Howard Lerman is CEO of Yext, a local advertising, technology company. Lerman spoke to AdExchanger.com about his company and its strategy.
Click below or scroll down:
- Consumers and Local Media
- Yext and The Ad Network Model
- Target Market(s)
- Cost and Proving The Value To The SMB
- The Integration Challenge
- What’s In It For Publishers
- What’s Ahead
AdExchanger.com: How are consumers interacting with local media in your opinion?
HL: I think there are two types of markets for consumers.
You’ve got discretionary purchases and non‑discretionary purchases. And then of course there’s what’s in-between.
For discretionary purchases where products are being sold or services that you don’t necessarily need but want to fill up your time recreationally – the daily deal segment has become a huge driving force of how people consume local media.
And for non‑discretionary purchases like going to the doctor or vet, getting your car fixed, calling a towing guy – any type of thing that you need to look up and buy – in Yext’s view, listings will remain the dominant way that people find and choose those types of businesses.
And that’s where Yext has made its bet. Whether or not you call using the listing or you purchase something through the listing or you click through to the listing and then go, it doesn’t matter. We think listings will continue to be the dominant way people find, discover non‑discretionary purchases. And therefore listings are the basic building block to local advertising.
There are many relationships. The ad network is this concept of audience – buying audience instead of placement. Certainly, I think the same thing could apply to listings in that it’s important to be on Yelp, Citysearch, the Yellow Pages sites and so on. To the extent that there’s a network involved, certainly locations are looking for solutions to help solve the listings problem. Which is, “Hey, look, my business is being listed on a number of places.”
In fact, there are about 20 million locations in the United States. And the average location has listings in hundreds of different places. Those listings are compiled through a variety of sources. And generally they’re just a mess. We think that whole infrastructure is due for a massive disruption. And that’s what we’re doing with PowerListings. We’re building up the world’s most advanced listings management system and give the ability to sync and control business listings across – to use your word – a network of hundreds of places from a single point.
There’s actually a lot of complexity involved in this problem. We’re not just purchasing ad slots -we’re actually managing data that is being indexed by these places. And that presents a technical challenge, which we built the platform to solve.
What do you consider the target market for Yext? There are different sides to the market that you’re going after, are there not?
It’s interesting. A lot of people make the false assumption that local is small. And that small businesses and local businesses are the same thing. But actually that’s not true. Local means local. And local is any business that has a physical location or presence that serves people in a local way. And so we think the important unit to be looking at is the number of locations or areas serviced. Not necessarily the number of small businesses.
For example –look at Starbucks or McDonalds. They have so many locations and they are doing local advertising in different ways whether they like it or not. And I think there’s been an emphasis by agencies to identify what the “new local” looks like for big companies. For the small guys, I think it’s a bit easier actually.
On the buy side, we’ve got an aggregation of sellers where you can buy listings across a network. And so when a location comes to Yext by way of PowerListings, we can immediately get them listed and control their listings on a network of 20 premium sites like Yelp, Yahoo, MapQuest, etc. From a single control point they can push out photos and push out special offers and whatever they want to do to run their marketing.
But the best bang for any local advertiser’s buck is absolutely maximizing the value of their listings so that when people go look stuff up – at the bottom of the funnel – the conversion happens in the appropriate way.
Display is more about awareness generation at the top of the funnel. But at the bottom of the funnel is local and listings are the unit that are being consumed.
Yext has built the plumbing to be able to update and manage listings across a network from one spot. This plumbing has never before existed.
How would Coke take advantage of this?
I think Coke would not be a target customer for this because they don’t have locations across the country. But a company like The Gap could because they’re trying to drive foot traffic, or McDonald’s could. So any company that has physical locations, that has listings appearing on Yelp, Bing, etc. – this would be a way for them to make sure that those listings are found.
How do you make money from this? Is it off both the buy and the sell side?
