MerchantCircle is claiming a registered base of 250,000 small businesses. That’s a lot – a penetration of 4.8% of the 12 million U.S. businesses that advertise. It has also announced $10 million of new funding, adding the likes of IAC and Square 1 Bank to prior investors, who include Rustic Canyon Partners, Scale Venture Partners, and Steamboat Ventures (the venture capital arm of The Walt Disney Company). Among other things, the money will be used “for acquisitions.”
The fact that Merchant Circle has kept all its original investors says something to me. And its ability to get financing from IAC, while forming partnerships with IAC sites such as CitySearch and HotWire, also says something to me. The people at WebVisible, who have added MerchantCircle to their small business sales arsenal, also seem bullish on the company.
But if a money person called me and asked me about the company, I’d still give a very mixed report. I’d say the company has developed some state-of-the-art tools for small businesses. It gets small businesses into search engine marketing and search engine optimization, and bolsters the case with blog tools and coupons. And with 580,000 unique visitors, per Quantcast, it is making some money from Google, and can make some more.
But the claim of 250,000 registered businesses, while impressive, should be sliced-and-diced for exactly what it is. The vast majority may have been duped into registering by an aggressive telemarketing campaign that strongly implied these businesses had a negative review, so they should go on line and check it out. To see their “review,” they first had to register.
The obvious question is how many of these violated businesses become loyal customers of Merchant Circle and are ready to be upsold into the SEM and promotion packages, etc. No one will tell me. I imagine it is a very low number. Maybe it isn’t.
The company does report traction in a few areas, though. For instance, it says it is publishing 7,000 unique coupons a month. Assuming that each SMB has one coupon, that means it has an active user base of at least 7,000. That’s a start.
Good for you, Peter. It’s good to see someone deflating these ludicrous claims. Pure hype, and in MerchantCircle’s case, blackmail and extortion as well.
BOY is this information a stretch…250,000 merchants? Dex, Superpages, The Yellow Guys, they cannot even claim that in their online initiatives yet and they already have penetration…This is the Wild West and it is a LANDGRAB but if we all use infousa or amacai data then we too can have over 250,000 merchants - Cant we? WE have to be very careful not to leave a poor taste and distrust in the small business owners mouth or we will all be in BIG trouble -
Peter - what’s interesting is that the company’s investors are backing 100% self-service model. They are betting that local ad sales can be automated. It is the opposite bet of ReachLocal , Yodle, WebListic, etc..
From the blogs, it looks like MC has reached at least some merchants and businesses not in the yellow pages database (consultants, service providers, etc) I suspect they scraped phone numbers and dialed. This expands the addressable market of yellow pages listing from 15 million to 20, 25, 30+ million (SBA estimate of SMB market). It would be easier to get a sole proprietor to log on and register — a copywriter for example — but harder to get them to advertise locally.
FastCall411 also dials merchants, but only merchants listed in local directories and calls are only initiated by consumers. The goal is to establish a relationship with the local merchant by proving first that FastCall411 can deliver value. MC will ultimately need to prove their value to build a relationship with merchants.
What do you think? Will the SMB market ever give up the sales relationship and self-service?
Richard/Peter, we’re run across a few customers who have no idea why they got an automated call from Merch Circle…confusing and a bit misleading, we’ve heard. We’re actually having client use self-serve forms “after” the sale to help us keep their content fresh. Although we have the advantage of having the client in one of our new Your Marketing Corner stores or being serviced by a premise rep, the buy-in the client demonstrates is very high.
Seems to me it would be very hard to create enough of a sense of value and buy-in via self-serve + tel. to have long-term retention. However, I do think the urgency to answer created by your tool is interesting and will review it. Thanks.
I wonder how many business profiles can a small local business have on the internet?
Facebook just introduced its “free” product last week, that gives businesses yet another place to exist.
For example, local restaurants are going to have to a hire a part time person or local agency just to keep their information current across the internet.
Merchant Circle, in my opinion, provides far less value as a host than most of the other businesses mentioned above. It is not a targeted vertical like a CitySearch.
MerchantCircle recently crossed 500,000 members. We’re proud to help local businesses acquire customers by offering an alternative to over-priced, ineffective offline marketing channels. We’ve been interviewing our merchants in all 50 states – you can read about their MerchantCircle experience here: http://www.visualcv.com/merchantcircle.
We’re committed to providing every local business a web presence, easy-to-use marekting tools and a platform for connecting with other merchants, all for free. As always, please email any questions or concerns to support@merchantcircle.com and we will respond as soon as possible.
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[…] all new to you, click the link earlier in this paragraph, or read Rae’s rant about them, or Peter Krasilovsky, who says the “vast majority” of their merchants “may have been duped”, or […]