Category Archives: Money

Groupon Divests Breadcrumb to Upserve: RIP Platform Dreams

Groupon’s vision of using Point of Sales to position itself as a “Local Operating System for Commerce” is effectively over, with the divestiture of its Breadcrumb Point of Sales division to Upserve, the Providence-based restaurant loyalty and analytics company formerly known as Swipely. Groupon had purchased Breadcrumb in 2012.

Thought to be worth $100 million by Piper Jaffray analyst Gene Muenster in April 2015, Breadcrumb is being given to Upserve in return for an undisclosed minority position. Groupon – which has been taking cash for other divestitures, such as for South Korea’s T-Mon — has a similar ownership interest in Serviz, a southern California home services marketplace.

Rumors of Groupon’s efforts to unload the division have surfaced since spring 2015. By that time, Groupon’s hopes of making POS an anchor for a broad commerce platform were clearly not realistic.

Groupon’s concept for the platform, however, was a bold one: a virtuous circle of deals, marketplace goods, payment processing, services and analytics. Groupon’s recent (and ongoing) push into delivery via its purchase of Order Up was also thought to strengthen its value proposition for restaurants. Most of all, a robust POS-based system would provide long-term stickiness with its merchants. At the same time, it would also position Groupon as a platform player against a set of diverse, more blue chip players such as Amex, Verifone and First Data.

Ultimately, Breadcrumb’s technology may have been good at restaurant analytics and management — it will complement Upserve’s capabilities. But from a marketing perspective, it has been limited. Groupon wasn’t able to leverage the technology to win restaurants accounts.

Upserve won’t confirm how many customers it gets with the acquisition, but it may have involved fewer than 2,000. Before the deal, CEO Angus Davis told us last month that it had “thousands” of restaurant clients. In a press release, Upserve says that it will now have 6,000 total.

Does the divestiture of Breadcrumb have broader implications for the future of POS-based loyalty and offers programs – including card linked offers? We have seen people in the industry contend that loyalty programs and analytics have moved away from explicit programs such as card linked offers towards implicit programs (experiences, etc.)

Given Groupon’s other distractions, however, we would not draw such broad conclusions. While we anxiously await reports of success in this category, there is still a lot of activity: First Data’s Clover, for instance, continues to leverage its relationship with the Perka loyalty program; Belly, FiveStars, Edo, Linkable and Affinity continue to build up their loyalty efforts; and companies like Empyr are also using POS as part of their Online to Offline marketing programs.

Breadcrumb’s Interface

The Remains of The Newspaper Business (and Ken Doctor’s Take)

Newsonomics’ Ken Doctor

Over the past 20 years, we’ve viewed newspapers as “the leading laboratory” of interactive local media. While the funding and execution could always have been greater, newspapers have trotted out project-after-project in hyperlocal, promotions, online video, vertical sites, shopping products, social media and digital agencies.

With the possible exception of the digital agencies, most of these efforts haven’t made much headway. None will return newspapers to a position of local dominance, or help them be especially relevant in the next generation of local marketing. The reality of most of the newspaper industry is akin to the depressing experience of The Independent in the UK, which has seen its single copy print sales fall from 400,000 to 60,000 over the past 20 years, without online revenues even picking up a portion of the losses. While the innovators in the industry will continue to press on, the house is “on fire,” as Jeff Jarvis told attendees at The Mega Conference this week in Austin.

Some think it’s a matter of bringing back the quality of newspapers and letting them shine against the hack-writing of most online outlets. That seems to be working for The Washington Post, which has doubled its journalism core since Jeff Bezos bought it two years ago. The Post, however, has been repositioned online as a national property –one of the few that can qualify as such, along with The New York Times/Wall Street Journal/USA Today and The Guardian. At the local level, newspapers have the chance to produce unique content that is not available anywhere else. But things are looking dire.

Ken Doctor, in his Newsonomics’ post today, suggests the nails in the coffin are the ruthless financiers that have seen an opportunity in the bankrupt industry to suck out exorbitant management fees and merge newspapers together for regional ad clout and new fees. All the while, they are running the titles on empty, with few senior level (i.e. full priced) journalists left. The next recession — perhaps one later this year — will surely knock out the profit margins from the empty vessels and perhaps turn off the lights, once and for all.

If they were ever to be rescued, newspapers “need to think of product development as distinct from the news content itself,” says Doctor. “It is a change in thinking that’s still way too alien to local publishers…..Any company that disrespects its own products, and those who produce them, probably deserves its eventual fate,” he says. Their “financial-driven perspective has led them to believe that it’s mainly cost consolidation — rather than new content-based digital product development — that must be the major strategy of the time,” adds Doctor. “So far, that’s been a losing strategy for readers, journalists, and communities.”

DSC01959 Buys Yodle; Moves Deeper into Value Added SMB Services

A chapter in local commerce ended today with’s agreement to purchase Yodle for $320 million. The deal is expected to close by the end of 1Q.

