This column's biggest ongoing topic is the hotly-contested dynamics of mobile local search and geo-social apps. There's lots of excitement and investment being poured into the space, but continued confusion over monetization.
There's also the question of who is best positioned. Foursquare is a clear winner on the measures of usage growth and received volume of ink. It's recent $20 million B round doesn't hurt either, bringing its valuation to $95 million.
Meanwhile, Facebook looms as the category killer, as we wait for it to "turn on" automatic location annotations. Twitter has already done it. Could their combined 600 million-plus users (some overlap) preempt Foursquare's efforts to grow far beyond its 2 million users?
Foursquare founder Dennis Crowley gives a strong argument that its use case is decidedly different than Facebook and Twitter. And there's the argument that Facebook's entrance will involve federating check-ins from Foursquare and others. Twitter has done similar.
Either way, you have to admire Crowley for turning down the easy exit (acquisition) and instead raise capital to remain independent. That was the right move, if risky, for Foursquare to reach its potential. And acquisition-wise, Crowley's been there, done that.
Running with the Pack
Lots of others have flooded this space over the past year, while established companies have copied check-in functionality. We've argued it's a new form of currency in mobile local search, and many (including Crowley) have argued that it's becoming a commodity.
Challengers include WHERE, Brightkite, Loopt and MyTown. But what about Yelp? As one of the newly vaunted success stories in local over the past five years, it could be positioned well -- sitting somewhere between Foursquare's quasi-niche positioning and Facebook's scale.
The company has 32 million uniques, 1.4 million of which are mobile (mostly iPhone). But interestingly, 27 percent of searches come from mobile. Check-ins and augmented reality brought to its most recent iPhone and Android apps, also make it a formidable contender.
But unlike most entrants to this space, Yelp has direct touch points into the elusive SMB segment (via inside sales force) and many existing relationships. This is precisely the segment on which Foursquare and many others are basing future sources of revenue.
Yelp is also proving to be a solid SMB lead source. Mobile product manager Eric Singley told me that its iPhone app in May generated half a million calls to SMBs, almost a million point-to-point directions, and a rapidly growing volume of check-ins.
Based on this information, Yelp launched a new set of tools for businesses to better evaluate leads they're getting from their mobile products. Specifically, those that have claimed their listing and unlocked its free business tools can now also see:
- How many people looked at their business page from the Yelp app.
- How many people called their business from the Yelp app.
- How many people generated directions to their business from the Yelp app.
- How many people checked-in to their business via the Yelp app.
This will initially take form in a free e-mail newsletter sent to merchants. But Singley tells me it will likely integrate deeper into Yelp's profile management dashboard.
"This is step one, to get it in front of people as soon as possible," he said. "E-mail is visible and they get it in their inbox, front and center. But we do eventually want to integrate it more deeply with the online product."
The main point is to make it more apparent to businesses that they're getting real leads from Yelp. In that sense, it's a proof point for ROI, and an enticement for local merchants to claim their Yelp listings and start spending money on its range of paid ad products.
"We're seeing more tangible engagement in mobile apps and customers walking through the door," he said. "There is so much happening but it's hard for [merchants” to make the connection. This is our way to show it more explicitly."
There are no clear-cut winners in the mobile local space yet. It won't just be whoever accomplishes the fastest user growth or TechCrunch writeups.
Foursquare has excelled in these areas, as well as in attracting national advertisers to run campaigns and branded badges through its app. But the Holy Grail for Foursquare and most others will be the 23 million SMBs in the U.S.
The problem is the assumption I keep hearing that mom and pops will so easily show up and manage promotional campaigns. Just ask Google, which has gone further than anyone, but has penetrated less than a million SMB self-provisioned AdWords campaigns.
The latest was Foursquare B round lead investor Ben Horowitz, who characterized its monetization opportunities as "very obvious and straightforward." "Would you pay to know your most frequent customer?" he asked TechCrunch rhetorically. "Probably."
The problem is that SMBs often defy logic. Based on the investment and interest pouring into this space, I'm convinced it will be soon realized that SMBs act in inconsistent ways and aren't as "obvious and straightforward" as many assume.
It's been said for decades that local advertising isn't bought, it's sold. In addition to consumer appeal and massive scale, the winner in this geo-social mobile game will have direct touch points with SMBs (a la Yelp); or be able to build or partner to get them.
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