I first heard of Yodle about 4 years ago, back when it was called NatPal, by Nathaniel Stevens out of UPenn, a friend of Brad Twohig, who is our joint friend. Since then, I’ve seen the company grow from a few dozen clients to a reported 5,000, bring in a CEO (Court Cunningham), and a whole executive team. Of anyone in the marketplace, I see these guys as the leaders so far, even though Webvisible and ReachLocal are far larger in terms of customer base, revenue, and staff.
The local advertising game is far from won—- the mainstream has yet to see a dominant player emerge, much less be able to recall any name brands. As much as we’d like to believe the yellow pages will die an instant death, change occurs slowly. And I see the most efficient player being able to win. Yodle.com sells less on force of sales and more on the performance basis of calls driven. Call tracking is powerful, as clients can see measurable impact. But the game is early. Nobody yet has figured out a true multi-channel marketing play that delivers pure ROI for local, even though the search engines, yellow pages, newspapers, radio stations, agencies, and other guys are trying to build their own and partner with others. Expect to see some consolidation as a result of the economic downturn.
The eventual winners (and I believe there is room for many large players) will be the ones that deliver great value to the clients (transparent results and a large share of the client dollar actually going to marketing spend), plus take great care of their sales, operations, and engineering teams. Social media is increasingly important, for example, Facebook advertising for local. Trouble now is that building such a team realistically costs $5-10MM, depending on how it’s done. It takes, by my estimate, a team of two dozen folks for two years to build this out. The fully loaded cost of a person is about $125k in a major metro. Add in some marketing and sales expense and you can see how the numbers shake out.
Kudos to Yodle.com for being able to raise another round in a difficult environment.