tech

The problem with online “local” businesses

One of the most popular areas for startups today is “local.”  I probably see a couple of business plans a week that involve local search, local news, local online advertising, etc.

Here’s the biggest challenge with local.  Let’s say you create a great service that users love and it gets popular.  Yelp has done this. Maybe Foursquare, Loopt etc. will do this.  Now you want to make money. It’s very hard to charge users so you want to charge local businesses instead.

The problem is that, for the most part, these local business either don’t think of the web as an important medium or don’t understand how to use it.  Ask you nearest restaurant owner or dry cleaner about online advertising.  They don’t see it as critical and/or are confused about it.  Even Google has barely monetized local.

People who have been successful monetizing local have done it with outbound call centers.   The problem with that approach is it’s expensive.  Even if you succeed in getting local businesses to pay you, it often costs you more to acquire them than you earn over the lifetime of the relationship.

To add insult to injury, local businesses often have very high churn rates.  I have heard that the average is as high as 40%.  Anyone who has done “lifetime customer value analysis” can tell you how that ruins the economics of recurring revenue businesses.

Hopefully this will change in time as local businesses come to see the web as a critical advertising medium and understand how to make it work for them.  But for now, monetizing local is a really tough slog.

* This is what I hear from industry sources.  If readers have better numbers or sources I’d love to hear them.

Categories: tech

11 replies »

  1. I have some question

    If you like reading a blog, what kind of interesting things that make you like that blog? Give me your favorite blog links too..

  2. Hi! I’ve been following your weblog for a long time now
    and finally got the bravery to go ahead and give you a shout out from
    Lubbock Texas! Just wanted to mention keep up the good job!

  3. First, there are many ways to go about search engine optimization.
    There are services that will do the submitting for
    you. It is certainly thee best way to search enormous classifieds or advertisements posted oon Craigslist.

  4. Try to make it sound natural and less like a sales letter.
    If you keep getting questioned on your state’s statute of limitations,
    put the answer on your ad. ” The directory assistants shared their expertise on how the phone directories get additional money from advertisers like the senior living community.

  5. This can in turn affect your ability to calm down and get a good night’s rest.
    However, lack of hypocretin which is an amino acid that is accountable to determine whether one should be awake or asleep is usually found in people suffering from this
    sleep disorder. ZOLOFT not bothered serotonin reuptake inhibitor (SSRI) accredited by the FDA to take care of
    within adults Major Depressive Dysfunction (MDD), Obsessive-Compulsive
    Disorder (OCD), Social anxiety disorder, Posttraumatic Tension Disorder (PTSD), Premenstrual Dysphoric Disorder (PMDD), as well
    as Social Anxiety disorder.

  6. Hi there! This post couldn’t be written much better!
    Reading through this article reminds me of my previous roommate!
    He continually kept talking about this. I am going to forward
    this article to him. Pretty sure he will have a very
    good read. Thank you for sharing!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s