Posted February 22, 2007 9:59 am by with 7 comments

Tweet about this on TwitterShare on LinkedInShare on Google+Share on FacebookBuffer this page

My hat’s off to MerchantCircle. I’ve just read a Business Week article that explains how the company is serving local businesses with a network that borrows a few ideas from MySpace. It sounds like they’ve hit on a winner!

Using data obtained from public records and a proprietary Web crawler developed by cofounder Yamamoto, the eight-employee MerchantCircle builds the listings, then relies on merchants finding listings through word-of-mouth and search engines. MerchantCircle optimizes each entry in the directory, so that it gets good placement when it is picked up by major search engines such as Google. “We make it easy for people to link to your site, make it easy for merchants to create new content, and tag it in a way the Web loves. Google wants people to be able to find stuff that they’re interested in. For a small-business man to do that himself would be impossible, but we’re applying that [technology] across lots and lots of merchants’ pages,” says Yamamoto.

Smart guy! If you build it they will come. Instead of going out and trying to convince local businesses to let MerchantCircle build them an online profile, the network is simply going ahead and building it anyway. They then optimize it so that the profile shows up well in Google – which business owner wouldn’t want to claim that for free??

Of course, the hard part is actually getting the local business owner to pay for premium services. So far, MerchantCircle has 85,000 “claimed” profiles, which can be done for free. They’re hoping they can build such a vast and useful network, that local companies will upgrade to either the $30 or $100 a month level.

But selling the premium packages remains an afterthought for the cofounders, at least until they build their base of business owners who use the free services. “Our view was and still is—let’s grow the largest number of users. It doesn’t cost us a lot to help them do it. Once we’ve done it for one, [doing it] for 14 million doesn’t cost much more,” says Smith.

If I were to build a local network – and I know a few people considering it – this would be a good model to mimic. While it might be better to look at a per-click or per-lead model for revenue – as opposed to a monthly fee – I love that they’re building the profiles and optimizing them first. They’re creating value for local businesses and local residents.

  • I have read that MC will call your business with automated messages every time someone leaves a review. I have tried to contact them unsuccessfully now for about a week. I would stay away from these guys. Sounds like a major headache for small businesses.

  • Hi Andy

    I am not sure how much of a feature this is to business. I suppose it would be great if your small business did not have a website. But if it did, would you not also have to then compete with yourself/MC on search result placement??

    I view MC as a web design platform and not much else. The online reputation monitoring is a good next step. I just wonder how much longer will companies like Yelp keep at arms length from the business being reviewed? At that point, a company like (no affil) who keeps your information fresh at sites like Yahoo and Google local will replace the need for the monitoring service.

  • MikeOK – there are a lot of non-existent, poorly optmized, and just plain bad local business web sites out there. 🙂

  • Yes Andy, there certainly are. From that point of view, what MC is doing is good. Like I said, for those without a presence (or good one). I feel as a business I should be able to control every listing created for my business. This MC does which is good. But what if I don’t want a listing made by them?? Why should I have to contact them to remove the listing?? Why should I have to be concerned over one more place to update my business information. Isn’t that why I built MY website for in the first place?

    This point is not just a MC issue. The net is getting overrun with listings, reviews etc for business owners. As a former small brick and mortar business owner, I did not have the time to keep on top of this continually growing problem. I also lacked the funds to pay a company to monitor my online repuation. I feel this is the same position millions of SME’s face today.

    Better attention has to be paid to the business owner and their view on how they would like to see their business represented.

  • MC made some serious mistakes last Fall:

    which really angered a lot of small biz owners and earned MC a fair amount of negative press. They’re certainly trying hard to recover from that, but name recognition is still a problem.

  • Jim

    The issue, in my opinion, is that most businesses do not want their information placed on a site where anyone can provide an opinion or give a review. There are several Directory-type sites that try encourage “ratings” on merchants. What happens when a competitor trashes just for spite? Who controls the content? And, as Mike points out above, what if I just don’t want my informaton on this site? I predict MC will end up with about 99.9% “free” listings and 0.1% who actually pay – hardly the stuff of IPO or acquisition. As for an approach that works, look at Craigslist.

  • MerchantCircle is proud to help more than 500,000 local business acquire customers by offering an alternative to over-priced, ineffective offline marketing channels. We’ve been interviewing our merchants in all 50 states – you can read about their MerchantCircle experience here:

    We’re committed to providing every local business a web presence, easy-to-use marekting tools and a platform for connecting with other merchants, all for free. As always, please email any questions or concerns to and we will respond as soon as possible.

    Jim, you’re close. More like 1% of that 500,000.