A new local advertising platform called Yext completed a round of venture investment earlier this month. I was speaking with a few VC guys prior to the announcement and there was definitely a lot of interest in the company and the solution that they are offering.
The Basics
Yext offers pay per action phone calls. Yext distributes unique phone numbers on its own site and through its publishing partners. When those phone numbers are dialed, Yext records and transcribes the phone calls (example transcription), looking for keywords in the conversation. The basic idea is that advertisers only get charged for "good" phone calls and don't get charged for junk calls - like automated phone calls, sales calls, etc. According to Yext, 44% of inbound phone calls are irrelevant, so advertisers wouldn't be paying for these.
A Novel Solution
The Yext approach is a novel solution to a couple of issues that plague the online local advertising industry: getting the phone to ring and only paying for quality leads. In addition, the fact that the unique phone number can be distributed to many publishing partners makes Yext interesting because they have the ability to aggregate web traffic, enabling them to achieve scale for local advertisers. Further, they represent an easy monetization option for publishers.
Will it Work?
The basic idea behind yext is that advertisers will bid more for higher value phone calls. The common example given is that a phone call about a transmission repair is worth a lot more than a conversation about an oil change. Advertisers can set bid prices for the different keywords, thereby rewarding higher quality calls with higher payments to publishers (and to yext).
IMO, there are a couple of critical factors to getting it to work (I'm going to assume that yext will be able to solve the biggest technical challenges, which may or may not be a good assumption). First and foremost, they will need active bidding on the part of local advertisers. Without active competition for the "transmission repair" call, the advertisers will not have any real incentive to increase bid prices. If they don't increase the bid price, then the publishers will not benefit from the new advertising product.
The second factor is whether consumers will continue to use the phone as their primary way to interact with local businesses. The assumption of most local advertising is that advertisers prefer to get the phone to ring. This may be true, but what do consumers prefer? Personally, I hate calling 3 or 4 auto repair shops for a quote. Many times, I'm forced into it because their websites are so awful and because there does not exist a "lending tree" for local services (unless RedBeacon takes off). But, if there way, I would much prefer to interact through email. Its so much more efficient.
I wish the yext team the best of luck. I'm looking for a way to give it a test drive so that I'll have a much more informed opinion. Perhaps, I'll start with our site that helps consumers find a chiropractor.
Monday, October 19, 2009
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2 comments:
I signed up for the Yext service and found them to be little more than a scam. As a small business owner, I was enticed by the Yext rep's promises of only being billed for revenue producing calls. The reality is quite different and they bill the credit card you register with them for all sorts of junk calls that cannot even be deciphered. While I hope the VC's can recover at least part of their investment, I cannot envision the Yext scam making significant business success in the long-run.
We used Yext for several months. They started out with the promise of only billing for completed appointments. And although they billed for a lot of other things, they allowed us to apply for credits. They recently removed the credit feature and started billing for all phone calls. Needless to say we've cancelled the service. You could actually end up paying more to Yext than what your gross income is.
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