For investors, the big plusses are: strength of the brand; the large customer base of nearly 13 million (mostly SMBs); and robust growth in revenues and customers. Evidently, these outweighed the negatives of: lack of profitability; balance sheet challenges; and assorted bumps in the road over the last 10 years.

From a strategic perspective, the big challenge for GoDaddy (and other providers of registration and related products to low-end SMBs) is selling more and higher-priced products into a highly price-sensitive customer base. Moving customers along the value-vector into higher-priced, more robust products, while staying in a DIY/low cost pricing zone, is a challenging balancing act.

We think Go Daddy is well aware of the endgame, and knows it will take a lot more than Danica Patrick running NASCAR laps to get there.

The post Go Daddy Go appeared first on BIA/Kelsey - Local Media Watch.

As GoDaddy reportedly prepares for a $4.5 Billion IPO, the company has increasingly focused on leveraging and upselling its 12 million worldwide members with a set of comprehensive solutions. At BIA/Kelsey’s Leading in Local: Interactive Local Media event at San Francisco Airport, SVP Raj Mukherjee noted that the company is delivering on a new vision statement: “Empowering people to easily start, confidently grow and successfully run their own ventures.”

Mukherjee said GoDaddy is servicing its customers in three core ties: “basic identity,” “advantage identity,” and “marketing and back office.”

“Advantage identity” includes hosting and security, do it yourself websites, online stores and listings. “Marketing and back office” includes Domain specific email; Office 365; email marketing; invoicing and bookkeeping.

The post At ILM 2014: GoDaddy’s Raj Mukherjee on Leveraging 12 Million Users appeared first on BIA/Kelsey - Local Media Watch.

As GoDaddy reportedly prepares for a $4.5 Billion IPO, the company has increasingly focused on leveraging and upselling its 12 million worldwide members with a set of comprehensive solutions. At BIA/Kelsey’s Leading in Local: Interactive Local Media event at San Francisco Airport, SVP Raj Mukherjee noted that the company is delivering on a new vision statement: “Empowering people to easily start, confidently grow and successfully run their own ventures.”

Mukherjee said GoDaddy is servicing its customers in three core ties: “basic identity,” “advantage identity,” and “marketing and back office.”

“Advantage identity” includes hosting and security, do it yourself websites, online stores and listings. “Marketing and back office” includes Domain specific email; Office 365; email marketing; invoicing and bookkeeping.

The post At ILM 2014: GoDaddy's Raj Mukherjee on Leveraging 12 Million Users appeared first on BIA/Kelsey - Local Media Watch.

photo courtesy of Crain’s Chicago Business

All eyes are on “local” this morning on Wall Street, with GrubHub‘s IPO off to a great start. The company has placed 7.4 million shares priced at $26, or $192.4 million. The shares closed at $34.

We’ve been watching GrubHub’s IPO with real interest. The Chicago-based online take out ordering company — which merged last August with Seamless, its primary competitor — represents a key local “food” anchor, along with Open Table, UrbanSpoon, Groupon (reservations); Yelp and Google+ (reviews); and eventually, Amazon, WalMart, Google,eBay, TBD (grocery delivery).

It has 28.8K restaurants and 135,000 daily orders. Forty-three percent of its activity now takes place from mobile devices, a key metric in this space which relies on impulse purchasing. The company has operations in most major U.S. cities, but is strongly penetrated in several.

In this area, which might loosely be termed as “food,” the silos are falling fast — they each do a little of each. We expect to see a major land grab by the key players that are already in the space, and the possible addition of other tech and retail players.

At its most basic level, GrubHub views, confirms and tracks food orders, It makes its money from commissions of roughly 10-12 percent. Last year, it made $137 million. But the company’s value extends beyond order taking. It acts as a giant search and discovery engine that can bring customers back to locations, and recommend others when they are in the mood for something else.

The cost to use GrubHub is relatively high. There have been anecdotes in the press about some restaurants quitting GrubHub, seeing a drop in orders, but making higher profits. Obviously, these reports are not the general consensus, as the company continues to grow.

But the best way for restaurants to justify its cost is if they chalk it off as a promotional expense. GrubHub executives like to point out that it is ultimately cheaper and more retentive to spend on GrubHub than on a deals site such as Groupon, with its high commission structure taking 30-50 percent, on top of high discounting off menu prices.

While GrubHub has a nice lead in this space for now, the key for it now will be to extend its brand and reach. Its brand awareness remains low, and it is mostly known among niches such as office workers and college students. The company’s current competitors include Delivery.com, which claims a roster of almost 10,000 restaurants in 50 cities; and Eat24.com, which covers 20,000 restaurants in 1,000 cities across the country.

We’ll be watching for activity from companies such as Yelp, Google and other players too, either via start up or acquisition.

