!

Originally, I installed this plugin to help me learn more about SEO (search engine optimization).  But it’s been useful in a way I wouldn’t have predicted: knowing the number of inbound links helps me quickly make decisions based on popularity.  It helps separate the signal from the noise.
Let’s say you need an online bookkeeping solution.  You ask friends for a recommendation but get none.  So you google “online bookkeeping solution”.  The results are overwhelming and confusing.  You poke around a bit more and stumble on a Techcrunch article that mentions a bunch: Outright.com, Xero.com, Saasu.com, Lessaccounting.com, Fastdue.com.  How do you decide between them?

You’re a busy person. You don’t want to spend the entire day researching and reading reviews.  You need to pick one quickly and get on your way!  You visit each site and keep an eye on the SEO toolbar which instantly shows you the inbound links for each of the sites:

Outright.com: 2,000 inbound links
Xero.com: 11,000
Saasu.com: 2,000
Lessaccounting.com: 2,000
Fastdue.com: 284

You quickly identify that Xero.com has the most inbound links.  It’s probably the most popular because it’s the best product (this point is discussed in more detail later).  Maybe you do a quick twitter search to double check that people are in fact saying good things about the site.  Everything looks fine.   You sign up.  Decision = done.

Inbound link information is also extremely helpful for figuring out roughly how different competitors size up against each other.  Camelbak versus Nalgene? 31k links versus 6k.   Turbotax vs TaxAct?  340k vs 8k.  Google.com vs Live.com vs Ask.com?  515M vs 66M vs 9M.  Trying to figure out if anyone else has heard of some (seemingly obscure) website/startup that a friend has told you to check out?  Drop.io perhaps?  110k inbound links — “whoaaa, well ok then, I guess drop.io is worth taking a look…”

On a similar note, this information can help you avoid scams and phishing attempts.  If for some godforsaken reason you should land on http://www.ie-internet-explorer.com/landing/ie/ie-internet-explorer-browser.php or http://msie.com, the toolbar shows that these sites both have a total of THREE inbound links.  Obviously, if they were legitimate sites owned by Microsoft they would have a few more links — so you should probably stay away from them.

Quickly assessing the legitimacy of a site is especially important if you arrive via an advertisement.  Anyone can throw up a seemingly legitimate looking website and buy search/banner ads to drive traffic there.  But getting a few thousand links?  That’s a much harder task.

Having information about inbound links at my fingertips help me separate the wheat from the chaff and figure out what’s worthy of my attention and my time and perhaps my credit card number.  It’s basically a lifehack.

Using Popularity to Judge Quality
The decision making process I described above uses popularity as a proxy for measuring quality.  In most cases, popularity is a suitable enough measure for quality, especially when a decision needs to made quickly.  After all, “nobody ever got fired for buying IBM.” This method of decision making does however discourages you from trying anything other than the market leader.  What if second place truly does “try harder” in an Avis sort of way?  What if this method causes you to miss some awesome new website or company that hasn’t received a lot of attention and inbound links yet?

Another issue is that this method reinforces a lock-in situation where the rich get richer.  But Google itself is guilty of this too: the results of the search engine page are largely dependent on inbound links.  More people find the sites with more inbound links.  And then they link to these same sites which leads to a self-reinforcing situation where only the top ranking pages get found — a phenomenon which has been labeled Googlearchy.  (also see the original academic paper that invented that concept/name [pdf])

The truth is that popularity is always used as a filter.  People watch the NYTimes Best-Seller list like a hawk to figure out what to read.  The iPhone Top 25 App list is the key to getting your app noticed — and downloaded.  And popularity is frequently a selling point: automobile companies brag about their “bestselling” models.  Why?  Somehow it’s comforting to know that you’re not alone in your decision to purchase this particular car.  Millions of other people have done it.  They can’t all be morons, right? right?

(P.S.  This is where the sociologists come in.  If you’re interested in this topic — popularity as a decision-making tool — read some of the research of Duncan Watts, a former sociology professor of mine at Columbia.  He has one particularly interesting experiment where researchers tweak how ‘popular’ different songs are in an fake online music store and test the relationship between preceived quality and stated popularity.  Full research paper is here: Experimental study of inequality and unpredictability in an artificial cultural market [pdf])

Possibly Related Posts:

• Young Entrepreneurs and B2B Startups: Doomed to Fail?
• Building a Broken Product
• Five Pre-Funded NYC Startups To Watch
• Do You Speak the Language of Visual Design?
• Comparing Android, Blackberry, and iPhone App Sales

For a good example, check out this screenshot of the description for ‘Wobble• Bikini• Fun.’  The app’s developers have cleverly included the names of all the top applications and terms like ‘fart’ and ‘weather’ so that their app will show up for any of these search terms and get more traffic and downloads.  In other cases, I’ve seen descriptions that ‘also recommend these fun apps’ and then proceed to include the name of every top application.  Very smart.

Let’s also talk about the name of this app for a second: ‘Fun’ is part of the name…brilliant!  Guess what the top search result for ‘fun’ is?  You guessed it.  As long as they’re going this route, why not just name the app ‘fun• naked• girls• inside’? By the way, this 99c app is the #5 best selling paid application as of press time (or clicking ‘post’ rather).

One last thing.  Notice the final line of the long paragraph:  “And – people of both sex will love it.”  Isn’t the grammatically correct term “sexes”?  And wouldn’t writing “both genders” or “guys and girls will both love it” say the same thing in a less awkward way?

Alas, these clever developers have realized the power of the popular search term “sex.” This app ranks third for a search of “sex”  — right behind the official Sex and the City application.

