Leads are coming from everywhere, and the digital marketing firms have adjusted to this reality. ReachLocal, for one, has now opened up its ReachEdge lead conversion and marketing automation software. It now has the capability to track leads and other activity from a wide variety of unassociated marketing sources.

Chief Product Officer Kris Barton briefed BIA/Kelsey on ReachEdge’s evolution, noting that the company’s efforts to increase transparency and simplicity will ultimately boost conversion rates. Barton says that “decoupling” the software is the direct result of customer input. Some customers, for instance, had invested in redesigned website and didn’t want to have to abandon it in order to sign up with Reach.

The new version of ReachEdge is $149 a month and includes a free trial. It also features plug-ins for publishing systems such as WordPress and Drupal. The software has also been enhanced for mobile. Customers can use their phones to receive emails and text alerts. It also has integrated reports that are “focused entirely on ROI” and are much clearer than Google Analytics, says Barton.

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Matt Booth hasn’t let any grass under his feet since taking the helm at Solfo/Yellowbot last year. The company has closed a $6.35 million Series A funding round, build up its team to include more focus on marketing and business development, expanded the product portfolio and, finally, changed its name to Connectivity.

As Solfo/Yellowbot, the company was known for its reputation and presence management solutions, and was known as a strong engineering-centric company. One of Booth’s objectives has been to expand the marketing and business development focus. He has grown the team to 27 (from around 20 when he joined) and plans to expand to 65 by the end of the year, adding both engineering and marketing/business development talent.

On the product side, Booth said Connectivity plans to focus on three core products — reputation management, listings management and a new piece, which is building automated customer lists. The latter works from the premise, supported by BIA/Kelsey data, that most small-businesses don’t have a very clear idea who their customers are. Building lists from unique identifiers (most commonly through a phone contact), puts a powerful tool in the SMB’s hand that they can in turn use to do more on the retention/remarketing side of the equation.

“Most small businesses don’t spend any money on retention because they don’t know who their customers are,” Booth said. His premise is that having a better way to capture and engage with customers will spur more investment in retaining and growing existing customers.

“Products have to be great in order to be part of what a business does every day,” Booth said. The standard he cited was OpenTable. Once a restaurant installs OpenTable it is very rarely uninstalled.

Connectivity currently has 92,000 paying SaaS customers, acquired largely through self-service and resellers. Most of these are smaller merchants, but recent growth has come from from the franchise and multilocation side of the equation. Going forward, Connectivity’s efforts will focus on working with agencies and directly with brands to bring in more multilocation businesses. Booth see what everyone else sees — there is no way to scale an effort at acquiring very small businesses other than self-service or working with large resellers. Direct efforts have to focus upstream.

The recently closed Series A round will fund the company’s expansion and product development efforts. The financing was led by Greycroft Partners, with participation by Rincon Venture Partners, Daher Capital, Double M Partners, TenOneTen Ventures, Eytan Elbaz and SLP Ventures.

The post Solfo Raises Money, Becomes ‘Connectivity’ appeared first on BIA/Kelsey - Local Media Watch.

Matt Booth hasn’t let any grass under his feet since taking the helm at Solfo/Yellowbot last year. The company has closed a $6.35 million Series A funding round, build up its team to include more focus on marketing and business development, expanded the product portfolio and, finally, changed its name to Connectivity.

As Solfo/Yellowbot, the company was known for its reputation and presence management solutions, and was known as a strong engineering-centric company. One of Booth’s objectives has been to expand the marketing and business development focus. He has grown the team to 27 (from around 20 when he joined) and plans to expand to 65 by the end of the year, adding both engineering and marketing/business development talent.

On the product side, Booth said Connectivity plans to focus on three core products — reputation management, listings management and a new piece, which is building automated customer lists. The latter works from the premise, supported by BIA/Kelsey data, that most small-businesses don’t have a very clear idea who their customers are. Building lists from unique identifiers (most commonly through a phone contact), puts a powerful tool in the SMB’s hand that they can in turn use to do more on the retention/remarketing side of the equation.

“Most small businesses don’t spend any money on retention because they don’t know who their customers are,” Booth said. His premise is that having a better way to capture and engage with customers will spur more investment in retaining and growing existing customers.

“Products have to be great in order to be part of what a business does every day,” Booth said. The standard he cited was OpenTable. Once a restaurant installs OpenTable it is very rarely uninstalled.

Connectivity currently has 92,000 paying SaaS customers, acquired largely through self-service and resellers. Most of these are smaller merchants, but recent growth has come from from the franchise and multilocation side of the equation. Going forward, Connectivity’s efforts will focus on working with agencies and directly with brands to bring in more multilocation businesses. Booth see what everyone else sees — there is no way to scale an effort at acquiring very small businesses other than self-service or working with large resellers. Direct efforts have to focus upstream.

The recently closed Series A round will fund the company’s expansion and product development efforts. The financing was led by Greycroft Partners, with participation by Rincon Venture Partners, Daher Capital, Double M Partners, TenOneTen Ventures, Eytan Elbaz and SLP Ventures.

