Take the new Public Alerts feature in Google Maps. It’s pretty cool and it makes good sense. Whether you are traveling into an area where an alert might be in effect or you have concerns right near your home you can now check a map to get the information you want.

On the Google LatLong blog here is an example of what you would see on a map if there were public alerts set in motion.

If you click on an alert you will get the alert detail much like you would on the Weather Channel or from some other weather source.

There’s not much else to discuss about this other than the thought that while we like to get whipped into a SilVal frenzy about Google’s “evil intentions” we should pay some attention to the smaller things as well.

Maybe they should post a permanent alert over the Silicon Valley warning of heavy hot air gusts and limited visibility due to the fog of arrogance and self importance? I’m just wondering.

Of course, once the release is made official there will be grave concern that Google will be trying to corner the online game market. I have also heard that there is concern that Google is trying to corner the world’s toilets supply because they have some in their headquarters. Don’t say we didn’t warn you.

Enjoy the video giving you a look at “Play Your World”

Google Places has the potential to truly help businesses of all sizes since virtually every business be they large or small, has a place page for its location as well as its satellites. That’s very cool. We as regular folks using the Internet like the potential.

I use the word potential only because while there can be great benefit to a business with regard to Place Pages and now with the added Google+ brand pages (why aren’t these two integrated in some way anyway but that’s for another letter, I guess?) yet you still don’t seem to understand some simple concepts.

First is customer support. I realize that place pages are free blah, blah, blah but even free deserves some help especially when you make random changes to how pages are displayed, you merge listings without warning and you change data in listings that are supposedly controlled by the very business owners that were aware and conscientious enough to verify and claim their listing so THEY could give the correct information rather than the outdated info you have gotten from one of your data warehousers.

Your approach to your “customer” is incongruent at best and pathetic at worst. You want everyone to claim pages and take control then you change things without sufficient warning etc, etc. Could you explain that, please?

Even more interesting though is your attempt at building community around place pages. Your blog is filled with profiles of people that are our “neighbors”. Well, for about 99% (number pulled out of the air for effect, I admit it) of those seeing the profiles, we don’t know this hyper cool person and likely will never meet said person, let alone really care about their likes and dislikes etc etc.

You know what would build community around Place Pages? Information about how to get help that isn’t in a forum that is manned not by someone who is not being paid to help and yet does an infinitely better job of helping others understand the whole process than most folks on your team, aka Mike Blumenthal. No actual regular Google employees who deal with these issues from your side of the table on a day to day basis so us commoners can get a better grasp of how to use these offerings more effectively.

Oh and not to mention the fact that you have introduced the ability for a competitor to actually place an ad inside the map bubble that appears for a business listing? That’s just plain lame. ( I just remembered that one so I threw it in here so I wouldn’t forget).

There is SO much more but I wanted to really write this letter to see if anyone in Mountain View is actually listening to people who use your systems and services for local reasons. I know you will say there are gobs of people working full time to make sure that things are running smoothly but why don’t you give us names? Give the local search community our own Matt Cutts or something. Throw us a frickin’ bone here (I used by best Dr. Evil typing motion with a pinky up to type that one).

So that’s it for now. I know there are a million other issues to address and I can only hope that some of the real local experts will chime in with comments to help share their level of frustration with your efforts to build community that is surfacey and does nothing to actually make your service work better. After all, if you paid real attention to the actual business owners’ needs, we will actually spend more money with you because it is generating revenue for us. How about that?!

So Google Places team, is there anybody out there?

A recent study from eMarketer called “Local Online Advertising: Digital Trends, Challenges and Opportunities” (buy the study here as an eMarktere subscriber only; MP has no financial arrangement with eMarketer) looks at one very active discussion area of the online space which is local and finds that how local is defined will greatly impact any predictions about its future growth.

So why the disparity? MAGNAGLOBAL has a much different definition of local online ad spend as opposed to the other two research companies

[they] take a more narrow approach to classifying local online ad spending, including only dollars spent on local TV, newspaper and radio sites in its estimates. Local paid search and display ad dollars spent elsewhere are not included.

This is an interesting view of what is considered local. I have discussed in other writings that all businesses are local businesses so I also believe that all advertising efforts can have a local element regardless of company size and scope so to not include search in local ad spend is actually a strange defintion to me.

Of course, this varied point of view presents two very different pictures of just what portion of overall ad share the local element gets. By definition of the different research studies we see that the “predictions” are dramatically different.

We always caution about research and its source. What is also critical is the basic definitions of terminology that need to be examined when looking at any research in the online space. With change happening so rapidly it’s real easy for people to play fast and loose with just about anything. In a way, this example is refreshing in that it is a bit contrarian since it actually cuts back on an Internet forecast which would seem to break some unwritten rule. Isn’t all information and research about the online space only supposed to show double digit growth for, well, forever?

What is your definition of local advertising? Do you include search in that equation? Are you paying attention to the details of the research you are working from? After all, we are told that there may be some trouble that lies in those details if we are not careful .

That’s why we are sharing this bit of data from Yelp which obviously is trying to let people know that it’s more than just a restaurant review site.

This kind of “re-imagining” of a brand is something that is difficult in the Internet age. Yelp has allowed its users to define it and many have decided that Yelp is their home for reviewing restaurants. In order for the company to grow though it will need to have a broader reach.

How do you use Yelp? Is it a place where you review everything or has it been painted into a corner by being only for a certain segment of your life?

Let’s hear your thoughts on this Black Friday. After all, you may be doing a bit of shopping and eating today, right?

But as with any marketing update in the online space, how I use it doesn’t matter a bit. In a post from the Google Lat Long blog comes an explanation of this newest maps feature.

Since the My Places tab was released earlier this summer, you’ve been able to view all the places you’ve rated in one manageable list. This list is now being used to personalize your view of Google Maps, enabling you to visualize all the various places you’ve visited, loved, loathed, and might want to check out right on the map.

Starting today, business labels for locations you’ve rated with Google Places will be highlighted on the map with your corresponding rating beneath it. Additional places that our system thinks you might enjoy visiting — either to eat, shop, or more — will be highlighted as well. These personalized recommendations are based on the places and ratings you’ve already shared.

his could be good for the “out and about” set. My question is, how many places does the average person go out to eat at and do they actually forget whether they rated it as being good bad or indifferent? And do they just wander about and look for recommendations to something else in the vicinity?

Anyway, it doesn’t matter how I see this. It’s how the target market does that counts. Are you one of the targets for this kind of map functionality?

We reported about expanded local search results for branded searches the other day. The new look of a search for a specific place or business now places Google Place Page data on the search result page itself thus alleviating the need for the searcher to click through to place page which, in the past, was not always well done from a user’s perspective.

Now, in addition to this new look, Google has changed the traditional red pin map approach and turned the little buggers gray! Don’t worry though, they don’t stay gray forever. Google has now made it that when you mouse over the result the pin gets “happy” and turns red! Here’s a look. Notice too where the address information is occurring. (Click image to enlarge)

Google is now realizing that the visual cues it offers its users could very well lead to a click. When you mouse over a local result and something about that result, in essence, lights up then you have an eye catching experience which could mean conversion.

The final piece of the puzzle is what can happen if a local business is not keeping its place page information fresh with photos etc. You are leaving opportunity on the table because the new local search result layout is showcasing the data a business has in its place page information. Look below at what opportunity exists below to add more photos, hours of operation etc. (Click image to enlarge).

That is essentially the week in review for local search. Are you paying attention?

