Investment Thesis: Local Marketing Automation
Being on the investor side of the table requires one to dip their toes into many different spaces and every once in a while do a deep dive. I’ve had the opportunity to dig into a few subsectors and want to highlight one of those today.
The local marketing automation (LMA) space has evolved over the past decade as online “near-me” searches, particularly on mobile, have skyrocketed. A 2015 Google report claims that “what’s near me” searches increased 34-fold from 2011 to 2015. Businesses should take note because, according to Yext, retail brands lose $10.3 billion of potential sales annually due to wrong, missing, or incomplete local data.
Given that over 90% of total retail sales still happen offline in physical store locations (per US Census Bureau), the online-to-offline customers journey will have to become a bigger and bigger focus for corporate marketing departments. And mobile is a big part of that journey, with 89% of searching for local store locations on their phones at least once per week (Mediative mobile search stats).
And this kind of makes sense — just imagine yourself on a street corner with a craving for coffee. You want to find the closest coffeeshop so you pull up maps or browser app on your phone and type “coffee” and instantly, the closest 5 addresses pop up, which is enough for some people. But also included there are the phone numbers, hours of operation, website, reviews, and menu.
LMA helps multi-location businesses manage dozens or hundreds of store locations at a local level. Basic features of an LMA platform include data management, online localization (landing pages, SEO, etc.), online listing claiming, data syndication, reputation/review management, and targeted paid advertising/social media. A full LMA offering will help national brands manage stores at the individual level.
At this point in time, the LMA players are filling a need to manage online brand presence in specific geographies. However, I like the vertical because of the potential product growth opportunities. Beacons and geo-fencing represent targeted promotional efforts both in-store as well as to attract consumers in the pre-store search phase. Additionally, beyond just retail brands, service area businesses (plumbers, landscaping, etc.) could eventually benefit from an LMA approach. And my hope is that hopeful entrepreneurs would find it easier to go-to-market with a local small service business.
As far as market trends go, the LMA space is still growing but is already seeing consolidation as small vendors of specialized software sell to players who are already closer to that full-stack LMA offering. The most established player is clearly Yext (with >$100mm ARR and $116mm in funding @ a $520mm June 2014 valuation) but the market has yet to see a clear #2 player emerge. Here is where I see opportunity for growth-stage investors to enter the market. Companies like MomentFeed, SIM Partners, Brandify, RioSEO, Placeable, SweetIQ, Mediative, and Balihoo (and more!) are all striving for the brand recognition and traction that would put them on the same level as Yext.
At this time, I personally like MomentFeed. With a high focus on client services and data management, MomentFeed has found a clear entry point for its blend of software and services. The Company has also focused on developing partnerships that will give it a competitive advantage over Yext when the two are fighting for the leader position. However, thought leadership and customer education (something Yext does very well) will have to become more of an emphasis for MomentFeed to really succeed.
Thanks for reading, I tried to keep things high-level but am happy to dive deeper with anyone who is curious to learn more. PM me on LinkedIn and I can share the resources I’ve come across or the full market thesis I’ve created around the space. Comment below-do you agree or disagree that the LMA space has a high-potential growth track?