The post GrubHub IPOs: Thoughts About GrubHub and the ‘Food’ Segment appeared first on BIA/Kelsey - Local Media Watch.

photo courtesy of Crain’s Chicago Business

All eyes are on “local” this morning on Wall Street, with GrubHub‘s IPO off to a great start. The company has placed 7.4 million shares priced at $26, or $192.4 million. The shares closed at $34.

We’ve been watching GrubHub’s IPO with real interest. The Chicago-based online take out ordering company — which merged last August with Seamless, its primary competitor — represents a key local “food” anchor, along with Open Table, UrbanSpoon, Groupon (reservations); Yelp and Google+ (reviews); and eventually, Amazon, WalMart, Google,eBay, TBD (grocery delivery).

It has 28.8K restaurants and 135,000 daily orders. Forty-three percent of its activity now takes place from mobile devices, a key metric in this space which relies on impulse purchasing. The company has operations in most major U.S. cities, but is strongly penetrated in several.

In this area, which might loosely be termed as “food,” the silos are falling fast — they each do a little of each. We expect to see a major land grab by the key players that are already in the space, and the possible addition of other tech and retail players.

At its most basic level, GrubHub views, confirms and tracks food orders, It makes its money from commissions of roughly 10-12 percent. Last year, it made $137 million. But the company’s value extends beyond order taking. It acts as a giant search and discovery engine that can bring customers back to locations, and recommend others when they are in the mood for something else.

The cost to use GrubHub is relatively high. There have been anecdotes in the press about some restaurants quitting GrubHub, seeing a drop in orders, but making higher profits. Obviously, these reports are not the general consensus, as the company continues to grow.

But the best way for restaurants to justify its cost is if they chalk it off as a promotional expense. GrubHub executives like to point out that it is ultimately cheaper and more retentive to spend on GrubHub than on a deals site such as Groupon, with its high commission structure taking 30-50 percent, on top of high discounting off menu prices.

While GrubHub has a nice lead in this space for now, the key for it now will be to extend its brand and reach. Its brand awareness remains low, and it is mostly known among niches such as office workers and college students. The company’s current competitors include Delivery.com, which claims a roster of almost 10,000 restaurants in 50 cities; and Eat24.com, which covers 20,000 restaurants in 1,000 cities across the country.

We’ll be watching for activity from companies such as Yelp, Google and other players too, either via start up or acquisition.

The post GrubHub IPOs: Thoughts About GrubHub and the 'Food' Segment appeared first on BIA/Kelsey - Local Media Watch.

Last week at SMB Digital Marketing, Russ Laraway, Senior Director, SMB at Twitter added to the marketplace chorus espousing the notion that Content Marketing is king.

Many of Twitter’s moves in this area are well known, as content marketing is at the heart of the company’s monetization strategy, estimated $1 billion revenue, and the driving force towards its freshly announced (tweeted) S-1 filing to go public.

Content marketing so far has taken form in Promoted Tweets and Promoted Accounts. These have mostly been used by brand advertisers, but how does Twitter reach the SMB long tail? Of its content marketing initiatives, a partnership with Mail Chimp starts to answer this.

This arrangement takes form in a “lead gen card”. This allows companies working in email marketing (and potentially other formats) to provide a call to action that automatically authenticates and populates users’ information when they’re signed in to Twitter (think Facebook Connect for lead gen).

“If you think about lead gen, there is friction from the marketing message to generating demand and the actual collection of the lead information,” he said. You need impressions, engagement, then a click, then good website, then ultimately users fill out a form. This is lots of friction and it’s going to be even worse in mobile.”

Lead gen cards will come SMB-friendly including the ability to export leads to a CSV file and also lots of coaching about ways to set it up and use it frictionlessly. Overall, this drives towards having more tangible offline actions that can be driven (and tracked) from Twitter activity.

“On Twitter, outcomes are important,” said Laraway. “It’s a cost per engagement model, such as Promoted Tweets or Promoted Account [where] you pay when someone follows you. For SMBs, we need more accountable formats: How do you connect Twitter outcomes with off-twitter outcomes. That’s the idea of where we need to head.”

The post SMB Digital Marketing Conference: Twitter Drives Towards SMB Marketing appeared first on BIA/Kelsey - Local Media Watch.

Among the myriad questions swirling around Facebook’s imminent IPO (other than “when will it actually happen?”), the two most pressing are: 1) Can the social network actually support an assumed $100 billion valuation? and 2) How?

BIA/Kelsey sought to answer both by pairing financial modeling and strategic analysis. We recently published a comprehensive report exploring the financial drivers that can spur Facebook’s valuation, and the potential growth opportunities that it can unlock to build a business that meets the hype. The report can be purchased here.