Pin Image Credit – Blumenthals

A new report from CMO Council says this is just a small sample of what we’ll be seeing in the future. 86% of the marketers they surveyed said they’re actively looking for a better way to localize their efforts. 49% said that localization was essential to business growth.

In the past, local advertising meant the Yellow Pages, but not so much anymore. Local deal networks such as Groupon also came in at the bottom of the list.

What channels are marketers using? Direct mail, local websites, social networks and relationship-building events came out on top.

Pros and Cons

When asked about the pros and cons of localized marketing, 67% said it provided  “greater customer relevance, response and return.” Also mentioned was improved loyalty and advocacy and better connectivity with the customer.

On the downside, understanding the local market dynamics was listed as a challenge, along with determining the right cost/benefit model for the spend. As with many types of campaigns, measuring effectiveness was also listed as a challenge.

50% of those surveyed said they were under-performing in local markets and needed to step up their game.

My Local Website

Brick and mortar stores aren’t the only businesses that can benefit from local marketing. Adding a local touch to your online business can go a long way toward promoting sales and customer loyalty.  People like to buy from people. That’s why people will buy a $25 handmade hat on Etsy instead of a $5 mass produced hat at the store.

Take a look at your website. What image are you projecting? Cold, faceless company or hard-working owner who runs in local charity marathons? Simply showing the world that you’re a real person with hometown roots can buy you a lot of goodwill and that’s a whole different kind of localized marketing.

How important is local to your marketing plan?

The short term conventional wisdom regarding the new iPhone 4S is going some way to changing that. Its impact on the mobile world is that the voice recognition “engine” for the smartphone, Siri, is going to be a local search “killer app”. Google is responding in a way that seems to point to their need to make sure that their version of “local” is better.

Google has announced that they are now using another way to update Google Place pages. As put by Jon Mitchell of ReadWriteWeb

Google just launched a more streamlined process for updating small business listings on Google Places, but it asks forgiveness instead of permission. Instead of requiring owners to manually update the listing, Google Places will now automatically update with user-submitted info or updates to another source on the Web that Google identifies. When a listing is updated, the system will notify the business owner of the change by email.

What we don’t know for certain is where these updates are coming from (Attention experts: feel free to tell us more in the comments) and one wonders if there is room for any local information foul play which has become an local SEO pastime of sorts.

So where does Yelp fit? Well, one of the sources for Siri’s data is Yelp. Here is some more insight from local search expert Mike Blumenthal

Interestingly the current Siri app pulls data from a wide range of data sources to answer your questions. That is true with business listing data as well. Depending on the local search it might show results from Yelp, Yahoo, CityGrid, Localeze or BooRah. I presume that it uses even more sources than I have so far discovered and it appears to be agnostic as to where it gets its data. Siri also seems to mix and match sources when necessary.

Blumenthal also checked in regarding the changes in how Google Places is updated.

Yesterday Google Places announced on the LatLong Blog that they would automatically update claimed listings more quickly with information from trusted third parties [and end users] if Google thought the information was more accurate than information that was in the Places Dashboard.

The program’s goal is to improve index quality. If implemented carefully it can work. It is not clear how abuse proof program is and how much trust Google will put in end user edits. Obviously many of those, if not properly vetted, could create a whole new spate malicious activity.

If you would like to read even more of Mike’s thoughts on Siri check out his Siri love letter.

In the end it appears as if Google is working to wean itself off of certain local data sources with Yelp being one that they would like to create some distance between for obvious reasons. With this strategy, however, there are risks for sure.

I don’t have any evidence of this but one can pretty quickly surmise that Yelp is one of the companies that carries a pretty large target on it around the Googleplex. Right now though Google’s voice recognition doesn’t seem to be as smooth as Siri but the average Android user is used to clunky. iPhone users use the iPhone for a variety of reasons and one of those is that it is usually a smoother interface on all fronts. Android is usually playing catch up but that’s to be expected. The idea of Siri making Yelp a bigger player in the local space must be maddening to Googlers like Marissa Mayer.

The trouble with this local battle is that Google has been expected to be the local business leader but it never seems to make a push to get far ahead of the field. It has all the components to do it. It has Places, it has Android but one thing it never seems to truly have is a plan. At least not one that that is easy to see and moving them forward all the time. Now they are starting to look like they are reactive in their local approach rather than proactive which often indicates that they are not in a position to lead the local push.

In the end, this move by Apple to use Siri could spell serious trouble for Google in a space that is critical for the future of the search giant. Whether it happens today or in the next few years, mobile will be a very large component of any online effort. The spread of smartphone ownership is making that more of a reality than just a prediction.

If Google fumbles the local search market that could be a turnover that could be a game changer for sure. Do I think it is going to happen that way? I’m not saying yet because it is still early. What I will say though is that it looks like Google may be more on their heels than I imagined when it comes to the mobile space. Just that possibility is enough to put everyone on alert that the local game has never been more up for grabs than it is now.

Your thoughts?

The company has been expanding beyond the check-in and for good reason since those who enjoyed the “game” have quickly bored of the game. A new service offered for iOS 5 users called Radar will now tell users when they are near a place of interest that they have tagged or is part of a list of things you are following.

The foursquare blog says

The initial vision for foursquare centered around one question: can we build something to help make the world easier to use. Until now, we’ve focused around sharing what you’re doing and building expertise, with features like checking in, tips and recommendations. Today, we’re super excited by what some of iOS 5′s newest features allow us to do. Specifically, say hi to foursquare’s ‘Radar,’ a huge step in the evolution of the foursquare vision.

I know we are talking about Radar but I couldn’t quite get past the line that asked “Can we build something to help make the world easier to use?” Huh? After that bit of information it was likely that anything foursquare had to offer would fall a bit short since their first attempt was to make people a fake mayor so they could get a virtual badge thus proclaiming virtual victory over their fellow bar hoppers. I’m still scratching my head.

But back to Radar. The blog continues

Now, if you follow a list, like the 101 Best Dishes of 2011, foursquare will let you know when you’re next to one. Or you save that yoga studio to your To-Do List (because you really want to try it); we can remind you when you’re close. Or, better yet, if you’re driving home and three of your friends are getting together nearby, we’ll tell you so you can meet up. The app doesn’t even have to be open, it just works. We call it foursquare Radar, because it finds things nearby that you normally wouldn’t know about.

I get this one although depending on where you live and how you have this set up the constant reminders of things you should consider doing while you are hopefully on your way to things that you have already considered worthy of doing could get a bit much. Of course, if you just wander around aimlessly on a regular basis just looking for something to happen to or for you this kind of serendipitous discovery could be helpful.

Are you using foursqaure currently? Did you once use it but your interest has waned or is it still cool? Does this feature seem useful to you? Let us know in the comments. People are wandering around the Internet waiting to hear from you so here is the perfect place to do that!

Now they have gone social in their local attempts by creating a Facebook Page for every one of their more than 3,500 stores. An AP story tells a bit more

The world’s largest retailer announced Tuesday a partnership with the social networking site that offers Facebook pages specifically tailored for each of its more than 3,500 locations. Those pages are designed to allow its customers to interact with its local stores as well as get information on new products, events and discount offers. The partnership marks the first of its kind for a merchant and underscores how companies are using Facebook to develop a deeper relationship with its shoppers by responding quickly to their demands with the goal of increasing sales.

Here is a picture of the page used to get one started down the path of making Walmart a local and social experience.

Your next stop is getting to your local Walmart page which looks like any other Facebook page but it is local. As you can see by the numbers of folks liking a local store that this idea is indeed really new.

