Category Archives: Viral Marketing

Word-of-mouth has been very, very good to FPF

Posted on Wednesday, March 5, 2008 by No comments yet

I was talking to a marketing professional this week and he was asking me how big Front Porch Forum‘s marketing budget is considering the high level of local buzz about it.  Well… what budget?  We depend on happy members to spread the word… neighbor to neighbor… social “contagion.”  So I was glad to read this posting from Perry in a Burlington neighborhood forum today…

I heard about [Front Porch Forum] some weeks ago, then yesterday, within about 12 hours, three different people mentioned it. I figured that’s the sign I need to become part. Looking forward to becoming more familiar and involved with the neighborhood.

8,000 local subscribers and counting… out of a base of 50,000 households.

Yelp, Local Online Leader, worth $200M?

Posted on Thursday, February 28, 2008 by No comments yet

TechCrunch reported this week…

Yelp, the popular local review site, will soon announce a new $15 million dollar round of financing led by DAG Ventures. The valuation is rumored to be in the $200 million range. Yelp says that they will be using the money to expand geographically, add onto their sales team, and establish an office in NYC (they are based in San Francisco). This is Yelp’s fourth round of funding since their founding in 2004. Yelp is also boasting some impressive stats: 8.3 million uniques in the past 30 days and over 2.3 million review.

Mike Boland comments

Yelp has become a poster child for how to build a local reviews site and has become a clear favorite of the twenty and thirty-something urban “foodie”.

And Greg Sterling offers

Yelp’s success is about its “personality” and “transparency.” The site has managed to create a brand as a result of offering content that people have come to value and trust.

This brand identity is what now lifts it above many or most of its competitors.

But it’s the comment area on TechCrunch that starts to get at the most interesting points.  E.g.,

Comment No. 12 says in part…

Local interest websites are always non-viral, because they operate in the disjoint “internets” of each metropolitan area. So one needs to wait a very long time before they reach decent size. For Craigslist, it took 7-8 years. VCs will not wait that long. To accelerate this, you can throw money at the distribution/marketing. I do not know what the timescale for them will be in NYC, but VCs may get impatient, especially because this business is very recession-prone, and the recession is coming.

Comment No. 15…

i’m no expert, but $200mm for sub-$10 million revenue, no profits, and difficult to scale growth (building a community in a new metro area takes time and local ad sales takes sales manpower) seems really generous. i guess yelp is essentially the market leader and probably does get high return traffic from those who do use the site… maybe you can argue a decent ltv for each user?

And comment No. 37…

I helped start a review site that was funded at the same time as Yelp, InsiderPages, Judysbook, etc. After building the feature set, we set forth to capture the YP advertising market. Kelsey Group and other industry pundits were playing up the pending “massive” migration of local advertising from offline to online. We all wanted to be there to capture it.

There was one big problem with capturing those ad dollars: the cost of sale. Reaching out to local businesses costs money, a LOT of it. I’m not sure what Yelp’s rate in customer-review-leads-to-advertiser equation looks like, but here’s some back-of-the-envelope math:

2.3 million reviews
Assume average of 1.5 reviews per business location (this is generous)
1.5 million businesses reviewed to date

Break down those businesses:
60% local, 40% regional or chain (some split along those lines)

The ad dollars are in the “national-local” or “regional-local” businesses. They have bigger budgets, and they’re familiar with the web play. But if you’re in the local review business, how many of your users will enjoy ads from Applebees and Home Depot?

So, you go after the “local-local” businesses, because that’s what brings the value of your site (Yelp) over the big guys (Yahoo Local, Google Local). Reaching out to these folks? You have to put feet on the street, and the cost of the sale just doesn’t pencil out.

Because of this, Yelp’s strategy is obvious acquisition. But at those numbers and a fourth round, they need to be eclipsing the {portal-name-here} Local properties in traffic. In short, good luck.

Front Porch Forum is not a local review site (although many of our subscribers do use it for reviews), but many of the points above apply.  We launched in our pilot area about 18 months ago and it gets a little easier every day in ways that money can’t buy.

Going viral ain’t as easy as we thought it was

Posted on Tuesday, January 29, 2008 by No comments yet

Duncan Watts of Yahoo! takes Malcom Gladwell’s Tipping Point thesis to task in Clive Thompson’s article today.  In particular, he goes after the notion that a small number of people carry extra weight in igniting trends that spread exponentially… influentials.  Rather, its society’s readiness for a trend that matters most…

“If society is ready to embrace a trend, almost anyone can start one–and if it isn’t, then almost no one can,” Watts concludes. To succeed with a new product, it’s less a matter of finding the perfect hipster to infect and more a matter of gauging the public’s mood. Sure, there’ll always be a first mover in a trend. But since she generally stumbles into that role by chance, she is, in Watts’s terminology, an “accidental Influential.”

Perhaps the problem with viral marketing is that the disease metaphor is misleading. Watts thinks trends are more like forest fires: There are thousands a year, but only a few become roaring monsters. That’s because in those rare situations, the landscape was ripe: sparse rain, dry woods, badly equipped fire departments. If these conditions exist, any old match will do. “And nobody,” Watts says wryly, “will go around talking about the exceptional properties of the spark that started the fire.”

Also noted today is this tidbit from Kevin Harris

I was talking to a group of community workers today, getting their views on the use of community centres and ways of getting people through the door. Most of the way through a 12 month funded programme, they told of an influx of new people coming in. This is in an area of low expectations and high needs.

The explanation is that ‘word-of-mouth takes 8-9 months…’

‘It’s about people having the courage to act on what they’re hearing. It can take you a year to get confidence in the community, that there’s something new for them to try and to trust it. It takes time for the confidence to work through.’

Reaching people is hard work.  About 30% of our pilot city subscribes to Front Porch Forum and I’d guess that almost that many are familiar with the service and are open to signing up… just haven’t gotten around to it or don’t quite understand or trust it yet.