow pages? If so I would love to hear it promoted more.
Jerry
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