One point of interest is that I couldn’t get the process started in Chrome so I turned to Firefox and everything worked as intended. I know more than a few people who have trouble doing “normal” activities in Chrome. While that’s a side note to what Walmart and Facebook are doing it is possibly an important one since the frustration of not being able to get the process started may make some not participate at all.

The AP story continued to give some more corporate insight into the move

“This allows us to make our stores relevant on a local level,” said Stephen Quinn, executive vice president of Wal-Mart’s U.S. division, during a media conference call late Monday. “This addresses our ‘next-generation’ customers who are using a lot of social media. A national message is often not as relevant.”

Wow, how forward thinking of Walmart! Did it really take them this long to figure this out? I sure hope not but why wouldn’t this approach have happened much sooner if Walmart had actually figured out the local, social, mobile nature of the world these days. Oh and nine straight quarters of revenue decline might have had something to do with it. Just sayin’.

As for the experience itself the retail giant is promising that this won’t be your standard Facebook page experience.

Carolyn Everson, vice president of global marketing solutions for Facebook.com, said the partnership with Wal-Mart goes beyond a “simple local tab.” “This is embedding the social media phenomenon into the core of the offering,” she added. She noted that Wal-Mart has worked hard to engage its Facebook fans. Facebook isn’t currently working with other merchants to develop this localized approach because it doesn’t have enough resources, she added.

This is an ambitious undertaking even for the likes of Facebook. Does it make you interested enough to become a follower of your local Walmart? Of the over 9 million people who like the Walmart corporate page how many will make the jump to the local side? Only time and promotion will tell but this is one social media venture worth keeping an eye on.

Your take?

• Young Internet consumers
• Older “other media” consumers

While the lines blur in some areas it is pretty obvious that the digital divide is as much a function of age as it is economic. This first chart shows clearly the differences in how local information is taken in with regard to age group.

Once again, no real surprise but as a marketer in this era where you have equal parts those who have grown up on the Internet and those that have had it thrust upon them, it becomes critical to understand where different folks go for local data.

The rest of the report concentrates on breaking down different types of information and what outlets people use to get that information. This next chart shows where local TV coverage is the way to go. The categories where TV is the primary source for information tend to be the weightier ones of the day.

Turning our attention to what types of information are more Internet centric shows the lighter side of life.

Now a natural connection here would be that as people get older they pay attention to different things. That makes sense. What should be a shift we see in the next 20 or so years is the younger crowd turning their focus to more serious topics more (like politics) but still keeping the Internet as their primary vehicle for gathering this data.

We are living in a very transitional period of time with regard to information. Not since the advent of the television age has there been such a sea change with how information is disseminated. Many of today’s consumers (especially those with deep pockets due to their longer time in the work force) use what are being deemed more traditional methods of information consumption like TV and even, gulp, newspapers. It’s because of these consumption habits that it would be unwise for marketers to simply abandon “old school” media as a way to reach their markets.

There will come a time, however, when that group has moved on (ok, let’s just say it, they will die off) and marketers will have a more streamlined approach because the vast majority of people will be of the Internet Age and will not be using these older forms of media (at least not as much).

So where does this leave a marketer? Today, it’s in a pickle because budgets have to be split in many directions to appease the different groups habits as to where they gather and retrieve local information. There will be some relief as traditional media gives way to a wider Internet audience but by that time who knows what the latest and greatest way to get information will be? There will be something that comes along that will make today’s Internet look archaic. I have no idea what that might be but if there is one thing we can all count on as marketers it’s change.

What’s your favorite way to consume local information? Do you use different mediums for different types of information? Let us know with your comments!

CLAIM: “Is a consumer (or a small business, for that matter) well served when Google artificially promotes its own properties regardless of merit? This has nothing to do with helping consumers get to the best information; it has everything to do with generating more revenue.”

RESPONSE: In fact, most of the click traffic (roughly two-thirds of clicks) from our local search result pages goes directly to small business websites, and review sites make up the next largest percentage (about a quarter of clicks). Less than 10% of clicks from our local results page go to Google Place Pages.

It’s the last sentence that sticks out because for all of the hype surrounding Google Places in cities like Portland, Austin, Charlotte and more, Google Place pages, by Google’s own admission, accounts for only 10% of the local clicks.

I can see that happening since Google often seems to bury the links to get to the Place Page in favor of pointing the searcher to the website (which I never understood but it may be just to keep them out of trouble). The question then becomes where should the SMB or any business for that matter put Google Places on their pecking order when deciding how to allocate precious marketing resources. Well, it looks like the answer on the surface is a very distant third at best.

Here’s a quick look at what Google’s order of click importance could mean.

• SMB’s need to spend most of their time on their website and doing SEO – We always try to do an end run around this truth but when given the information about where the clicks go in local search it’s obvious what should get the most attention from a resource stand point. Maintaining a strong website and doing the SEO dirty work is not sexy by any stretch but who cares about cool when money is on the line.

• Local businesses have to pay close attention to all review sites – With about 25% of local clicks going to these review sites (according to Google) it’s obvious that a real strategy around these important purveyors of opinion needs to be in place and worked all the time.

• Google Places not about clicks – It looks like either Google is making this appear a certain way to sound good before the Senate committee or Google Places may not be as important (right now) as we often talk about. For the most part, it’s a set it and forget it proposition (with some important steps as part of that process including cleaning up name, address and phone information across the Internet). Of course, if an SMB wants to do the work to get more citations to push the listing up in the results then they can (and probably should).

But here is where it gets most interesting. Google downplays the clicks the actual Place Page receives but that’s not the real story. Take a look at this local search result from this morning. This is why the Place Page is so important to businesses.

The clicks to the Place Page may be a distant third but their importance in being ranked on the first page of results appears to be paramount (click the image to enlarge). The map and the resulting placement for the business is pinned (pun intended),in good part, to the Place Page. It could simply be that the majority of clicks going to a local business’s website are just because people habitually click on blue links and Google has laid out results to highlight that option more than the others. You can also see how review sites get plenty of the rest of the clicks because they are prominently displayed in the results as well.

So all in all it’s an interesting game being played regarding local search. Yelp in particular has been very vocal that Google promotes its Place Pages above other local search options. If you look at the SERP’s like those above you can say there might be an argument there but is there really one? In reality, if most people are clicking on websites or and review sites what has Google done to prevent competition?

In conclusion, Google is trying very hard to downplay the importance of their Place Pages to try to negate any arguments that their own “products” are receiving favor in the SERP’s.

If Google were really smart about this I would suggest that they put together an all out assault on the business community around Google+ and any integration of Place Pages that would occur there. This creates two wins for the search giant in that businesses will flock to the service and, as a likely, result promote the heck out of Google+ thus doing the advertising to the masses that Google needs to do in order to get a wider adoption rate for the Facebook competitor.

So what’s your take on Google Places? Is it the clicks that matter? If so is it worth the effort to go after only 10% of those clicks? Or is the Google Places game about a larger strategy that isn’t as much about clicks on a Place Page but taking full advantage of ALL that Google offers?

Well, there may be some help. Starting last Thursday (Sept. 8, 2011) Google Places users have a two week window to pose questions about the things that baffle them about Google places like merged listings, listings appearing out of nowhere, places being listed as permanently closed. You get the drift.

The Google Small Business blog tells us

It’s important to us to continue hearing your great feedback — and we suspect you’ve had a lot of questions and ideas throughout the past year — so let’s fire up another Moderator page. Starting today and for the next two weeks, you can submit your questions and ideas, as well as vote up other submissions from users. We’ll answer some of the more popular questions directly on the page and post a new video or two to the Google Places YouTube channel.

