Insider Chatter by Donna Bogatin

Are Google CEO Eric Schmidt’s ears ringing? After all, Spot Runner CEO Nick Grouf is borowing his Googley one-stop online advertising agency lines!

Grouf announces SpotRunner’s acquisition of SEM firm Weblsitic:

“This acquisition further strengthens our leadership position as the comprehensive resource for the full spectrum of local businesses’ advertising needs. Our objective is to help businesses drive awareness and attract new customers through multiple media channels, in an integrated manner, and online advertising is a top priority for us and for our clients.”

The SotRunner goal is to offer a “complete solution”: ”including media planning and buying for TV, radio and online,” because, Spot Runner assures:

TV and Internet advertising, when utilized together, have proven to be a particularly effective combination. According to Jupiter Research, TV advertising is the number one impetus for people to search for a particular company or product online, surpassing all other forms of advertising.

Remember when the Googler-In-Chief’s favorite fantasy was a multi-million dollar “complete solution” one:

The long-term fantasy is we walk up to you and you give us, say $10 million and we’ll completely allocate it for you across different media and ad types.

Long-term is apparently VERY long-term, though, as Google’s billions remain steadfastly 99% “traditional” AdWords and AdSense pure, as I steadfastly report:

SEE Google CEO In-Car Radio Ad Vision Fading and
Google TV Ads Auction: NO AdWords Buyer’s Remorse and
Google Execs Silent On NYC Print, Radio, TV Promises and
MySpace To Google: Learn How To Sell Advertising, OMMA Report and
MySpace To Google (Round 2): Text Clicks Do NOT Rule! VideoEgg Report and
The Web Economy Rejoices: Google IS Overrated and Due For BIGGER Fall!

If Google is not easily able to achieve one-stop online ad agency domination, does SpotRunner have a realistic shot? Unlikely.

Google has ONE very big advantage over SpotRunner, a $139 billion dollar one: Google owns the number one search engine inventory SpotRunner needs to resell! Reseller status is NOT a winning ad sales formula, just ask Google: Google Radio, Google Print, Google TV, Google MySpace…

Nevertheless, Ketan Shah, CEO of Weblistic, confirms his “passion” for “making online advertising easy and turnkey for small and medium-sized businesses.”

Unfortunately for new coproprate parent Spot Runner, however, local passion is hard to monetize.

MORE: Spot Runner Sells For Rival Google: Local SEM Bandwagon Grows and Local Video Ads Battle: YellowPages.com Taps TurnHere, Spot Runner Gets 1200 TV Producers

PLUS: Yellow Pages Get Reprieve? The Myth of King Google Local Advertising ROI and
Reach Local Advertising? How Google Squeezes SEMs and AdWords Buyers and
Local Ad Sales War: Why Google is a Guaranteed Winner and
Google AdWords Plus Box: Local CPC Bidding War Unleashed! and
Google Apps & Maps: Enterprise and Local Business STILL Missing and
Local Advertising Online: SMEs Hold the Billion Dollar Keys, ILM ANALYSIS 

PLUS: PAY PER BLOG? WHAT KILLER BUSINESS MODEL

CONTACT DONNA BOGATIN

What a local online classifieds coincidence!

I enjoyed breakfast this morning with Craig Donato, along with a hearty helping of “innovators dilemma” discussion about how the Web company he founded and leads–Oodle–is seizing a $30 billion market opportunity ripe for exploitation due to mass media incumbent inertia.

At the same time, the latest touted “online marketplace for local services” was making noise: GenieTown. The newly funded startup has been operational for many months, but is apparently now hailing an “official” launch. Founded and run by a Stanford PhD candidate, Hassan Chafi, the site’s raison d’etre reads like a computer scientist’s thesis proposal!

Although GenieTown sprung from Chafi’s humble need to “find someone to clean his apartment while working under stringent paper deadlines,” Chafi obtained his startup financing by proclaiming an esoteric sounding “local service lifecycle model.”

In GenieTown “Whitepaper” speak:

At the core of this model, is a customer-centric continuum that runs through a series of action phases, beginning with a customer’s intitial interest in a service, through the fulfillment of the service and the customer’s recommendation of the provider to others. For ease of reference, we name these action phases: Explore, Communicate, Transact and Manage. 