The companies will complement each other well, with’s huge 3.45 million SMB base being driven up the value chain from domain registration (via its Network Solutions division) and websites and presence management to Yodle’s higher priced and more complex services, including SEO, leads, office based automation and CRM.

Yodle currently has 58,000 subscribers and an average revenue per user of $300 per month — a figure driven higher by the 9,000 franchise locations it serves for 200 customers. Its integration will have a large impact on averages, moving Web’s average customer earnings from $167 to $226 per month. It also will provide with a large, 700 person local sales team.

The sale price, of course, has got to be a major disappointment for Yodle backers. It was less than two years ago that Yodle had been talked about as a $1 Billion + company on the brink of a planned IPO. Its positioning at that time suggested it had finally broken down the wall in local between acquisition and relationship marketing as Yodle invested in CRM, cloud-based software and leads.

But Yodle never pulled the trigger on the IPO amidst a tough market for tech IPOs, There was speculation that the company simply could not withstand the exposure of publishing its churn and customer acquisition rates, which like the rest of the industry, would presumably be very high. And then there was the damning Wall Street Journal article on April 16, 2014 on poor customer service and poor values that focused on Yodle and Reach Local; and an apparent slowdown on efforts to sell enterprise level CRM and cloud based services to top franchise companies, or “brand networks.”

Right now, the battle to sell marketing services to SMBs includes a shrinking number of players. High acquisition costs and churn rates continue to plague the industry. But the potential rewards are rich for a group that not only includes but also ReachLocal, Endurance/Constant Contact, Vistaprint, Main Street Hub, SignPost, Deluxe Corp., Hibu, YP and in some verticals, DemandForce, which was just sold to Internet Brands.

Location and Corporate Presence: GE’s Move to Boston

Beta Boston Columnist Scott Kirsner

How much does an active tech scene really inspire a global tech conglomerate — especially one that is as far-flung as GE? That’s a big question, as Edison’s company prepares to move from the distant suburbs of New York to Boston.

Boston tech blogger Scott Kirsner placed his bet on Boston last week in an excellent column. “If GE thinks its future is about deal-making, glossy marketing campaigns, and trying to squeeze costs out of industry sectors undergoing commoditization, New York is the place,” he wrote.

But “if GE thinks its future is about keeping its portfolio of billion-dollar businesses steps ahead of the competition, growing new ones, and recruiting a next generation of digitally-savvy leaders from some of the world’s top schools, that points to Boston.”

That all makes sense to me. Personally, we’ve seen that location is important in providing proximity to capital and people, energy, tech savviness and overall smarts, and culture. All these can be diminished by real estate prices, bad schools and weather. But taxes probably pay the biggest role.

Is Boeing better off for having moved to Chicago? And Gannett in Virginia? Beyond the financial and news companies, are any other companies really better off in New York?

My Podcast Predictions for 2016: I’m on ‘The Digital CMO with Mike Orren’

Can the daily deals model recover? Will beacons be big in retail? Why is the home services space set to soar? How will custom deals be more sophisticated in the new year? And how can marketers decide which “unicorns” to bet on and which to ignore?

Speakeasy CEO and social and hyperlocal media pioneer Mike Orren interviews me — The Local Onliner — about what’s happening in local and media in 2016 for his new show, The Digital CMO. It runs about 34 minutes….Here’s the podcast link.

Sneak Peek at BIA/Kelsey NEXT Show: 6 Things I’m Watching For

“End of Big” Author Nicco Mele Keynotes BIA/Kelsey NEXT Dec. 9-10

BIA/Kelsey’s December event has been local’s flagship, and always ahead of the curve in all of local’s iterations. It has been widely imitated, but never totally duplicated! I‘ve been producing it for a long time, but this year, handed it off in midstream. I’ll be moderating some great sessions, though, and the conference team has ended up with 52 hand-picked speakers, a Tech Expo and two full days of programming. Here are some of the things I’m most excited about:

1. The New Cut on Local and Community. Local’s still at the concept stage in a lot of areas. Why think small? Two leaders from USC’s groundbreaking Annenberg School (my alma mater) will point to the new directions in separate keynotes. First up is Nicco Mele, the author of The End of Big (2013), a tour de Force on “radical connectivity.” He’s also fresh from his stint as deputy publisher at The LA Times, where his team’s efforts to seize new initiatives in local had already produced major new revenue streams. He’ll have a lot to say about what’s going to work. Leading off Day 2 is Dr. Karen North, Director of Online Communities, a dynamic presenter who is focused on Millenial applications and behavior – you’ve heard, perhaps, these kids live on the phone?

2. Keynotes from Google and Facebook: The latest in local from the two dominators and trend setters in local. Danny Bernstein at Google is set to highlight its deep linking efforts (Google Now). He is sharing the stage with Button’s Chris Maddern and Local Seo Guide’s Andrew Shotland.