To be fair Google did the same thing about a year ago and they stress that in their post and encourage readers to visit the YouTube page which has some of those responses.

But it’s a year later and much has changed including users’ level of frustration with Google’s lack of support and apparent lack of a cohesive plan for populating, managing and applying Google Places in a way to benefit users and business owners alike. The scattershot approach of adding and removing information, merging listings etc. etc has made this apparently important piece of the Google search puzzle more aggravating than anything else.

Marissa Mayer is the head of the local effort at Google that many sense will ultimately find some kind of a home as part of the Google+ business offering. She apparently is as much engineer as anything else though since customer service is still non-existent and the attitude from Google is that “If we come down off the mountain for two weeks each year that should shut up the whining masses”.

Honestly, while it makes for nice PR it is a pathetic gesture from Google. It’s weak and designed only to give the search Giant the ability to say “Hey, check out these neat videos to answer all your Google Places questions.” which is today’s poor substitute for actually helping someone with a problem.

So lay out the palm branches for the honor of being able to ask a question that may actually be seen by someone who receives a paycheck from Google. Remember though that when the window closes you’ll likely have to wait for another year for the privilege to be seen in the digital shadow of real help from Google around Places.

Hey anyone from Google who is reading this, this effort rates a “C’mon man!” If you don’t know what that is please Google it and figure it out for yourself and see how it feels.

The Google blog post from Google’s VP of Local, Maps and Location Services, Marissa Mayer tells us

So, today, I’m thrilled that Google has acquired Zagat. Moving forward, Zagat will be a cornerstone of our local offering—delighting people with their impressive array of reviews, ratings and insights, while enabling people everywhere to find extraordinary (and ordinary) experiences around the corner and around the world.

With Zagat, we gain a world-class team that has more experience in consumer based-surveys, recommendations and reviews than anyone else in the industry. Founded by Tim and Nina Zagat more than 32 years ago, Zagat has established a trusted and well-loved brand the world over, operating in 13 categories and more than 100 cities.

For all of these reasons, I’m incredibly excited to collaborate with Zagat to bring the power of Google search and Google Maps to their products and users, and to bring their innovation, trusted reputation and wealth of experience to our users.

In a rather funny moment, when asked by Search Engine Land’s Greg Sterling whether these reviews would be showing up in Google Places Mayer was non-committal. Uh, how else will these reviews become a cornerstone of local for Google? But anyway …….
What is even more interesting is Yelp’s response to the purchase. The tweet below comes from Luther Lowe who is part of Yelp’s Business Outreach and Public Affairs efforts.

Sounds like someone who is either too hip to realize what sounds whiny (that is like a disease these days) or someone who is a bit concerned about Google’s move. It’s likely both since Yelp often lives up to the true definition of their name (noun – A short sharp cry, esp. of pain or alarm, verb – Utter such a cry) by barking about the unfairness of Google using their reviews (which they no longer do) while depending on Google for a fair amount of their traffic. They have also been dragged into court by businesses who claim that Yelp uses extortion tactics to have bad reviews “adjusted”. From the business side Yelp is annoying for sure but their users don’t’ care. In all though, the classy thing to do would have been to acknowledge the purchase and congratulate Google on truly entering the review space. Confident reads much better than wiseass but I doubt Yelp gets that theory.

For sure, these two ratings services are like night and day. Zagat’s has been around for over 30 years and publishes a book (which Google is saying will continue to be published via subscription) while Yelp is an Internet only player that has made its mark in the space very quickly. Yelp in the past has rebuffed an offer to be purchased by Google as well.

So all in all this is a good thing for the review space. Now Google can remove itself from any dependence it has on outside review sources and use the Zagat name or whatever they choose to make Google Reviews more prominent. We won’t need to hear the constant back and forth between the two companies about fair use of content.

To be sure, Google is the underdog in this play because they need to play catch up with Yelp and that won’t be easy especially considering Google’s track record of buying companies then announcing that they have thrown the carcass away just a short period of time later.

How do you see this move by Google? Is it something for Yelp to be worried about or is Google just making its own shrill noise in the reviews space?

The issue is around just how easy it is for someone to get a Google Places listing tagged as “Permanently Closed”. Now, in a world where there was respect and decency this shouldn’t be that big a deal but we are talking about the Internet here. If there is a way for someone to make a buck or prevent someone from making a buck by exploiting a hole in an open system like Google Places you can bet there will be those who will do it and even smile when they do.

The article reads

In recent months, plenty of perfectly healthy businesses across the country have expired — sometimes for hours, other times for weeks — though only in the online realm cataloged and curated by Google. The reason is that it is surprisingly easy to report a business as closed in Google Places, the search giant’s version of the local Yellow Pages.

On Google Places, a typical listing has the address of a business, a description provided by the owner and links to photos, reviews and Google Maps. It also has a section titled “Report a problem” and one of the problems to report is “this place is permanently closed.” If enough users click it, the business is labeled “reportedly closed” and later, pending a review by Google, “permanently closed.” Google was tight-lipped about its review methods and would not discuss them.

The Times goes on to basically call out Google’s system and what many perceive as their simple lack of caring about the issue. It is pointed out that even the remedy that Google offers for the situation is inconsistent in its success.

The owner of a closed business, and customers who know better, can click on a button marked “not true,” which appears by all “reportedly closed” and “permanently closed” listings. In some instances, owners say, a business will “open” shortly thereafter. But other owners, like Ms. Cowan, say that the button doesn’t work, or that it takes a week to have any effect. Still others say that immediately after clicking the “not true” button, their business is immediately “closed” again.

Some local search experts were quoted in the article that recounted one of the funnier things a search marketer has done to make a point. Mike Blumenthal reported Google’s headquarters as being closed. His actions, described below, at least got some attention from Mountain View.

In mid-August, a search consultant and blogger named Mike Blumenthal was so rankled by what he considered Google’s cavalier attitude to closings on Google that he committed an act of online disobedience: He “closed” Google’s offices in Mountain View, Calif. For a brief period, Google itself was “reportedly closed,” according to Places. “I did it to point out how annoying this is when it happens,” he said.

On Aug. 15, Mr. Blumenthal posted a screen shot of Google’s Places page “reportedly closed,” noting that it took just two people — him and a friend — to pull off this stunt. It seemed to get the company’s attention. At least one change to closings on Places has already been made. Since late August, a business that is newly tagged “permanently closed,” receives an alert via e-mail from Google, informing the business owner of the change.

So will this result in Google finally acting as if it has some responsibility in making sure that yet another one their systems isn’t being gamed regularly? We all know what happens to search results and Google’s “battle” with spam. Now the same gamesmanship is happening in Google Places.

Google better get it’s act together on this one especially if the Places listings will in some way be incorporated into Google+ as part of their business offering. There has been no confirmation that this will even be the case but it would make sense especially since Google’s recent whitewashing of these Place page listings indicates they may be preparing to populate these pages in a way that fits the whole social fabric they are trying to knit together through Google+.

So what does Google have to say about all of this? Well, the New York Times certainly must have their ear because a post today on their Lat Long blog says the following

About two weeks ago, news in the blogosphere made us aware that abuse — such as “place closed” spam labels — was occurring. And since then, we’ve been working on improvements to the system to prevent any malicious or incorrect labeling. These improvements will be implemented in the coming days.

