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The Local Innovator’s Dilemma

November 15th, 2011
5 Comments


Great post from Muckerlab on the agony and the ecstasy of Local:

“By my count, around 100 startups focused on local were launched between Q2 and Q3 of 2011. there are mobile apps, deals/offers companies, social relationship management dashboards, ad networks, merchant acquiring/ processing solutions and more. (Although the slow down in the last 30-60 days has been seriously alarming). By 2013, I doubt no more than 10 of them will still be in business (and potentially none, if the Euro collapses – but in that case we are all in trouble anyway). Most would have gone out of business because they failed to solve the “Local Innovator’s Dilemma” – how the heck do you profitably acquire hundreds of thousands of SMBs when hundreds of companies large and small failed to do so in the past 20 years.”

One minor quibble: The author assumes an average $2 CPM for a local web business as part of a back of the envelope calculation to show how hard it is to make money.  While I agree it is hard to make money, many local media sites can do a lot more than $2 CPMs, which is why the business can be so damn attractive.  I have seen some really targeted local sites doing $150 CPMs.

 


Tags: Local Search

5 responses so far ↓

  • 1 Kris // Nov 16, 2011 at 6:13 am

    Sorry to be so naive at times but what do you mean by CPM?
    Kris

  • 2 Andrew Shotland // Nov 16, 2011 at 10:08 am

    CPM=Cost Per Thousand Ad Impressions.

  • 3 Kris // Nov 16, 2011 at 11:40 am

    Okay, thanks. But I still don’t understand how spending $150 CPM is better than spending $2. I’m sure you mean something else, but I don’t get it.

  • 4 Andrew Shotland // Nov 16, 2011 at 11:42 am

    A better way to think about it would be RPM – Revenue per Thousand.

    So for every thousand impressions a local site could make $150 which is a bit better than $2

  • 5 Kris // Nov 16, 2011 at 11:43 am

    Got it. Super. Thanks.

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