The post Solfo Raises Money, Becomes 'Connectivity' appeared first on BIA/Kelsey - Local Media Watch.

The company may break $100 million in annual revenues this year, and is not yet profitable (which may — or may not — matter to tech investors).

Zendesk has a CRM product suite that is particularly appropriate to SMBs. Their suite is a cloud-based CRM platform that runs off extensive inputs from social media. Their suite is action-oriented, designed to help SMBs dialog and engage with their customers. So, here we have the new model for CRM for SMBs: Cloud-based, fueled by social media, bi-directional communications (consumer, SMB).

They’re also using a new approach to pricing plans. Their starter plan is $1 per seat/month.  Although this is close to a true “freemium” model, it is NOT freemium — there’s an actual cost incurred, even if it’s only nominal (at first).

Zendesk is betting this pricing model will produce superior results, net, than a “free” or “fremium” model.

— Scenario A: A customer starts with a free version of a product. Soon enough, the vendor tries to upsell that customer into a paying product. But the customer sees the product as inherently “free,” and is resistant to moving to a paying model. (We saw a lot of this in the early days of Internet Yellow Pages).

— Scenario B: A customer starts with a product version that has a nominal cost — $1 per seat/month. Although there isn’t much difference between $0 and $1 in economic terms, PYSCHOLOGICALLY there’s a big difference. Putting a price on the starter package, even a nominal one, establishes the concept in the SMB’s head that this is not a free service — there’s tangible economic value to it.

Their bet with this pricing model is that it’s easier to move a customer from $1 per seat/month to a meaningful price than it is to move a customer from free to a meaningful price.

In any case, Zendesk has put several business model elements together in a creative way with their CRM offering for SMBs. The ways of Zendesk bear watching. Mindfully, of course.

The post The Ways of Zendesk appeared first on BIA/Kelsey - Local Media Watch.

1. Traditional Media rule… and will continue to do so.

2. Content (generation, discovery, distribution) as ever stronger nexus among brands, media, audiences.

3. Omnichannel, transmedia campaigns for greater lift.

4. SMB “Operating System” – mobile commerce, CRM, analytics, card linked offers, transactional marketing, etc.).

5. National Reach, Local Activation – national agencies and brands by geo-targeted local media.

A bit of a spoil sport perhaps to be saying this at a digital conference, but based on our forecast of spending in local markets out to 2017, BIA/Kelsey sees the traditional media segments of the pie retaining by far the majority of ad spend with only $41B of $148.8B overall being spent in online/interactive. As we are fond of pointing out to the digital literati, even tech companies use traditional media to get their messages out. Traditional media work and are a vital part of many media allocation plans.

The role of content continues to morph with different actors in the local ecosystem casting content in different roles. Media (editorial, scripted, news), brands (content marketing), retailers (advertorial) and audiences (reviews, blogs, likes, shares) are all content producers in an increasingly interrelated ecosystem. Content is becoming the glue that binds brands, media, audiences and retailers into an unified experience variously referred to as cross-platform, transmedia or omnichannel that seamlessly continues the user engagement across dayparts, devices and milestones along the journey to purchase.

Brand managers, agencies and media executives are beginning more seamless planning and execution around cross-channel or omnichannel campaign management. For example, there’s strong evidence that display ads significantly increase search conversion. We also see that TV ads can increase online revenue per click. This points to importance of campaign planners and media buyers to integrate the campaign strategy and creative with the innate capabilities of not only individual media channels but also their synergistic effects.

We’re also seeing Small-Medium Businesses (SMBs) evolve a grab bag of tools into a more effective use of cloud-based Software as a Service (SaaS) functionality ranging from Customer Relationship Management (CRM) systems to ad tech and marketing tech solutions for managing in-bound leads; lead generation; bidding for programmatic search and display ads; and leveraging big data in card linked offers and other transactional marketing solutions that leverage the power of customer data. This provides even very small businesses the same kinds of tools and functionality and affordability that once were the exclusive province of Fortune 500 firms.

Finally, another big trend we’re seeing is the increasing role of the national brand in local markets. BIA/Kelsey’s advertising revenue forecasts illustrate that national advertisers play a significant role in the purchasing of advertising opportunities across many different local media outlets. In 2012, our estimates are that national brands spent $45.2 billion dollars in local media advertising such as direct mail, television, print yellow pages, radio, out-of-home and more. This amount accounts for more than a third (33.6 percent) of all spending in local media.

We’ll be covering these five themes in great depth at our upcoming Leading in Local conference, December 10-12 in San Francisco. Be there and join the conversation!

The post Digital East 2013: Traditional Media Continue to Rule appeared first on BIA/Kelsey - Local Media Watch.

A central theme emerged this morning at SMB Digital Marketing. It began in the Focus on Profits session, where former BIA/Kelsey analyst and current Yellowbot CEO Matt Booth declared, “In ten years, this conference will be all about software and services.”

Matt’s point was simple. Selling advertising to local SMBs is a tough business. Renewals are getting harder and competition is fierce. Selling cloud based services (presence management, CRM, reputation management) offers the opportunity for that coveted “lock in” that ensures a long-term high-value customer relationship because the SMB depends on your service to manage its business. Think Demand Force or Open Table.