We know that accurate listings on Google Maps are an important tool for many business owners. We take reports of spam and abuse very seriously and do our best to ensure the accuracy of a listing before updating it. That being said, we apologize to both business owners and users for any frustration this recent issue of spam labeling has caused, and we’re committed to making sure that users and potential customers continue to have the most up-to-date and accurate information possible.

Wow, Google, those are some very pretty and comforting words. Nice try. Until there is some action taken that is real (how about providing some real support to these businesses if they are so important?) this is an empty gesture. We’ll wait and see what exactly is done in the “the coming days” then see if this is something you are really concerned about or just paying lip service to.

Sorry to sound so cynical, Google, but why does it take an article in the New York Times to make you take action on something that you have known about for far longer than just these past few weeks?

Darren has made a name for himself in the local search community with his development of the Whitespark Local Citation Finder. Darren was kind enough to conduct an e-mail interview with us so we could learn more about the local search game. Enjoy!

MP: Darren, give our readers some history about your time in the industry.

Darren: I started developing websites in 1996 while in my first year of computing science at university. I would skip my calculus classes and hang out in the labs fiddling with HTML and Javascript. I failed calculus 3 times

In 2000, after developing a few websites for friends and my employer (I was a waiter at a French restaurant) I worked with a friend to develop a PHP driven e-commerce site for my sister’s company, a

It was awesome back then. I wrote a script to automatically email hundreds of teacher websites and let them know about this great new teacher resource website they might want to add to their links page. About 70% of would send a happy reply thanking me for the information and add the link. Every week I would drop new sites and email addresses into the script for more link building fun.

Education Station started ranking for every term we wanted, and with this success, I was hooked on SEO. I started doing some occasional SEO for my own site and for my client sites.

In 2005 my freelance web development business had grown to the point where I felt comfortable going full-time with it, and I started Whitespark. I was mostly focused on web development, and would do some basic SEO for my clients as they needed it, but really, it wasn’t my strongest skill.

In 2008 I was contacted by Austin Culley, an SEO that freelanced in the city, and we started doing some SEO projects for my web development clients together. Austin is an excellent SEO, and I learned a ton from him through the client work we did together.

Eventually I hired and trained some full time SEO consultants to help me with the workload.

MP: Tell us about Whitespark and what you do.

Darren: I guess my official title at Whitespark is ‘founder’, but really, I don’t know what to call my position. I work with clients, manage the development projects, do a little coding, do SEO for a few clients, manage the books, and spend a ton of time on email, skype, and the phone.

Whitespark primarily does custom web development, a few SEO projects, and our own toolset development. We’re working on a number of tools, and we hope to establish Whitespark as a leader in the Local SEO tools space. Our local citation finder has been a big hit thus far.

MP: Explain the idea of a citation for SEO v an inbound link and how has the citation changed with the changes in Google Places?

A citation is any mention of your business out on the web, with or without a link. It can come in various forms:

1. Company Name (by itself).
2. Company name & phone number.
3. Company name, phone number, & address.
4. Company name, phone number, address, & link.
5. etc.

In Local SEO, a citation is theorized to be as good as a link in terms of helping out your rankings. You certainly need both citations and links to get rankings, especially now with the new blended results that Google came out with at the end of 2010.

You used to be able to rank in the local results without a website. All you needed was an optimized Place Page, some quality citations, and some reviews. Not the case anymore. Now you need an optimized website as well, and it needs to be specifically tweaked with local signals.

The citation hasn’t changed at all with the changes Google made to the place page. We’re not seeing any changes in rankings. Google has simply stopped displaying the citations on the Place Pages. I think this is a good thing, because it wasn’t displaying all your citations, or the best citations. It was completely random. Google deliberately obfuscated the citation listing on the Place pages in the same way they do with the nearly useless link: command.

Google has never been a good source of competitive intelligence, and this is why tools like Open Site Explorer and MajesticSEO exist for competitive link research and it’s why we built the Local Citation Finder.

With the removal of the partial citation list they were displaying in Places, people will finally stop asking why their citations aren’t being “picked up” by Google. Many people believed that if the citation wasn’t showing on the Place Page, then it wasn’t counting towards their local SEO, and this was never the case.

MP: Explain the Whitespark local citation finder tool. Why did you build it?

Darren: The Whitespark Local Citation Finder does what the name says, it helps you find citation sources. There are two kinds of searches you can run: keyword searches, and phone number searches. For keyword searches, you’ll search a term like “chicago plumbers” and the tool will identify the top businesses that are ranking locally on page 1 of the search results, then search the web to find all the places they have citations. You’ll get back a nice big list of citation sources automatically sorted by how often the source appeared in the results. Presumably, the sites that appear as citations more often are higher value.

We also pull in MajesticSEO’s ACRank and SEOmoz’s DomainAuthority metrics for each source so you can sort by these as well.

The sites with the highest DomainAuthority will usually be higher quality citations to get. We also provide direct links to the pages where you can add your business listing on many of the directories and Internet Yellow Pages in our database. Phone number searches are great for getting back a list of citations that your own business has, or, that a specific competitor has.

We built the system simply because a tool to find citations didn’t exist. We got the genius idea for how to prospect for citations from Garrett French of Citation Labs and built the tool by automating his technique.

We’ve been adding tons of features since we launched and now have an API and affiliate program We are also working on some great new features that will be launched in the coming weeks. Most notably, we’ll be categorizing all the sites that are returned. So, in the list of 200+ citation sources you get back, you’ll be able to sort them by type to identify the directories, IYPs, social sites, and others that you can take action on to get your site listed.

Another great feature that’s coming soon is the ability to re-run a previously run search. This is especially useful for phone number searches. You’ll be able to simply click the re-run button and the tool will find any *new* citations that weren’t showing up before and append them to the list. This is great for monitoring your own citation growth over time, or for monitoring when your competitors get new citations. We’re going to provide options to set up re-runs to run automatically on a weekly or monthly schedule. This way you won’t have to do anything but sit back and wait for email notifications about new citations found.

MP: What should an SMB (small and medium business) do for local search success?

Darren: These days, it feels like local SEO is more work than the standard organic SEO. You still need to do all of your standard organic SEO such as basic onsite optimization (proper keyword placement in relevant content) and offsite optimization (link building), but you also need to make sure you have good local signals onsite and and offsite. This includes:

- Make sure your name, address, and phone number (NAP) is consistent across the web. I discuss this in more detail below.

- Add your phone number and address to the right places on your site: I recommend every page, in a header or footer, in hCard microformat. I also have seen local ranking boosts from adding the phone number to the title tag. If the business has multiple locations, be sure that each location has its own dedicated contact and information page. Make sure you link to your Google Place Page from your individual location pages as well.

- Get citations: We recommend the finder

- Get reviews: See this for review advice

- Get links with city, service, or both in the anchor text. I like to use sponsorships of local sports teams or charities and guest posting on the blogs of similar businesses in different cities to get custom anchor text. Also, see this post for local link building ideas

MP: What are the most common issues that confront the SEO and and the SMB in doing local search?

Darren: Google Places is a mess. There are tons of problems with duplicate listings and listings being merged. This is because Google is gathering local data from different sources.

Make sure your Name, Address, Phone number are consistent throughout the web. Otherwise, you’ll see these slight variations start to show up in Google places as duplicates and you’ll effectively be splitting your “citation juice” as some of the citations will get associated with one listing, and some citations will get associated with other listings.

Many of the smaller citation sources are fed data from one of the big three data providers, so it’s always best to start with making sure your NAP is consistent at Localeze, Infogroup and Acxiom. You can also run phone number searches on your own business in the Whitespark Local Citation Finder to get a list of all of your own citations, and then go through them making sure the information is consistent. Key events in a business’ history to watch out for include past phone number changes and moves to new locations.

