DMS ’11: Google’s Zagat Purchase and the ‘Open Garden’

The walled garden approach may be history, as too many consumers are cut off from access. But companies still want to control customer activity, and will now pursue more of an “open garden” approach, suggests Halogen Media’s Peter Horan, a former leader at IAC and GoodMail.

Horan, who was speaking last week at DMS ’11 in Denver, says that the trend is perfectly clear in Zagat’s passage from a standalone premium product to a Google property, where Google will seek to open it up and grab more diners as they shop for restaurants. “Increasingly, we ‘re seeing people point to a place,” says Horan.

Google, Amazon, eBay and Apple will all be eagerly seeking such open garden opportunities, Horan adds. The first click represents “upstream control of the customer.”

Horan notes that the battle for local itself will be differentiated between “efficient” local and “effective” local. Efficient local has been the common approach but it has just two percent penetration, he says. Citysearch, with its huge sales force, was probably an example of this. But effective local is a guy going down the street and swaying: ‘Mr. Florist, do you want to work with us?’”

Merchant Circle might be more typical of effective local, even with a small staff of 25 people. The Reply.com property has 1.6 million SMB accounts. Horan, who invested in MerchantCircle when he was at IAC, appeared on the DMS panel with MerchantCircle co-founder Ben T. Smith IV and Reply.com CEO Payam Zamani.