In GenieTown consumer facing marketing speak:

What is GenieTown? Chafi–who has declared himself Mayor of GenieTown–asks and answers: It is where “clever people connect to buy and sell local services.”

“People with skills, expertise, and passion in a wide range of areas use GenieTown to offer their services. These “Genies” build credibility and trust through answering questions from customers, submitting articles and giving competent advice. Through their contributions and jobs well done, Genies increase their ranking on GenieTown. GenieTown enables service markets to emerge and thrive by creating opportunities for people to express and demonstrate their abilities, ambitions and passions.”

Whether in feel-good marketing prose, or feel scientific engineering text, however, GenieTown is not delivering on its “clever” experience promise, and real world “genies” are not readily apparent. Browsing GenieTown’s “featured” listings surfaces an array of impersonal, canned, standard handyman sales pitches, and spam-like hawking of online ecommerce franchise properties. FOR EXAMPLE:

We are L’bel Paris 40 Years in the Direct Selling Industry selling fine french fragrances,skincare and cosmetics company. We are in 14 different countries and growing!
We are now expanding here in the United States.
We are looking for business minded individuals looking to start their own business selling cosmetics from our L’bel Paris catalog.
EXELLENT MONEY MAKETR! Make anywhere from 25%-50% commission.
We are Not a Mult-Level MARKETING COMPANY!
EXCELLENT OPPORTUNITY TO MEET PEOPLE
LOTS OF COMPANY SUPPORT! FREE TRAINING!
PLEASE CONTACT: AREA SALES MANAGER

How does one “Become a genie?”: “Join now, it’s quick and easy!”…AND free, and apparently anonymous and unverified!

How does a “Genie” get featured on the GenieTown home page? GenieTown advises one “Genie” called “Power Of Cash”  of GenieTown’s Stanford PhD advanced algorithm:

If you are wondering how to be displayed on the front page: the two genies featured are selected from our list of genies with portfolio pictures. To add portfolio pictures, log into your account, click on profile and scroll to the bottom of the page. This allows you to upload and organize your pictures.

GenieTown “Genie” “Power of Cash”’s profile:

Cash Leveraging Genious. I Help others receive Financial Glory..

You go, Mr. Power, thanks to GenieTown’s open (too open) platform! Despite all of GenieTown’s Stanford engineering credentials, the founding team has unleashed a supposedly local Web platform that is friendly to global, online spam.

Oodle has been striving to “improve the way people buy and sell locally” for several years, fueled by $19 million in venture capital backing. Oodle CEO Donato told me today that Oodle is on track to be cash-flow positive by the end of the year.

Both a destination site and a third-party distributor and aggregator, Oodle cites “30 million listings from over 80,000 classifieds sites,” except Craigslist. Donato believes that Oodle is nevertheless complementary to Craigslist, recommending that consumers use Craigslist, plus Oodle for breadth of reach.

Straddling both direct-to-consumer and link-to-classifieds sites approaches poses Oodle business model challenges, however. Last June, I asked Donato for his reaction to the eBay launch of Kijiji. SEE: Oodle CEO Q & A on eBay, Kijiji & Craigslist Classifieds

The Oodle CEO told me last year about Kijiji:

It’s great for consumers and it’s great for Oodle. Providing consumers with choice is alays a good thing. And consumers are increasingly getting more options to post free classifieds listings. Obviously as consumers use more and different marketplaces, Oodle becomes more useful. It’s also important to note that consumers don’t publish listings directly into Oodle. As a search engine, it is our goal to partner with all the classifieds marketplaces on the Internet, big and small, local and national.

It is important to note now, though, that consumers ARE publishing listings directly into Oodle. How will the Oodle business model be impacted by the new, Oodle direct stance?

STAY TUNED TO INSIDER CHATTER FOR MORE: PART II ON OODLE COMING SOON!

MORE:  Yellow Pages Get Reprieve? The Myth of King Google Local Advertising ROI and
Local Advertising Online: SMEs Hold the Billion Dollar Keys, ILM ANALYSIS and
Google Beware: Facebook Takes Local Advertising Gloves Off, ILM REPORT and
Judy’s Book: What’s On Sale? WE ARE! Ten Reasons Why and
Spot Runner Sells For Rival Google: Local SEM Bandwagon Grows

ALSO: Craigslist Q & A: Classifieds Community NO ‘Walled Garden’ and Craigslist PR: Same OLD Media?