MP: What’s your opinion of how Google “supports” the local search industry?

Darren: Local businesses are not Google’s customers, they are the products. Google is in the business of collecting and presenting data so they can sell ad space. So, there really isn’t very much support at all. If you have a problem with your listing on Google Places, you can try the forums, and the Report a Problem feature, but it’s very difficult to get an issue resolved and it can take as long as four to six months. Apparently if you sign up for Google AdWords Express you’ll get a direct line to call your rep and they can sometimes expedite a solution, but I’ve heard some stories that many of the reps are more confused than the SEOs. I think it just depends on who you get.

MP: Give us two or three peers in the industry that you think our readers should pay close attention to?

Darren: Only two or three?! That’s tough. There are many great local SEOs that I respect.

1. David Mihm – @davidmihm

David is crazy smart and is probably the most recognized expert in Local SEO. He compiles and publishes the Local Search Ranking Factors every year, and runs the excellent free service GetListed. I recently saw him speak at MozCon 2011 and he blew me away with the depth of his knowledge. Readers interested in local SEO should definitely be reading everything he publishes on his blog.

2. Mike Blumenthal – @mblumenthal

Mike is in the trenches every day working on Local SEO issues and solving them for his clients, and for random strangers in the Google Places forums. I think he might be addicted to combing through the forums and trying to help people with their Google Places problems. He blogs almost every day about the space as well.

3. Mike Ramsey – @niftymarketing

Mike is a smart local SEO publishing quality info on Search Engine Journal and his own local SEO blog.

Three isn’t nearly enough. I also love these fine folks:

1. Matt McGee – @mattmcgee – http://www.smallbusinesssem.com/
2. Chris Silver Smith – @si1very – http://silvery.com/ & http://www.nodalbits.com/
3. Andrew Shotland – @localseoguide – http://www.localseoguide.com/
4. Chris Piepho – @smallbizshift – http://smallbusinessshift.com
5. Will Scott – @w2scott – http://www.searchinfluence.com/blog/
6. Linda Buquet – @CatalystLocal - http://marketing-blog.catalystemarketing.com/

MP: What is the future of local search? Will there be true local SEO or is the blended approach that Google is taking moving away from pure SEO to more of an integrated search / social mix? How will local search be managed in the coming years?

Darren: There are still some search phrases that return pure old-style 7-packs, and although I haven’t looked closely at this myself, I have heard that these results still let businesses without websites rank purely on local factors (place page, citations, reviews). I suppose this could be considered true local SEO. How Google decides which style of local results to display, blended or 7-pack, is completely random at the moment. There is no logic to it.

I have no idea what Google’s going to do next, but my guess is that eventually there will only be one algorithm, the blended algorithm, and businesses without websites will lose their 7-pack rankings. Local search will be managed the same way in the coming years as it is now: optimize your website with local signals, optimize your place page, then spread your business footprint (NAP) as far and wide as you can around the web. Social signals are becoming more and more important in organic SEO, and this is the same in Local SEO. The more mentions, shares, likes, and +1′s a business has, the better. Small businesses would do well to get into social now and start building a following.

MP: SMB’s have limited resources. Should they be putting aside time and money for Yahoo and Bing?

Darren: Bing has an excellent listing management tool called the Bing Business Portal. I think it’s actually better than the Google Local Business Center, and I highly recommend getting your business added and claimed. This is some low hanging fruit because not many people are doing this, and just taking this one small step can often result in top local rankings on Bing. Matt McGee has written an excellent guide to Bing’s Business portal.

Beyond claiming a listing in Bing, I don’t do any extra work for Yahoo or Bing for any of my clients. On all of the sites I manage, Bing accounts for only a tiny fraction of search traffic, so all of my optimization work is focused on Google. The idea is that any work I do to improve my rankings in Google will naturally improve my rankings on the other two engines. This isn’t always the case, but in my opinion, it’s not worth specifically tweaking for Bing or Yahoo when it could potentially have a negative effect on Google rankings. If you’re a small business with limited resources, you already have your work cut out for you optimizing for Google. If you manage to secure #1 Google rankings for all your keyphrases, then I’d start to look at dominating the Google search results page with other verticals such as videos and news. Then, maybe, if you’re completely killing it and are out of things to do, sure take a look at Bing. Ignore Yahoo altogether though, as it’s powered by Bing now.

Thanks to Darren for helping bring some clarity to and area of SEO that doesn’t often offer much clear direction.

About the author Darren Shaw

Dad, husband, and founder of Whitespark. SEO and PHP/MySQL web developer with a focus on local SEO. Have been building websites and optimizing them since 1996.

Then there’s this: “the nation’s 27.5M small businesses comprise half the US GDP and create two-thirds of all new jobs.” SMBs truly are the backbone of our economy and they’re also the ones who struggle the most to remain afloat.

The State of Missouri wants to help, so they’ve partnered with Google and Intuit for the “Missouri Get Your Business Online” campaign.

The campaign offers any small business in Missouri a free, easy-to-build website along with a customized domain name and hosting for year. After a year, the website hosting goes to $4.99 a month and $2 a month for the domain name. The project also walks SMB owners through the process of claiming their Google Places listing and setting up a free business email account through Google Apps.

Jim Heeter, President and CEO of the Greater Kansas City Chamber of Commerce, said in a recent press release,

“Because more than 90 percent of our members are small businesses, the Greater Kansas City Chamber of Commerce understands the impact that small businesses have on the local economy, and we know that having a Web presence is becoming more and more important to the success of small businesses. Google’s free resources to help get Missouri businesses online represent a significant opportunity for our region. We are thrilled to be partnering with Google on the initiative.”

Those of us who spend a lot of time on the internet often take our skills for granted. But the prospect of building and maintaining a web presence is overwhelming for many and it’s nice to see this offering of help even if it is a little self-serving.

In the past month, I’ve gone online to look for a local store or service provider three times and each time I was frustrated by the lack of information available. In several cases, I had to depend on Yelp listing to find out if a business was still open. With two words in a search engine I can find a store that sells Australian didgeridoos but it takes ten clicks to find a handyman to fix my garage door. That’s not right.

Kudos to Missouri and their partners for taking steps to help SMBs in their area succeed.

Bloomberg Businessweek reports

Yelp Inc., a website that collects local business reviews, is scaling back its year-old deal service, following Facebook Inc.’s retreat from a market where consumers and merchants say they’re becoming inundated.

Yelp will cut its sales staff dedicated to Yelp Deals by half, the company said yesterday. Facebook, the world’s largest social network, said on Aug. 26 it would shut down its Deals local-discount feature, decamping from a business it entered in April. Both services were started to compete with Groupon Inc.

While calling for the end of the deal space is not warranted, it certainly is getting to be that time that an examination of the health and scalable viability of the space are fair game. Facebook has gotten out of the space for now. Groupon is, well, Groupon so according to them the deal space is full of butterflies of gold and unicorns that poop rainbows. I guess if you are being quiet before an IPO (I guess Groupon cut a deal with Webster’s to redefine quiet to fit their needs, huh?) what else can you do?

Over at paidContent.org there are some other thoughts about the space:

The reason given by Yelp for the change in strategy is that the company now wants to focus on “good” opportunities, rather than sending out more offers of “inherently declining quality.”

The decision comes somewhat abruptly: it was only at the end of June that the company took the service mobile and extended its Deals service to its iPhone and Android devices, allowing users to find and redeem the offers through Yelp’s native apps.