Our takeaways: Yes, Facebook can eclipse $100 billion in fair market value, but to do so it must demonstrate strong revenue expansion while maintaining a robust EBITDA margin. This will necessitate rapid expansion of its existing advertising business, but also shifts into adjacent advertising sectors and even transformative new businesses such as off-network payments and content distribution/syndication. In other words, the path to $100 billion is far from straight.

This Wednesday, May 2, at 3 p.m. EDT, BIA/Kelsey analysts Matt Booth, Jeanne Dattilo and I will present our financial and strategic analysis in a public webinar. We’ll also welcome CEOs from high-profile companies that work closely with Facebook to share their vision for how the network will evolve its business, and the implications for the interactive local marketplace. Our guest speakers are:

– Victoria Ransom, CEO, Wildfire
– Niel Robertson, CEO, Trada
– Peter Vogel, Cofounder, Plink

You can register for the webinar here.

The post BIA/Kelsey Webinar: ‘Facebook’s IPO — The Valuation of the Decade?’ appeared first on BIA/Kelsey - Local Media Watch.

By now, much of the connected universe, and certainly all of technolphilia, is aware of Facebook’s IPO, which seeks to raise up to $5 billion (and perhaps eventually $10 billion) when its shares go public this spring. The net effect is a valuation of $75 billion to $100 billion for the 8-year-old social network.

Mining the 150-page S-1 for gold can be something of a scavenger hunt. Of course, Facebook’s user reach and engagement metrics explode off the document: 845 million monthly active users (MAUs) as of December 2011, 483 million daily active users (DAUs), 425 million mobile MAUs (as detailed by MLM’s Mike Boland), 2.7 billion likes and comments per day, and the list goes on. Facebook’s engagement stats — and the data that those enable it to collect about its audience and on behalf of its advertisers — is the envy of companies everywhere.

Also, its $1 billion in net income was a conveniently round and easily discoverable number. But probing deeper, the data told other narratives as well: some promising, others alarming and several yet to be determined.

The Good

Facebook’s top-line revenues continue to grow, as one would expect with a maturing network whose domestic and global reach is ubiquitous. Revenues eclipsed $3.7 billion in 2011, an 88 percent increase year over year. Advertising jumped 69 percent from 2010, with 56 percent of that U.S.-based. Perhaps more encouraging was its deepening payments business, which now accounts for 15 percent of Facebook’s total revenues, skyrocketing from $106 million to $557 million in just 12 months.

Facebook also already boasts $3.8 billion in cash on hand, and that number is about to multiply.

The Bad

Although $3.7 billion in revenues seems like a handsome haul, the top-line number actually came in lighter than many analysts expected. The 69 percent increase in ad revenues looks modest when noted that this stream boomed by 145 percent from 2009 to 2010. And that was even as Facebook boosted its total ads delivered by 42 percent and average price per ad by 18 percent.

Meanwhile, it is not realizing meaningful money from its 425 million mobile users. Facebook is in the strange position of both attacking and defending on mobile platforms. While it continues to enhance its apps suite and build new mobile products, and will soon place Sponsored Stories ads within mobile news feeds, it also wants to refrain from cannibalizing the ads business it has amassed on the desktop. As a result, substitutive mobile growth is listed as a risk factor.

The (Unknown) Future

Facebook’s future appears as uncertain as it is promising (and vice versa). Naturally the company must continually calibrate its monetization engine, and quickly unpack new revenue sources (as it has with Facebook Credits over the past two years). Here are three domains that we feel Facebook may address with its newfound cash and investor pressure:

– Ad Network: Facebook’s reach is undeniable. Its user data trove is deep, perhaps unparalleled. And thousands of third-party sites have linked to Facebook’s platform through Connect, a single sign-on conduit that can socialize a website experience based on the user’s Facebook social graph. Mash it all together, and an ad network — both desktop and mobile — seems irresistible and inevitable. For now, we’ll call it “Facebook AdSense.”

– Payments Expansion: Facebook has already ported its Credits currency beyond gaming and virtual goods to digital products such as movies and music. Now, will the network usher Credits into real-world goods and services, making it a full-service social commerce portal? It toyed with the idea during its short-lived deals trial last summer, in which Credits were a payment option (though not the only one). Expect many experiments to come.

– Local: Facebook has never shown the propensity to build a sales force of the mass and scope necessary to exhaustively address local markets and SMBs (as opposed to say Groupon). Even its deals play was an aggregated approach through partners. However, it does collect much of its advertising revenues from small and mid-market businesses that self-serve on the platform. Now it has opened up its Ads API to all qualified developers, enabling more partners with local audiences (agencies, media, etc.) to manage scaled ads campaigns on behalf of a fleet of clients. As just one example, French directory publisher PagesJaunes recently joined the API program.

A more enterprising probe of the S-1 will publish to Social Local Media clients in the coming days.

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