PLUS: Like.com to Entrepreneurs: It’s the Revenues, Stupid! and VideoEgg Rocks: Unveils AdFrames in Silicon Alley: Google Next?

CONTACT DONNA BOGATIN

Who are the biggest winners in the latest Internet fueled business model disruption? Independent filmmakers and videographers. YouTube may not be a big money maker for Google, but it has spurred the money making ambitions of unsung video creators and the monied interests that seek to leverage their low-cost video production skills.

On the local video advertising battlefield, ambitious players TurnHere and Spot Runner not only duke it out for lucrative video production and distribution contracts, but fight for the highest quality, most prolific independent video producers as well.

TurnHere has built its 3200 member “Filmmakers Network” from the ground up, Spot Runner has fueled its ”Production Network” with the absorbtion of GlobeShooter, a 1200-person strong group of local video professionals.

TurnHere leverages its base of independent video creatives for a variety of vertical applications–travel, publishing, local directories–while Spot Runner has its roots in a core local advertising message.

SpotRunner CEO Nick Grouff: “The acquisition of GlobeShooter is a natural extension of our strategy to be a central resource for local businesses’ broad spectrum of advertising needs.”

TurnHere “has established a strong foothold in the directory and local markets,” said John McWeeny, Business Development, TurnHere, in announcing a video production agreement with YellowPages.com this week, on the heels of its non-exclusive vendor agreement with Superpages.com, announced last month. TurnHere has been supplying video production services to Citysearch since last May.

Why such local business interest in videos?

According to Matt Crowley, CMO, Yellowpages.com, “Advertisers recognize that video can play a key role in delivering a unique and memorable message that engages the consumer and influences action.”

TurnHere’s McWeeny offers: “We continue to see rising industry demand as small merchants embrace online video as a platform to attract new customers and drive businesss growth.”

Citysearch itself, however, is more nuanced in evaluating video traction among merchants online. In November, President Jay Herratti spoke of the need to lower cost of video entry for advertisers in order to spur greater adoption, while keynoting at the Kelsey conference in Los Angeles.

The local video battle for advertisers and production contracts is NOT solely an online one. The Spot Runner founding claim to fame is ”the first Internet-based ad agency that makes it easy and affordable for local businesses to advertise on TV.” Nevertheless, GlobeShooter’s video producers serve to “expand the company’s ability to offer highly customized ads for both TV and the Internet.”

The TurnHere founding Internet message was Web-centric, offering “studio quality Internet adverising and Web distribution for building online traffic.” TurnHere is now poised to leverage good old fashioned television as well, however.

When I spoke with TurnHere CEO Brad Inman about the Yellowpages.com online video deal this week, he began by underscoring how TurnHere is key to bringing “television quality advertising” and television like distribution to the reach of local merchants. What’s more, the TurnHere video product is “more micro-targeted than cable television.”

Inman also hailed the television worthy work of the TurnHere “Filmmakers Network.” Will videos by TurnHere soon be playing then on a TV near you? Stay tuned!

ALSO: Spot Runner Sells For Rival Google: Local SEM Bandwagon Grows and TurnHere Video Gets the Book Marketing Party Started

PLUS: Reach Local Advertising? How Google Squeezes SEMs and AdWords Buyers and Google Apps & Maps: Enterprise and Local Business STILL Missing and
Local Advertising Online: SMEs Hold the Billion Dollar Keys, ILM ANALYSIS and Google TV Ads Auction: NO AdWords Buyer’s Remorse

CONTACT DONNA BOGATIN

I headlined earlier this week: Kelsey: You’ll Still Have Yellow Pages To Kick Around Some More. Kelsey CEO Neal Polachek now underscores that yes, Yellow Pages will live another day, or two.

Polachek’s Scrooge worthy “Christmas Story” of his car being rammed, his house being infested by vermin and his commode refusing to perform, has a happy Yellow Pages ending. Polachek shares that he turned to his “phone book” NOT to the World Wide Web to find eager, ready to serve auto repair, pest control and plumbing professionals.

BUT, what about the Polachek family’s Festival Of Lights? WHERE did Neal turn to search for how to spend his Hannukah gelt on toys, apparel, dining out…? Typical searchers do their everday “look ups” at Google, as Yellow Pages know all to well.