“Today you can find Yelp Deals in your inbox in 20 metros and counting,” wrote Eric Singley, Yelp’s director of mobile products, at the time. “How’s it going? AWESOME.”

So what causes something that was so “Awesome” in June to be shelved in August? Well, good ol’ fashioned hype versus reality always has a hand in this. If we are smart as both industry members and consumers it’s best to think that any self-promotion that reeks of hyperbole (which is most of it) should simply be discarded as the crap that it is. After the self-generated hoopla passes we can then assess that nasty little thing called reality to see where it all settles in. Despite this being the Internet space things still need to time for facts to be found. Words, especially in this space, are as cheap as dirt.

It is likely that the deal burnout that many are experiencing can be a contributing factor. What adds to the weariness with the volume of the deals is the quality of the deals. Yelp is looking to focus on “good” opportunities. Well, if they only need half the staff to get the “good” deals that implies that the other of your deals before now were of “inherently declining quality”. When an Internet company shifts into consecutive multi-syllable words to describe a situation and it they are not followed by an exclamation point then you know something is amiss. It’s also likely that they hired someone to write it since it’s using full words.

So where does it go from here? The Groupon folks are probably in a big room right now with a video of Andrew Mason saying over and over “This is a good thing for us. They can’t handle the truth!”. This wave of negativity about the business opportunity for deals from well established Internet players is certainly making the deal space look like a deal for day old bread rather than something fresh and exciting. Of course, if your life is nothing but spa visits, pedicures and photo shoots then there is plenty to look forward to.

In the end, all we are experiencing is the Internet’s version of the Sunday paper’s ads. When there is too much to wade through people lose interest. And, maybe even more importantly, when you are putting a piece of crap in a 50% off box with a pretty bow on it, guess what you still get when you open? Yup, that’s right.

In and of itself, there is nothing wrong with doing things your own way unless that way actually pushes what is legal to, or past, the limits. It’s not so much about the pushing of legal limits, since people and companies do that all the time. Rather, in the case of Groupon, it’s the shady culture that appears to be emerging and this latest flouting of convention really pushes the envelope in my opinion.

Andrew Mason, Groupon’s CEO, wrote an internal memo to his employees answering just about all of the accusations that have been thrown at the company during the IPO quiet period. During that time the company is to, well, keep quiet with PR and publicity that could be used to influence an IPO’s success or failure.

Knowing this restriction exists, somehow and some way, this memo still got into the hands of Kara Swisher at All Things Digital. The memo, as seen below, was published in its entirety with a single sentence in the post saying.

Mason, when asked about the memo, declined to comment.

OK, so I have never claimed to be the sharpest knife in the drawer but this all looks so flimsy to me. Of course, if something like this kind of defense of Groupon’s pre-IPO condition was ever “found” in the blogosphere it would be passed around like a joint at a frat party. And it has been. Heck, we are even furthering the cause to some degree albeit to point out the air of shiftiness more than anything else but it is being passed around nonetheless. So without further ado here is the full memo.

Dear Groupon,

This weekend, I did a Google News search on our company — my first in awhile. The first story that popped up was called The Fall of Groupon: Is the Daily Deals Site Running Out of Cash? I laughed when I read the headline (in the car by myself, weirdly). First — with this article, the degree to which we’re getting the shit kicked out of us in the press had finally crossed the threshold from “annoying” to “hilarious.” Second, I was struck by the irony — I had just finished a board meeting last Wednesday saying this to myself: I’ve never been more confident and excited about the future of our business.

I realize that this sounds like the kind of thing that CEOs say when they’re trying to pep people up. First of all — I’m all about not pepping people up. If you don’t believe me, just ask my fiancée, Jenny “why don’t you ever say anything nice about me” Gillespie. Want another example? Look at the magazine covers in our lobby, which are there to make you sad by reminding you of the impermanence of success.

I’m going to spend the rest of this email explaining why I’m so excited. You need some ammo to argue back against your blog-reading “friends” (silently argue in your mind, that is — you can’t actually say any of this yet), and I’ve been told that the “what have you ever done with your life that’s so great?” rebuttal isn’t working as well for you guys as it has for me.
While we’ve bitten our tongues and allowed insane accusations (like in the article above) to go unchallenged publicly, it’s important to me that you have the context necessary to brush this stuff off.
I’ll summarize my excitement with four points: 1) Growth in our core business is strong 2) Our investments in the future — businesses like Getaways & NOW — look great, 3) We are pulling away from competition, and 4) We’ve built a great team that I would pit against anyone. In other words, all the stuff that one would want to look good? It looks good.

Many of the long-term unknowns of our business are becoming known, and we like the answers. I will now elaborate in a level of financial detail that will give Jason Child a stomach ulcer.

1. GROWTH IN THE CORE BUSINESS
Thanks to a tremendous effort by our sales team, August in the U.S. is shaping up to be a pivotal month. It appears that will revenues grow by about 12% over last month (which is a lot), while we cut our marketing expenses by 20% in the same period.

Beyond their obvious goodness, these numbers are important because they answer one of the main criticisms thrown at us in the past few months, relating to a metric we put in the S-1 called ACSOI (adjusted consolidated segment operating income) to help people understand how we think about marketing expenses. The reason everyone in the world seems to hate ACSOI is that it makes us look magically profitable by subtracting a bunch of our customer acquisition marketing costs from our expenses. The reason we didn’t realize everyone in the world would hate ACSOI (no, it’s not the same reason we didn’t realize everyone in the world would hate our Superbowl ad), is that we think it actually does a pretty good job at describing our marketing expenses in a steady state –we just didn’t realize there would be so many skeptics. I think it’s worth going deep on this one more time — brace yourself.

Our internal forecast shows two different types of marketing: what I’ll call “normal marketing” — which is NOT excluded from ACSOI — and “customer acquisition marketing,” which is. The way Groupon spends on marketing is unique in three ways:

1. We are currently spending more than just about any company ever on marketing — in Q2, we spent nearly 20% of our net revenue on marketing, while a typical company spends less than 5%. Why do we spend so much? The simple answer is “because it works.” But thats only part of what makes our situation special.

2. Our marketing — at least the customer acquisition marketing that we remove from ACSOI — is designed to add people to our own long-term marketing channel — our daily email list. Once we have a customer’s email, we can continually market to them at no additional cost. Compare this to Johnson and Johnson, McDonald’s, or most other companies. If I’m a Johnson, and I’m trying to sell you a box of Band Aids, I have to keep spending money on commercials and magazine ads and stuff to remind you about how sweet Band Aids are, even after you’ve bought your first box. With Groupon, we just spend money one time to get you on our email list, and then every day we email you a reminder of the sweetness of our metaphorical Band Aid. There is no cost of reacquisition — that’s unusual (and we created ACSOI to point that out). If Johnson wanted to follow the Groupon strategy, he would have to start a free daily newspaper about bandages and then run Band Aid ads in it every day.

3. Eventually, we’ll ramp down marketing just as fast as we ramped it up, reducing the customer acquisition part of our marketing expenses (the piece that we remove in ACSOI) to nominal levels. We are spending a ton now because we’re acquiring as many subscribers as we can as quickly as we can. We aren’t paying attention to marketing budget (just marketing ROI) in the way a normal company would, because we know that even if we wanted to continue to spend at these levels, we would eventually run out of new subscribers to acquire. So our customer acquisition spend drops severely to reflect the fact that eventually we’ll run out of people we can add to our email list. We view this internally as a very large one-time expense and then our job forever after will be to continually convert these subscribers into customers and to make sure our customers keep buying from us. Ongoing, the normal marketing dollars we spend are not something we would remove from our internal calculation of ACSOI.