Possibly Related Posts:

• Building a Broken Product
• Do You Speak the Language of Visual Design?
• Economy of Taps and Smart iPhone App Design
• Location, Location, Location: The Hyperlocal ‘Moment’ of Awe
• A Tech Geek’s Guide to Tourism

Yodle is also interesting because it’s the classic instance of a startup founded by a young person and transitioned over to ‘real’ management.  Founded as NatPal in 2005 by Nathaniel Stevens (then an undergraduate student at Wharton), Yodle took off.  He was replaced as CEO in 2007 by Court Cunningham, an experienced Harvard MBA and former SVP at DoubleClick.

The company is growing fast: 300%, 400%, 500%, or even 700% depending on which press release you decide to believe.  With $15M in funding, the company is in a race against its competitors to expand quickly across the nation.  They’re hiring aggressively and overwhelming Craigslist with job posts. They already have a presence in 18 major US cities and “will grow the team from 180 to 800 in 18 months.”

What Exactly Does Yodle Do?

Yodle helps small local businesses (think hair salons, florists, car mechanics, and optometrists) advertise effectively online.  Online advertising is too complex and time consuming for the average small business owner to deal with..or so goes the thinking.  By combining an expertise of SEO, SEM, and website design, Yodle seeks to generate leads, driving new customers to small business.

To achieve this, the company first sets up a doppelganger of the client’s existing website.  For example, the TheBodyKlinik’s main website is www.thebodyklinic.com.  Yodle set up a separate mirror site for the business at www.thebodyklinic.net.  Made from a template designed to optimize conversion rates, the page is also extremely SEO-friendly.  This helps the page rank highly on google search results (although some maintain that duplicating a site’s content will cause both to be dinged by google).  This sometimes also results in two similar client webpages: exhibit a and exhibit b.

Second, the company sets up a separate phone number for tracking purposes: notice that the phone number on the .net site is different than the .com site.  This allows Yodle to gather statistics about incoming calls and monitor the ROI.

Third, Yodle purchases online search ads to drive traffic to the mirror site and hopefully drive phone calls too.  Yodle uses predictive modeling to set expectations for how many calls will be generated by a given level of advertising spend.

Additional Services

Yodle isn’t just another SEM/SEO agency.  The company differentiates itself with innovative tools that help optimize a small business’ interactions with prospective customers.  All calls to the tracking phone number are recorded to help the business owner gauge whether staff are dealing with customers appropriately or whether more training is needed.  Yodle also offers consulting services to help plan in-house promotions and address call center staffing issues.

Competition

Yodle’s competition comes in many forms.  First, there are direct competitors like ReachLocal, Webvisible, Weblistic and MerchantCircle.  Reachlocal has $65M in funding versus Yodle’s $15M and both have focused on quickly building out a large and aggressive salesforce. Webvisible has $17M, and Merchant Circle has $14 million in funding.

Companies like Yelp and CitySearch also compete with Yodle.  These business listing/review sites often dominate the search results (SERP) for a business name, and attempt to sell to small businesses ‘premium listings’ designed to drive more customers.

Additionally, each specific vertical seems to have its own set of specialized lead generation companies or directory listings which help small businesses dominate SERPs.  Doctors, for example, can use the service ZocDoc.com to help bring in new patients.

Company Performance

So how is Yodle performing?  Well, if we trust Yodle’s job listings, they currently serve 4,000 customers.  The average spend from each client is pegged around $900 per month but let’s round that to $1,000.  Therefore, Yodle should be doing $4M in monthly revenue and close to $50M in annual revenue.  Much of this spending flows right through Yodle and into Google AdWords.

Googling “Local Internet Marketing by Yodle,” the phrase that appears at the bottom of every site designed by Yodle returns only 200 businesses…let’s hope there’s a flaw to this method of gauging the number of Yodle clients!  Yodle has most recently turned their focus to franchises, which could be a real cash cow for the company.

Potential Acquirers

Yodle’s heavy reliance on search ads immediately rules out yahoo/google/microsoft due to the conflict of interest (remember, when Google bought Doubleclick, Google sold DoubleClick’s SEM division to Publicis due to that conflict of interest).

The big advertising conglomerates (WPP, Omnicom, Publicis, Interpublic) certainly would be interested in Yodle, but Yodle’s focus on local small business advertising doesn’t match the ad conglomerate’s focus on bigger nationwide clients.

Certainly Idearc would be interested.  Idearc is the publisher of the Yellow Pages, White Pages and also Superpages.com, Switchboard.com and LocalSearch.com.  Yodle is eating their lunch.  The problem?  Idearc is currently only worth $52M and couldn’t afford Yodle.

Additional Questions

1) Yodle serves small local businesses by helping them beat their competition to the top of internet search result pages (both organic and paid results).  But Yodle cannot in good faith serve two local competing businesses in the same geographic area.  So what are the competitive limitations on clients?  Can Yodle only serve a single florist across all of NYC?  Or within a specific NYC neighborhood?

2) What is the culture like of a company which grew from a handful of employees to 180 employees in a very short time?  Is there a corporate culture?  Any semblance of stability?

3) Why does the company have no news?  Doesn’t the company have a PR department!?  Shouldn’t they be complimenting their outbound sales team with a marketing/press team to get articles written about how local businesses are embracing new online technologies?  Yodle should help attract customers by getting the Yodle name into every small newspaper across the country!

Interview with the founder: http://www.youtube.com/watch?v=zfJiv7XetDA

Any comments, insights or additional business analysis would be greatly appreciated!

Possibly Related Posts:

• A Home for the Homeless and a Desk for the Deskless: NWC Deserves Your Support
• Young Entrepreneurs and B2B Startups: Doomed to Fail?
• Building a Broken Product
• Five Pre-Funded NYC Startups To Watch
• Do You Speak the Language of Visual Design?