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Peter Krasilovsky

Over the past year, the team at NCI has been developing a social marketing service under the umbrella of Digital Sherpa for local advertisers. The service was launched commercially into the multi-family market last August and into the home design market in December.

Our attention over the past months has been focused on executing on our value proposition for our clients. The core of the proposition is to leverage social media tools and content creation and curation in order to expand a customer’s digital footprint. The outcome is increased web traffic through improved Google juice and increased connectedness with their community of interest.

To execute these propositions at a low monthly price to our customers while delivering measurable results, we’ve been building and fine-tuning our business processes and bringing on board a group of talented and enthusiastic professionals excited to pioneer the next wave of internet marketing.

Our activities attracted the attention of a leading analyst in the local media space, Peter Krasilovsky, who heads up the Marketplaces advisory service at The Kelsey Group. Peter asked to look under the hood and has issued summary report about DigitalSherpa.

Here’s how he framed the report in his alert to clients:

Will vertical advertising be replaced, in whole or in part, by search engine optimization? That’s the question companies are grappling with as they consider that many leads are coming from articles and other media that rank high in search results.

NCI, the publisher of The Real Estate Book, Apartment Finder and other publications, isn’t waiting to find out. Throwing worries of cannibalism to the wind, it is building social media content for its advertisers, placing highly contextual articles, abstracts, photos and video on advertiser blogs, Facebook and Twitter.

In his report, Peter poses 5 key questions about the Digital Sherpa service:

  1. Will “content” be a compelling proposition of potential clients, even though the big SMB bets for 2010 are reputation and presence management?
  2. Will DigitalSherpa experience the same high churn that other local internet ad services have experienced with SMB’s?
  3. Can DigitalSherpa develop effective content?
  4. How much content does a service need to develop in order to deliver results to its clients?
  5. What impact will creating DigitalSherpa have on our core customer relationships?

These are great questions. I’m not going to take a stab at answering them now. With close to 1000 clients currently, we’ve going to have data-driven answers to the questions in fairly short order. That will be the time to see how things shake out in this social media marketing experiment.

The Kelsey Report advisory alert is available to subscribers here. If you have questions for Peter, you can find him at his blog, The Local Onliner.

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Tidbits on ReachLocal

by drm on August 19, 2009

75A245A6-03B6-4006-A2A1-E9CF2D7E95E0.jpgReachLocal, which positions itself as a small business online advertising consultant, recently surfaced on the Inc. 500 as the 39th fastest growing private company in the U.S.

Peter Krasilovsky of The Kelsey Group used the occasion to take a look at the young company’s financial performance. Krasilovsky notes that there have been reports that ReachLocal has experienced significant customer churn, the macro numbers show a company that has grown rapidly, and that has a fairly efficient level of revenue per employee and revenue per sales person, albeit low for a technology-focused company.

The company reveals that it grossed $147 million in 2008, and is expecting even higher numbers for 2009, despite the sour economy. The company also released some macro data, noting that during the course of its history, it has fielded some 15 million phones calls and 10 million + online inquiries.

At this point, the company has expanded rapidly to 38 offices in the U.S., Canada, Australia (in 2007) and the U.K. (in late 2008). It has 800 employees, including 500 sales people; and it has added display to its search offerings.

Extrapolating from these figures, revenue per employee is about $184,000; revenue per sales employee is about $295,000.

Total sales compensation is probably around $35M to $40M, which would be around 25% of total sales, a level that should drive an ultimate EBITDA margin of 15% to 25%. The variables that will ultimately drive the margin are the cost of marketing to drive new customers into the sales funnel and the operating efficiency achieved in creating and executing the client campaigns.

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My Kelsey presentation: Quick notes

March 17, 2009

Slides from my presentation at Kelsey’s Interactive Local Marketplaces.

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