I tried my best to explain this simply, but it’s not lost on me that if you actually understood this, you probably had to read it three times. It’s not easy stuff. It’s much easier to assume that we’re goons. So people can be forgiven for being suspicious. In fact, feel a little bad about how downhearted the critics will be when we don’t turn out to be a Ponzi scheme — those are good impulses for journalists to have, and I hope our non-evil ways don’t destroy their spirits.

Anyway, there’s a reason that I just went on about ACSOI. One of the questions that skeptics ask is, “when you ramp down marketing, won’t revenues stop growing as well? Aren’t you just buying growth?” Over the past several months we’ve been consistently reducing our marketing spend and yet revenues are still increasing at a significant pace. In Q1 of this year, marketing represented 32.3% of our net revenues. By the end of Q2 it had fallen to 19.4%. And it has continued to fall over the past several months all because we’ve been investing in our own long-term marketing channel — our email list.

Internationally we see the same trends — marketing is down, but revenues are up — every country is either losing less or making more. Even in young markets like Korea, where we’re still making massive investments, we’re seeing unprecedented growth. We started building our Korean team this January, despite the presence of two competitors that were larger than any we’d previously battled from behind. Thanks to the brilliant execution of the Korean team, we are set to be the market leader within months. We’ve never had a country grow as fast as Korea!

What about our joint-venture with Tencent in China? Did you read the article that Gaopeng’s CEO has kidnapped the first born children of all our employees and is putting them to work building a laser beam he’ll use to slice the moon in half? It turns out that that one isn’t true either. China is definitely a different market, but every month we inch closer to profitability. As has been our strategy in launching other countries — Germany, France, and the UK, included — our China growth strategy was to hire quickly and manage out the bottom performers. So far, that strategy has improved our competitive position in China from #3,000 to #8. Will we one day reach the dominant status we enjoy in most (come on, Switzerland!) other countries? It’s too soon to tell, but there’s no question in my mind that we’re building a business that will be around for the long haul.

2. NEW BUSINESS LINES ARE BOOMING
Travel and Product are enormous opportunities. After only a few months, they’re already making up 20% of revenue in some countries. We sold $2M worth of mattresses in the UK — in one day! Groupon Getaways will do $10M in its first calendar month — which you might think is awesome, but we’re actually disappointed with those results because we know how much better we’ll be doing soon.

While there’s still a ton of work to do, Groupon Now! continues to see weekly double digit growth. The model works and I believe it will play a major part in the future of our global business as more merchants and customers join the marketplace.

3. WE ARE PULLING AWAY FROM COMPETITION
If there’s a question I’ve received from Groupon skeptics more than any other, it’s, “how will you fend off the competition — especially massive companies like Google and Facebook?” I could give a dozen reasons to bet on Groupon, but it’s impossible to predict the future or the actions of others. Well, now the sleeping giants have woken up — and the numbers are showing that what was proven true with literally thousands of other competitors is just as true with the incumbents of the Internet: it’s kind of hard to build a Groupon. And since anyone with an Internet connection can track the performance of our competitors, I can be more specific:

Google Offers is small and not growing. In the three markets where we compete, we are 450% of their size.
Yelp is small and not growing. In the 15 markets where we compete, our daily deals are 500% of their size.
Living Social’s U.S. local business is about 1/3rd our size in revenue (and smaller in GP) and has shrunk relative to us in the last several months. This, in part, appears to be driving them toward short-sighted tactics to buy revenue, like buying gift certificates from national retailers at full price and then paying out of their own pocket to give the appearance of a 50% off deal. Our marketing team has tested this tactic enough to know that it’s generally a bad idea, and not a profitable form of customer acquisition.

Facebook sales are harder to track, but are even less significant at present.

My point is not that our competitors will fail — some may actually develop sustainable businesses, or even grow — after all, local commerce is an enormous market. The real point is that our business is a lot harder to build than people realize and our scale creates competitive advantages that even the largest technology companies are having trouble penetrating. And with the launch of NOW, I suspect our competition will have an even harder time in light of the natural barriers to entry that are needed to build a real-time local deals marketplace.
4. OUR TEAM
This is the fluffiest of the four points, but maybe the most important — we’ve built a global team of hungry entrepreneurial operators and seasoned executives that rivals any team I know of. Almost every day, I find myself in a scenario where I silently think, “I can’t believe I got this person to work for me — that failure of judgement is perhaps their single flaw.”
I point out the team because while today the business is strong and it appears we must endure success for awhile longer (despite its impermanence), we will inevitably be challenged with issues we didn’t predict — and when that happens, the quality of our team will be a deciding factor in our ultimate long-term success.

FINAL THOUGHTS
I wrote this email because when I read some of the press this weekend, I realized a rational person could read this stuff and wrongly conclude that we’re in trouble. The irony is hopefully clear: We’ve never been stronger.

And while we’ve refrained from defending ourselves publicly, you’ve continued to create our best defense, with every department innovating new practices that are taking our business to the next level. Thanks for staying tough, determined, and agile throughout this process. For now we must patiently and silently endure a bit more public criticism as we prepare to birth this IPO baby — a breed for which there are no epidurals. If there’s a silver lining, it’s that we’re almost on the other side, and the negativity leaves us well-positioned to exceed expectations with an IPO baby that, having seen the ultrasound, I can promise you is not one of those uglies.

I’ve been as candid as possible — hope this sheds some light on things. Reply with your questions if anything remains unclear. Amidst all this, I hope you remember what we’re doing here — we are making history together. I guess you don’t get to build something that reshapes the local commerce ecosytem without getting a few bruises. I’m so proud of the work we’re doing, and I feel extraordinarily lucky to work on what I think is the best thing that’s happened to small businesses since the telephone We’ve invented something that is catalyzing millions of dollars of local commerce every single day in 45 countries and fills the lives of millions of customers with unforgettable experiences — it’s pretty remarkable.
Looking forward to getting this behind us!

Andrew

P.S.: I almost forgot to address the nonsense about us running out of money in the article above. If you apply the same logic used in the article, you’d have concluded long ago that companies like Amazon and Wal-Mart were running out of cash too. Both have often had payables far in excess of their cash. Finance geeks call this a working capital deficit. It’s normal, manageable and a lot of folks actually believe it’s good thing and would kill to get paid from their customers long before they have to pay their suppliers. We are generating cash, not losing it — we generated $25M in cash last quarter alone, adding to the $200M we had before. In other words, we’re doing the opposite of running out of money.

Hey, if you needed to get your side of the story out to the public without breaking the rules this might just work. This technique, however, is one that speaks to the culture of “we’ll do what we need to do” that seems to exist at Groupon. How else can you explain the creation of a new accounting ‘technique’ to make their business look more profitable. They had to do that so they could tell a better story that would make people invest.

What isn’t being told in this are some new numbers from Experian Hitwise showing that Groupon’s traffic was down 50% in June of this year.

It is important to note that these numbers do not include mobile traffic or app traffic. This is not the first time that Groupon’s traffic number have dipped, however, and they appeared to have come back from earlier this year.

All in all, I just see all of this through a very cautionary lens. It seems too easy these days to get around things and there has not been any company in recent memory that makes this more obvious than Groupon has. Mason is starting to make Mark Zuckerberg look like a choirboy and that’s saying something.

What’s your take?