“I couldn’t agree more with Matt that it will all be in SaaS in the future,” said ReachLocal President Nathan Hanks during his keynote presentation following the Focus on Profits panel.

Hanks took Booth’s prediction a step further by predicting the move to a SMB marketplace built around SaaS is closer to five years away. The big opportunity is in marketing automation, and ReachLocal is moving aggressively in this direction.

Part of Hanks’ thesis is that the purchasing process for local merchants is broken.

“It is not fun to do all you have to do to get and keep customers today,” he said. Sifting through the entire basket of point solutions and providers, getting leads, following up, and fulfilling orders adds up to a draining process.

Software is going to dominate local because it makes life better for the merchant. “Software is the answer for what ails us in local, and for what takes us to the next level.”

No doubt a large sales force is an asset. However, it is not a requirement for success in local, particularly as the local space moves toward more of a data- and software-driven paradigm. Hubspot, Hanks points out, uses technology to bring in leads, and sales to close the leads. “You don’t to have to have a big sales force to win in where local is going,” Hanks said.

Hanks leads a company that will drive about $500 million in revenue this year, with 2,000 employees and 23,700 active advertisers. Hanks replaced Reach’s CEO and co-founder, Zorik Gordon as keynoter. Gordon resigned last week, for reasons that were not immediately disclosed. The company did reaffirm guidance for the year, in an effort to reassure investors that Gordon’s departure wasn’t tied to the company’s performance.

The post SMB Digital Marketing Conference: ReachLocal’s Nathan Hanks appeared first on BIA/Kelsey - Local Media Watch.

Today at SMB Digital Marketing, BIA/Kelsey Entrepreneur in Residence Warren Kay led a panel of heavy hitters to bat around operational and financial strategies for local media companies and early stage startups.

Matt Booth, CEO, YellowBot
Mike Dodd, Partner, Austin Ventures
Gordon Henry, VP / GM Small Business Services, Deluxe Corp

“How do you balance profits and growth,” posed Kay to open the session. “The challenge of acquisition and fragmentation of your customer base, and retaining those customers is incredible.”

The consensus of the panel was that software and infrastructure plays will be the future of local. They have better unit economics and more importantly, high customer retention and recurring revenue.

This is tied closely to the SMB Operating System concept we’ve been writing about a lot. Another way to look at it is to riff on Marc Andreesen’s famous claim that “software will eat the world.” Now it’s eating local.

Gordon Henry

Despite the emphasis on shiny new technology, there still needs to be a focus on what’s going to make money for investors. The businesses admired by Henry in the local space include those that can achieve high margins through software and Saas based products with little service components.

These include Valueclick and DemandForce, the latter which was sold for a huge multiple to Intuit. Endurace is another one he mentioned which has achieved high EBIDTA through an emphasis on software and higher margins

“The challenge is when you involve lots of humans and high touch sales,” said Henry. “Businesses in local that are reselling are facing a lot of margin pressure.”

Mike Dodd

Faced with the question of value in a company like Marketo that just went public but isn’t yet profitable, Dodd posits that it deserves to.

“If you are a SaaS offering like Marketo burn as much as you can,” he said. That might sound weird but it’s true for the type of business they’re in. When you’re in that market with a product with high gross margin and high retention rates, you can afford to spend a lot to acquire that customer upfront.”

“They’re focused on getting coverage and mopping up as many customers as possible. Customers get locked in for high retention and there’s also a lot of upsell potential and higher margins. When those factors are in place, you can burn through capital and you’ll reach profitability over time because the lifetime of customer value is high.”

Local conversely is faced with more challenged margins and retention. Daily deals for example has high churn and the unit economics aren’t as good. Lots of venture money hasn’t gone into local startups for that reason.

Michael Vivio

Valpak is franchise based with a committed sales force but there is margin pressure that requires devising solutions that works for ValPak, advertisers and the Franchised media sales. That’s all about achieving scale and “the hard stuff.”

“It’s the hand to hand combat,” says Vivio, “The conversation over the hood of a pickup truck. I admire the companies that can get to that type of customer with digital offerings. For us, we’re getting there on our longstanding relationships and trust in 40 years of business.

“The challenge is scale. You have to do the right thing by the small business and do it in a way that will pay,” said Vivio “Lots of these things are difficult for SMBs to understand. They have to be explained by a human but done in a way that is profitable.”

Matt Booth

Posed with a recent Paul Graham quote that in order to be considered a startup, your growth rate should be 7-10 percent per week, Booth agrees that growth is important, but so is customer retention.

“The expectations you often see with investors is that you’re able to at least double your business year-over-year for the foreseeable future,” he said “But they also want to see recurring revenue.”

Lots of players in local are either selling marketing or infrastructure and operational products. The difference in customer retention is huge when you consider the operational players are locked in with stickier relationships (the Intuits and Squares of the world). SMB advertising conversely has famously high churn to the tune of the 40% range.

“If you’re not on the infrastructure side and you’re just on the advertiser side alone without a large legacy sales force, you’re going to find it very difficult to scale,” said Booth.

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