Recession Hits AT&T Online: Kelsey Local Search Advertising Predictions Too?, however, I analyzed earlier this week, underscoring the persistent roadblocks that continue to thwart en masse online advertising adoption on the part of local businesses.

Nevertheless, Kelsey analysts’ 2008 predictions echo persistent conventional local wisdom of a seemingly preordained inevitablity of “big increases in local search inventory” and an unstoppable victory of the new, (purportedly) more rational Web model over the old, (supposedly) frustratingly irrational print directory framework:

In the past, small and medium-sized businesses have protected their print Yellow Pages investment at the expense of other media. Given the structural changes in the local ad market, we believe the next downturn will favor media choices that are more flexible and provide a lower cost per lead than print directories, which would signal a profound shift: the Kelsey Yellow Pages point man, Charles Laughlin.

In the long term, we remain bullish that online and mobile products will bring in better than one-to-one conversion rates because of their superior return on investment: the Kelsey online verticals evangelist, Peter Krasilovsky.

BUT, are the Google inspired claims that an online ad spend is structurally inherently better than an offline one bankable? NO, not for the legions of single store, owner/operator local merchants that comprise the long and challenging sales cycle bulk of the ever elusive, but big, local business advertising opportunity.

Google’s superiority is clear on one front: Its ability to envelope a Google-centric, non-transparent, advertisers bid up their own rate cards, not marketer friendly, black box GOOG fuel money making machine in claims of irreproachable “accountability” and unbeatable “pay (only) for performance,” which even analysts willingly succumb to.

The big, bad Google “performance” ROI myth is that the “performance” being sold is a click, NOT a sale. The supposed impending holy grail of Pay Per Call products also is based on “performance” ROI myths: Advertiser costs are driven up for the extra perceived “accountability,” but the “performance” being sold is a call, still NOT a sale.

A call may be more valuable than a click, BUT it is also not a true performance metric for the only advertising result that counts at the end of the local merchant day: A local sale.

The Kelsey Group continues to hail the power and potential of call tracking: Polachek seized his Yellow Pages to the holiday rescue adventure to plug the up sell service to a Yellow Pages advertiser. Here at Insider Chatter, however, I WARN local merchants of the perils of call tracking as it is currently packaged and sold.

1-800 Pay-Per-Call: Marchex Buys VoiceStar, $4 billion Local Advertising Bonanza? I anlayzed in August.

The big, bad ”secret” dark side of the pay-per-call opportunity is that local advertisers often loose exposure of their REAL phone numbers by accepting call-tracking with random vendor supplied 800 numbers, as the Citysearch specs for its Pay For Performance-Calls product indicate:

Merchants are charged a fee per call and when an advertising cap is reached the toll free number (which appears throughout the site) is removed and replaced with the local, non-metered number…Citysearch provides a toll free number wherever the local merchant’s contact information appears: PFP ads, search results, merchant information page, and/or Best Of Citysearch listing.

LOCAL MERCHANT ROI PROBLEMS?

Customers jot down the toll free number to call another time, but end up unable to reach the merchant because the “ad cap” has been reached?

Customers print out the merchant info page for an out of town trip, but end up unable to reach the merchant because the “ad cap” has been reached?

Customers want to call the merchant a year later but don’t have the merchant’s real phone number…

The REAL bottom line local advertising problem? Old media or new, from Yellow Pages to Google, media companies spend their money and their energy in trying to PROVE to local merchants that their ad products are good for their businesses, rather than making sure they actually are.

MORE: Frugal Google.org: How NOT To Save the World On $159,000 a Day and
Reach Local Advertising? How Google Squeezes SEMs and AdWords Buyers and
Yellow Pages Trash Talking: The SEO Dog in the Google Local Fight and
Google AdWords Plus Box: Local CPC Bidding War Unleashed! and
Google Apps & Maps: Enterprise and Local Business STILL Missing and
Local Advertising Online: SMEs Hold the Billion Dollar Keys, ILM ANALYSIS 
Google Beware: Facebook Takes Local Advertising Gloves Off, ILM REPORT and
Judy’s Book: What’s On Sale? WE ARE! Ten Reasons Why and
Spot Runner Sells For Rival Google: Local SEM Bandwagon Grows

CONTACT DONNA BOGATIN

AT&T’s 2007 farewell to analysts promised a blazing hot New Year thanks to a “three screen strategy” with “internet search and display revenue growth beginning in 2008,” according to Ray Wilkins, President, Diversified Businesses. AT&T CEO Randall Stephenson rang in the analyst New Year by underscoring weakness, however, ciiting a slowdown in consumer broadband and service disconnections due to nonpayment.

