Tag Archives: Reply.com

Reply’s MerchantCircle Relaunches; Heavier Consumer Focus, Less on Listings

MerchantCircle, which was sold to Reply.com in May 2011, continues to rethink the traditional Yellow Pages small business model. The company today unveils a web site that is less oriented towards directory listings, and more oriented – it hopes — towards winning more consumer traffic, generating more SMB leads, and better monetization.

While the new platform has been launched on the core Merchant Circle site, it will soon be available on a white label basis for other publishers, such as Internet Yellow Pages and City Guides. A key driver of the move has been the company’s desire to leverage a larger consumer base for Reply’s “clicks or leads” model.

MerchantCircle has actually been moving towards a “social commerce” model for some time, in recent years adding Answers, community content and other features. But EVP Darren Waddell tells us that the site has now more clearly moved away from an IYP “silo” model, where consumers basically encounter a business and its merchant page.

“It is not about the merchant value proposition,” says Waddell. “It is about helping consumers to connect with local business owners in a meaningful way.” Consumers will be able to seek requests for quote, see pictures – which Waddell stresses are “really important”; build deals; enter business subscriptions; and access the company’s trove of six million+ pieces of user generated content. Merchants, meanwhile, move up from a simple IYP-like enhanced listing to Reply’s Marketplace.

“We really blew out the entire MerchantCircle front-end,” Waddell adds. “We’ve developed an entirely new look and feel.” In beta tests involving up to 10 percent of its user base, the new, improved MerchantCircle has yielded a 2.5 X improvement in consumer engagement.

Being consumer friendly has also required Merchant Circle to crack down on merchants that were aggressively gaming the site and hurting its credibility. “It was a small but loud minority,” notes Waddell. “Algorithmically, we’ve really cracked down on people gaming the system.”

Initially, some of its merchants have not been pleased with the changes, which put most non-featured businesses below the fold. Waddell notes that some merchants on the site’s forums have been “really upset,” but MerchantCircle is sticking with it’s more balanced approach.

In the long-run, the company believes that they’ll realize they’re better off with the consumer-friendly features. In the meantime, Waddell suggests that Merchant Circle has hit an effective balance , with 1.2 million active merchants being able to respond to a strong volume of consumer requests – a capability that he believes is unmatched in the industry.

Waddell appears at ILM East March 26-28 in Boston on our all-star “Local Business Success: Picking Winners” session, along with AT&T’s Maria Kermath, Schedulicity’s Dave Galvan and SMBApps’ Randy Parker . Register here.

MerchantCircle Sold to Reply! Inc. for $60 Million

Reply! Inc has acquired MerchantCircle for $60 Million in cash and stock in a deal that makes a big bet on SMB, vertical and social marketing. The deal, which should be completed in Q3, brings MerchantCircle’s list of 1.6 million SMBs to Reply’s “leads or enhanced clicks” platform that ties together elements of search and lead generation.

It also seemed to indicate a possible IPO in the future, although company principals say there is no hurry to do so. Reply filed an S-1 with the SEC last year. Both companies have been profitable for at least two years.

Reply currently attracts 25 million unique visitors to its network of sites and white label relationships. The deal brings together a number of online consumer destinations from both companies, including Bloglines.com, Contractors.com and iMotors.com. MerchantCircle itself has shaped up to be a strong, search-driven Internet Yellow Pages player — although it prefers to characterize itself in broader terms, having added a Q&A platform, appointments, leads widgets, etc.

Indeed, MerchantCircle CEO Ben T. Smith IV likes to focus on the site’s engagement characteristics. “We had 250,000 business engage with each other on Tuesday,” he says. “They friended each other.” Smith says that 25 percent of the member base is active on a monthly basis, which is comparable to other social networks. Instead of a “flat directory,” Smith says: “We give consumers a way to say ‘I want someone to fix a hole in my fence.’

Under terms of the deal, Reply CEO Payem Zamani will run the operation, which will be comprised of Reply! Marketplaces, and Reply! Media. Smith will be Reply! Media Division President and report to Zamani.

Reply was founded in 2006 with a focus on simplifying real estate and auto leads. On one level, the company seeks to make it as easy for consumers to connect to businesses as to make a search. It also has focused on monetizing traffic at every step of the way, and simplified the process for businesses to acquire leads.

Zamani says that what he is building is “dramatically different” than what Google, Yahoo and others provide. “What we’ve done in the local space is what Google Adwords did for the SEM business” — but easier and more scaleable.

Reply’s big idea was recognizing that some consumers aren’t always ready to fill out a cumbersome lead form. Its solution was to develop a variety of lead formats, including “enhanced clicks,” which might be seen as light leads. In these cases, consumers would just provide basic information (i.e. desired car make and model) within a search box found on a site or widget.

It has since added home improvement, insurance, education, apartments and used cars – a vertical lineup that provides a continuum from more mature businesses that have long depended on acquiring leads, to less mature businesses that are more likely to rely on acquiring their customers from search.