It’s all from the advertisers. Advertisers pay us per location, on a per‑site basis to manage this. The average price for what we call our premium package ‑ the list price is $400 a year per location. For our platform partners and agency partners, there’s a wholesale price.
Do you do any matching or analytics in terms of the conversions with this product?
We don’t view it as an ad buy. It’s a plumbing system to take advantage of. But the tracking we offer shows you numbers such as clicks and impressions to your profiles. We don’t let you put tracked phone numbers in there because the publishers won’t allow it.
So how does the Yext platform prove that detailed value that the small business person needs?
I think the first way that we frame up the value proposition is that we’re going to help you take care of your listing. Yext gives the SMB the ability to go fix listings in one place which is a huge time savings, and also part of the value proposition.
But in terms of your own company’s development, what’s taken so long in getting to this point?
It’s actually because of the way that the information has evolved – it’s fragmented data which requires “looking up.” Each of these publishers has a different data set and then they layer their data on top of it which includes different algorithms to be accessed by search results.
This reason this is complicated is because the integration that’s necessary with each publisher. We had to create the supply first through these integrations and “tame” the listings quite a bit, for the integrations.
Now, we’re working on signing up as many locations and bringing on as many clients as possible to take advantage of this unique plumbing.
The reason that something like this hasn’t existed – despite the fact that it’s clearly something that’s simple and should exist – is because of the fragmentation of local. And local is going to continue to become more and more fragmented. Think of the Foursquares and the Groupons. Every time we wake up there’s a new location‑based service.
They’re all using a similar, but different data set and then once they start making their own data set, they have their own architecture around it. It requires a pretty substantial bet in infrastructure to build around it. We’re committed to doing that and continuing to expand our network to make it possible. To make what seems simple – actually simple.
Take one publisher in particular, why do they like working with you?
We pay them on a per‑unit basis. For example, let’s take MapQuest. We’re paying MapQuest on a per‑unit basis every time we sell a power listing and we’re giving them superior updated information.
In other words, Yext is saying to Mapquest, “Here’s a business listing that we can validate exists. Here are some pictures and great content about it. Take it for free. Put it in your search index and we’re going to pay you to keep it updated. In the process, you’ve improved your consumer experience and you’re making money.”
Another way of looking at it is all of these listings publishers have joined a cooperative model – Superpages information is now the same as Citysearch information. Why can that work for them?
They all have a mission to bring the best information to the consumer. If the wrong phone number is on one of these sites, they want to get that fixed.
If what you’re asking is what is the long‑term content differentiation between between each site, I don’t think it’s name, address, phone number, description, business hours of operation, special offers, and photos. It’s more like reviews and that type of information.
What milestones are you thinking about within the next year that you’d like Yext to accomplish?
There are really two sides to that answer.
We want to keep building up our plumbing and add more and more publishers. Currently we’ve got about 15. I’d like that to be at 100 in the next year. In the long run, the better we make our plumbing and the more expansive we make it and the platform, the more partners we get putting locations into it. Then, the better off the entire ecosystem is going to be. We want to be an enabler of the entire global listing ecosystem.
Also, I’d like to keep improving the integrations and the speed of the integrations. When you put that picture up there, it’s there right away. Just like when you put that picture on Facebook, it’s there right away.
Is there a video play here?
I think video is content that could be put into a listing. So, sure. Look, whatever content that a business listing can contain, we want to be able to provide that across a network. Whether or not it’s a video or a special offer or a picture or, maybe down the line, some sort of transaction, we want to be an enabler of that.
Where does or will Yext fit with Facebook and Foursquare?
Well, I think we’d love to work with Facebook on the publishing side. We’d love to give Facebook our fresh updates on their Facebook places, for sure. They have a database. They’re building up the database. They’re building up their own proprietary stuff just like everybody else has. We think they’d be a great publisher for us.
Same with Foursquare. We’d love to be able to update that plumbing, too.
Follow Howard Lerman (@howard), Yext (@yext) and AdExchanger.com (@adexchanger) on Twitter.
