Startup Chatter by Donna Bogatin

I am a Silicon Alley veteran of the interactive directional media space and vividly remember Microsoft’s short-lived attempt at gaining first-mover advantage in the paid local search BUSINESS, aka Sidewalk.

A decade later and, contrary to blogosphere–and mainstream media–PR-fueled conventional wisdom, NO ONE is winning the online local search BUSINESS.

From classic Web 2.0, oblivious to revenues, VC-driven, UGC “viral loop” (not so) quick flip plays–Yelp–to mass-market, automated lead gen platforms for low-price-point SMB distribution–Merchant Circle–new local forays emerge regularly attempting to unseat the STILL reigning local search BUSINESS–Citysearch.

SEE: Why Citysearch STILL Reigns Local Search Supreme

Citysearch absorbed Microsoft’s Sidewalk in 1999 and last year acquired the user review base of Insider Pages–a more mainstream version of Yelp–in a fire sale, and then invested in Merchant Circle for cross-selling opportunities.

Citysearch may still rule by default, but the online local kingdom is NOT a very lucrative one, for anyone in the ecosystem: local consumers, local merchants, investors.

Despite feel-good surveys sponsored by organizations seeking to pump up a $30 billion local advertising opportunity that has been deemed ripe for the online taking for more than ten years, the purported “user review” revolution is not a mainstream one and the content generated is generally not representative of the mainstream.

What’s more, from Google to Citysearch, it is but a minority of SMBs that have the sophistication, time and necessary budget to SEM themselves effectively.

SEE: Citysearch SEM Funny Business: Click Fraud or Google Arbitrage?

Moreover, NO significant investor returns have accrued to anyone in the local search space, while hundreds of millions continue to be invested in non-pioneering marketing and infrastructure amidst a landscape littered with unsuccessful interactive directional media plays unable to win thier piece of the $30 billion local advertising pie.

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