At this point, Reply.com has formed click-and-leads partnerships with a number of leading publishers, including CBS Local, Hearst, Local.com and Merchant Circle. These complement existing leads relationships formed with major portals, vertical publishers and OEMs, such as Cars.com, ServiceMagic, JumpStart, RealEstate.com, ActiveRain, GEICO, Ford Motors, Nissan, and Sears.

Reply.com Buys AdHubs, Will Add Mobile App Strategy

Reply.com has carved out a niche among online marketing companies by offering an auction marketplace for locally-targeted consumer traffic for various verticals (home improvement, autos, real estate, insurance, etc.) Now, it is set on building a mobile strategy. The company recently announced that it has acquired AdHubs, a mobile App developer that sees vertical apps as a major new source of lead generation and advertising.

The small startup, co-founded by former Yahoo Infrastructure Technologies head Reza Hajebi, focuses on “commuter apps,” such as games, as well as apps such as recipes and sports. It has already built 1,200 apps and is seeing 30 percent growth every month.

AdHubs is now set to ramp up quickly. It expects to have 95 developers on board by the end of the year, and create an assembly line for apps. It expects to add 25,000 apps in 2011 alone.

“A closed network gives better results,” says Hajebi, who has been made Reply.com’s CTO. “Mobile is the best way to measure user behavior.” Hajebi says that AdHub quantifies up to 28 touch points for mobile users.

Reply.com COO Sean Fox is set to discuss leads and vertical marketplaces at ILM East March 21-23 in Boston.

A Look at Reply.com’s SV-1

Reply.com this week announced plans to raise $60 million in an IPO. ReachLocal had earlier announced similar plans to go public. The success of one or both companies’ efforts will have a major impact on other local-themed companies’ efforts to raise funds and/or go public.

Looking at Reply.com’s SV1, we see that the company has 127 full-time employees, including 103 in sales and marketing, 14 in technology and 10 in general and administrative. It has raised $27.5 million since its inception, and last year grossed $34.3 million in revenue from over 5,000 advertisers. It also delivered 700,000 leads.

The brainchild of AutoWeb Co-founder Payem Zamani, Reply.com was founded in 2001 primarily as a lead generation service for autos, with real estate added in 2003. In 2005, the company acquired Connecting Neighbors, which builds sponsored neighborhood websites for real estate professionals.

In 2006, Reply.com’s strategy made a sharp turn. It announced plans to sell Connecting Neighbors, which recently only contributed 5 percent of its revenue; and added “enhanced clicks” generated from auctioning inventory for a variety of local categories from the search engines and ad networks. The company reasoned that the search engines and ad networks had a massive amount of left-over local inventory that needed to be specially targeted. T

The online auction marketplace was introduced in 4Q 2008 with auto and real estate components. Since then, it has added home improvement and has just added insurance.

In the SVI, Reply.com noted that 65% of its income comes from locally-targeted national accounts, aggregators and channel partners. But an emerging sales focus is on channel partners offering white labeled versions of its system. Traditional media companies with a large installed base of advertisers are being specifically targeted.

Reply.com COO Sean Fox is a featured speaker at Marketplaces 2010, taking place in San Diego March 22-24.

Reply.com: Applying Leads, Performance to Key Verticals

Vertical businesses that have relied on Yellow Pages and newspapers and other classified channels aren’t always seeing the same performance based results that they might expect in the Google age. But many of them also aren’t likely to become keyword experts, or spend a lot of time managing their accounts. That’s always the SMB dilemma, right?

That’s what Reply.com is focused on. The two-year- old, 125 person company, backed by $17 million of venture capital, provides vertical advertisers with “enhanced click” packages and validated leads, complete with leads scoring. In addition, advertisers using Reply.com’s auction-based system can filter locations, and puts caps on spending and cost per click rates.

Vertical segments targeted by Reply.com include key leads categories, including home insurance, health insurance, life insurance, education, auto finance, mortgage, used cars and auto insurance. Auto and real estate segments make up the biggest segments, with 60-70 percent of Reply’s customer base. Under Reply’s system, each category is customized for the particular aspects of a vertical.

One key differentiator is that the targeted categories are typically not “inventory based.” They may be new cars, rather than used cars; mortgage, or pure relocation leads, rather than search-based rentals leads.

Reply CEO Payem Zamani suggests that Reply’s clicks and lead offers are more efficiently processed than typical ad exchanges, in part due to narrowing the market base with geo-targeting and a system for discerning consumer intent. The company is processing nine million clicks per month, and 1.58 million leads, with customers for its auctions including auto manufacturers, major media companies such as Hearst Newspapers, and vertical sites such as RealEstate.com and Autobytel. The company also works with several of the search engines, SEO sites and email providers.

The basic idea is to create a “Google-like” platform for acquiring traffic, says Zamani. Reply’s knowledge of user intent and location –driven in part by the installation of a pixel to track users — really streamlines the process, and drives higher conversion rates, he says. Conversion success depends on how deep the advertiser wants to go. Information that goes all the way through to consumer credit cards for purchase will be a small fraction (maybe .1 percent) of more general conversions (30-40 percent) that provide additional information.

Reply.com COO Sean Fox is a featured speaker at Marketplaces 2010 March 22-24 in San Diego.