AT&T’s bullish, unsubstantiated December 2007 powerpoint on the power of AT&T “Advertising & Search” claimed revenue growth “to more than $1.5 billion by 2010.” How will the AT&T happy talk come to fruition though, when it is already being disclaimed by AT&T’s chief cheerleader: Traditional wire lines and home broadband are the first things consumers disconnect when they are unable to pay their telecommunications bills, Stephenson said. He still has high hopes for wireless, though:

Wireless is proving to be fairly resilient, even in an economic downtrun.

The Kelsey Group seems to be counting on wireless as well for the realization of their bullish online local search predictions. Kelsey, the self-declared “leading provider of research, data and strategic analysis” in the “directories, small business advertising, online local media and mobile advertising sectors” began its New Year by circulating a Press Release of its analysts’ educated guesses about what 2008 will look like, while promising hard data to back up its predictions, available apparently only for Kelsey clients, though.

Among the many unsubstantiated, far reaching predictions Kelsey released to the local world at large last week: 2008 will see “big increases in local search inventory.” BUT, I have been asking Kelsey: Why “big increases”? How “big increases”? Where “big increases”? Who benefits from the “big increases”? Does any data back up the specific prediction, or is it a gut call?

CEO Neal Polachek told me yesterday: There will be more mobile phones, more searches, more online content. In other Kelsey words, there can’t help but be a virtuous Internet circle spurring an inevitable local search inventory and sales increase, right?

WRONG! The entire Internet advertising ecosystem has long been waiting for the materialization of a supposed “inevitable” correlation of increased consumer online media consumption with a matching increase in advertiser spend online.  

Polachek suggested Kelsey has hard data showing an increasing use of local Web search by local merchants AND an extrapolation of merchants’ own local search use of the Internet into a perceived consumer demand for more local merchant information online. The inevitable Kelsey conculsion? Local merchants will spend more money on local search advertising!

Too bad the king of all online search isn’t in on the local search advertising play book proscribed by Kelsey, though. Google continues to make it economically inefficient for independent single store owner/operators to partake of the “democratization” of advertising that the $200 billion market cap online marketing juggernaut claims to offer.

SEE: Reach Local Advertising? How Google Squeezes SEMs and AdWords Buyers and Google AdWords Plus Box: Local CPC Bidding War Unleashed! and
Google Apps & Maps: Enterprise and Local Business STILL Missing 

The latest Kesley Interactive Local Media conference surfaced the persistent roadblocks that thwart en masse online adoption from local businesses, as I underscored as a panelist on the closing session in Los Angeles in November. SEE Local Advertising Online: SMEs Hold the Billion Dollar Keys, ILM ANALYSIS.

The industry looks at the local opportunity glass as half full rather than as half empty. There are two fundamental flaws with the conventional wisdom that online local ad spend growth will inevitably catch up to online local media consumption, however:

1) The majority of local merchants do no advertising whatsoever in any medium, online or off, and will continue to remain happily advertising-free.2) Getting SMEs online–one way or another–does not mean that they will stay online.

Matt Van Wagner of FindMeFaster shared case studies at Kelsey of his local search campaigns for small businesses which he described as “miserable failures.“

MerchantCircle claims it has more SMEs online than anyone else, about 300,000. It also says it has contacted every single SME in the U.S., about 15 million. MerchantCircle then has a 2% conversion rate, and many accounts are not active.

Jonathan Weber, New West, shared during his Kelsey keynote, “It is hard to get local businesses to participate, even if it is free.” 

During the opening “Local Search: Why Your Business Needs To Be There and How” panel, ReachLocal CEO Zorik Gordon underscored “digital agencies” help local merchants not capable of, or not interested in, self-provisioning SEM campaigns to “simplify, manage and aggregate the Internet into a single buy.” SMEs want to “cut a check and have someone do it for them,” Gordon said. The ReachLocal platform hails its “patent-pending campaign optimization, management and tracking technologies” help small businesses “attract local customers via search.”