3. Big Thinking about MarTech: Big Data’s impact on local cuts many ways – analytics, leads, targeting, planning, But it’s only a subsegment of the broader “MarTech” movement. Those in the know attend Scott Brinker’s annual MarTech conference in Boston. Scott, who also runs ionactive, is going to focus on local and highlight what’s important and why for us at NEXT. He’ll be joined on stage by Surefire Social’s Chris Marentis.

4. The Mobile App-Driven Marketplace. The mantra is that it isn’t really about search right now, because Mobile apps are driving the marketplace. What’s that really mean for local? One of the best analysts I know is Mark Plakias, who has been running Orange’s think tank in Silicon Valley for several years. He’ll be joined by’s Paul Ryan and DialogTech’s Steve Griffith. This will be quite a session.

5. Local and The Internet of Things. We’ve been pondering iOT’s impact on local — when everything is linked, from transit cards to vending machines. So has the new venture, Instersection, which is a partnership from Google Ventures and former Bloomberg head and NYC Deputy Mayor Dan Doctoroff. CSO Dave Etherington will provide insights on what they are up to. He’ll be joined on stage by Cisco’s Andy Noronha.

6. Close Up on The New Local Marketplaces. We’ve been saying for a long time that local marketing has gone beyond advertising. Now it’s “closing the loop” with transaction data, offer targeting and complete behavioral profiles reshaping the game. Groupon’s Dan Roarty, Microsoft’s Neal Bernstein and MOGL’s Jon Carder share their insights. Cardlinx CEO Silvio Tavares will add data and help me run this session.

Haven’t got your ticket yet? I have a *little* influence and can get you $400 off. Please use this discount code: LOCALONLINER. You may register here.

Constant Contact’s $1.1 B Sale to Endurance: Is There Synergy with Email and Hosting?

Constant Contact, the king of SMB email newsletters with 600,000 overall accounts, has been sold for $1.1 billion in cash to Endurance Holding Group, one of the largest web hosting, presence and domain companies with 4.5 million accounts and brands like HostGator and

The deal – which might be seen an SMB version of Salesforce’s $2.5 billion acquisition of ExactTarget in 2012– potentially represents a way to “save” Constant Contact, which is constantly under attack by marketing rivals. It also represents a way to add to Endurance’s average customer revenue, which currently runs about $10 or so a month (for hosting). CCI typically receives $20+ a month for its marketing services.

For CCI, the deal is the culmination of a multi-year effort that began with its founding in 1995; its IPO in 2007; and a more recent effort to provide comprehensive SMB marketing efforts. Indeed, its stock price fluctuations tell the story of a company that still depends on email in an age of email fatigue, spam and messaging; but remains the envy and target of every SMB marketer.

In fact, CCI has managed –with some success — to move its customers from one that is solely about email to a deeper relationship with extensions such as social media (Facebook ad management) events management, search, loyalty and other services. Via its costly, $65 million acquisition of Single Platform in 2012, it also added presence management, contact management and in some cases, larger customers.

None of the “new” services have been the home run that Constant Contact’s email services represent. But all of its efforts act on Constant Contact SVP Joel Hughes’ observation at BIA/Kelsey’s SMB event in Denver this September that “the two changes in SMB marketing are the advances in audience targeting, and the rise of native advertising.”

Can the two companies ultimately help each other? Endurance is not known as a deep integrator among the 40 companies it has acquired over the years, and its brand names don’t have high awareness outside of their customer base. In terms of brand awareness, it is no “Go Daddy.”

But its brands have deeply loyal customers like me (Local Onliner is hosted by Host Gator). Loyal and trusting customers may be more likely to buy enhanced services. It also has a reputation for low cost customer acquisition. This is a major plus, given that Constant Contact and its competitors in the SMB marketing space have a reputation for high cost customer acquisition.

For the two companies, it also seems like an easy merger. Both companies are headquartered in the Boston area, and already work together as marketing partners. Five percent of CCI’s new customers come from Endurance leads. Endurance says the combination will allow the two companies to reduce duplicated resources, saving millions of dollars a year. The current employee count is 2,500 for Endurance, and 1,400 for Constant Contact.

In our view, the CCI/Endurance combination gets it right in combining presence and marketing. Together, the two features represent the stickiest parts of the SMB marketing arena.

But the combination of Endurance and Constant Contact is going to have to fend off a lot of other players. Many of them will have a higher profile. In fact, extending the platform is the real quest for every company in the SMB space right now. Will email marketing and hosting turn out to be the right anchor for an SMB platform? Or will it be search? Or Deals and loyalty? The list goes on. In this case, timing and execution will be everything.

I like what Constant Contact co-founder and current PagePart CEO Randy Parker told me today – focus on the consolidation of this space. “It really is coming and there will be few companies acquiring the SMB,” said Parker. “The rest of us will just get ‘distributed’ through them.”

Constant Contact CEO Gail Goodman Keynoting at ILM East