During the Q & A I asked Gordon:

Small businesses find a certain comfort in the fixed price formula of offline media. ReachLocal’s one check buy mimics that but does not negate the ROI impact of search advertisng’s variable pricing. The CEO Of Reed Publishing said at paidContent’s conference in NYC that SEM’s “dirty little secret” is PPC inflation.

How do you manage clients’ fixed spends so ROI does not decrease; Do you move from higher-priced engines to lower-priced vehicles?

Gordon acknowledged rising click prices in local keyword categories are a challenge, but indicated ReachLocal has been able to optimize conversions to keep ROI stable.

In response to a later question, Google Local Sales Director, Eric Stein, suggested Gordon implied that ReachLocal is able to “drive CPC down” via technology. Gordon nevertheless countered that local search power continues to require agressive bidding (up) to ensure prime placement in SERPs, the desirable Google kind.

High priced CPC AdWords are desirable for GOOG, BUT A BANE TO LOCAL MERCHANTS. Local advertisers are some of the toughest negotiators around, protective of their small but dear investments. Local merchants pride themselves on driving rate cards down.

Google’s black box, bid up your own rate card GOOG fuel system HURTS growth of the local search ecosystem.

UPDATE: Yellow Pages Get Reprieve? The Myth of King Google Local Advertising ROI

ALSO: Scrabulous At Risk? Zynga $10 million VC Game: Facebook Roulette and Henry Blodget Braces For ‘Harder Times’: Silicon Alley Insider ‘Screwed’? and Kelsey: You’ll Still Have Yellow Pages To Kick Around Some More

CONTACT DONNA BOGATIN

eMarketer discusses “hidden trends of 2008,” while offering proprietary data.

What happens when the self-declared “leading provider of strategic research and analysis, data and competitive metrics on Yellow Pages,” starts the new year by issuing a Press Release hailing “a profound shift” in print Yellow Pages spend without providing data to back up the provocative “prediction”?

Media reaction to the Kelsey Group’s formal announcement of its analysts’ educated guesses for 2008 could be 1) Discussion of anecdotal insights, 2) Dismissal of unsubstantiated projections, 3) Request for Kelsey clarification or 4) Unquestioning acceptance of New Year musings as fact.

Here at Insider Chatter, I proceeded with reaction number three: I immediately asked Kelsey to “explain/expound/backup” its cavalier, unsubstaniated “prediction” of “big increases in local search inventory.”

In typical blogosphere fashion, however, a typical media reaction was to pounce on another opportunity to giddily regurgitate a trendy ”Yellow Pages are toast” meme. So much so, apparently, that Kelsey itself deemed it prudent to issue its version of a Yellow Pages clarification.

I look forward to Kelsey’s “clarification” of its far reaching local search “prediction.”

The questions that I pose in response to Kelsey’s declaration that “big increases in local search inventory” are on the 2008 horizon are: Why “big increases”? How “big increases”? Where “big increases”? Who benefits from the “big increases”? Does any data back up the specific prediction, or is it a gut call?

For now, Kelsey advises it is “in the process of updating its annual revenue and usage forecast for global Yellow Pages and local search, which will project out five years.”

YAY? NO! Kelsey will “release the document” to “TKG clients in mid first quarter,” signaling “at which time our forecast figures will be subject to debate and scrutiny.”

Not really. The local world at large will apparently have to continue to deal with ambiguous Kelsey press releases.

UPDATE: Recession Hits AT&T Online: Kelsey Local Search Advertising Predictions Too? and Yellow Pages Get Reprieve? The Myth of King Google Local Advertising ROI

MORE: Reach Local Advertising? How Google Squeezes SEMs and AdWords Buyers and
Yellow Pages Trash Talking: The SEO Dog in the Google Local Fight and
Google AdWords Plus Box: Local CPC Bidding War Unleashed! and
Google Apps & Maps: Enterprise and Local Business STILL Missing and
Local Advertising Online: SMEs Hold the Billion Dollar Keys, ILM ANALYSIS 
Google Beware: Facebook Takes Local Advertising Gloves Off, ILM REPORT and
Judy’s Book: What’s On Sale? WE ARE! Ten Reasons Why

CONTACT DONNA BOGATIN