Localist ditches print, hitches wagon to mobile recommendation engine

  • Mobile
  • November 1, 2012
  • Ben Fahy
Localist ditches print, hitches wagon to mobile recommendation engine

When Localist launched as an Auckland-only print directory, plenty of questions were raised about the rationale behind the creation of a new product that went head to head with a dominant player in what many saw as a dying industry. 18 months on and it’s still here and, confounding the sceptics, it's still growing. But as of next week Localist will be very different and 100 percent digital. 

Blair Glubb, Localist’s chief executive, says the service essentially launched as a review platform, but the strategic shift to a sole consumer focus on IOS and Android mobile apps centred around great things to do, eat and buy in your area ("If you’re looking for a plumber, you’re probably not out and about," he says) means it will now become "more of recommendation engine".

"We’ve always set out to build a platform that would deliver local social recommendations for consumers. I suspect when we launched to market in print a lot of people said ‘you’ve got rocks in your head, why would you do that?’ But the reality is we’ve now got to the point where we’ve got a compelling digital asset ... The point is to deliver a business you will love, as opposed to just a business. If you want to find a business, you’ve got Yellow, Google, Finda. And there are a bunch of people who do some great stuff at a vertical level, but we see the opportunity to build on the strong review base we’ve got and actually provide something that operates across a broad local business context.” 

He says Yelp is a good example of where Localist has been but "where we’re pushing to now is more akin to the likes of Amazon, where you browse, rate and, as a consequence, get certain products pushed towards you. 

Users will be able search for businesses based on day and time, location, occasion (dinner, drinks, late at night, different cuisine types etc), and people (kids, friends, partners, someone to impress). And while he says the focus is around where you are right now, "if you want to plan something for Friday night, you can". 

He says a classic directory play would bring you back a list of things nearby (when Yellow sorted out its website, some commentators were aggrieved that consumers were only delivered paid results) and a review platform would probably rank them by the number of reviews. But the Localist apps offers suggestions through a combination of user feedback, editorial material and “what we would understand your user intent to be”. 

Reviews are generally trusted more than ads, even if they're from total strangers, but being able to see reviews from people in your networks offers more authenticity. And, according to Google's Tony Keusgen, the endorsement factor plays out in advertising as well, because people are five to ten percent more likely to click on an ad if one of their friends had pushed +1. Localist is heading down a similar path. 

“We’ve currently got about 36,000 people who have registered on the site who can provide recommendations so we take all of their opinions and that’s fed into this, but you can also register and sign in using Facebook, so what it will also do therefore is if you know people it will push their recommendations to the top of the list over and above random strangers.” 

When it kicked off, there was a team of writers called The 100, a group of socially-active Aucklanders who provided interesting content for the website, and he says the website had "more of a hyper-local feel". 

“Clearly we will continue to encourage a whole lot of user generated content. We’ve got 40,000 opinions up on the site, and we get around 3,000 new opinions a month, but we’re also going to have some expert writers.”

There are certainly some compelling stats to show why Localist is cutting the paper apron strings, chief among them that location-based search is the fastest growing vertical in mobile. 

Glubb points to stats (some local, some international) that show 80-85 percent of what we spend is done within ten to twenty miles of where we live; nearly 50 percent of Kiwis have smartphones, with 80 percent looking for local information and 88 percent taking action as a result; 70 percent of consumers check reviews before deciding which local business to use and 50 percent trust the reviews of strangers as much as personal recommendations; and 24 percent of all searches are local, over 50 percent of all mobile search is local and 27 percent of consumers have purchased something on their smartphone.

“These are all key drivers for what we’re doing. Print was about building content, building revenue, building brand and we knew there would always be a point where we would cut it. At the start did we think we might have it for longer than we have? Yeah, maybe. But it’s a reflection of where the demand is and where the market is and also a reflection that we’ve managed to grow our digital business. We can see cashflow break-even around the corner based solely on digital revenues.”

So, when Localist’s “objective was to be a digital business not a print empire”, was starting off as a digital entity ever considered?  

“The point of print was to build some deep rich business content and relationships and build a revenue profile, because you can’t just launch a website and start charging for it, you need to build it up as a brand. I think it served that purpose ... The thinking and logic with what we did around print made sense. And focusing on digital faster was also a great decision. If you talk to anybody who was working in the print space, just about everybody would say that market has declined faster than any of the predictions."

But, even so, he says Localist still wrote “a number of millions of print revenue in our first 12 months of operation” and that’s been a building block to get to this point. And while he says plenty of customers have come out and said they actually liked the printed directory after the decision to close it was made, there is a growing feeling that unsolicited directories being dropped on your doorstep is basically the real world equivalent of spam, so plenty will welcome the news (in the States he says there’s legislation to say permission is required before directories are handed out).

Slightly ironically, given it is going completely digital, Localist has employed the services of Tangible Media to create magazines for three Auckland regions—Central, North and South/East—to announce the repositioning of the brand and draw attention to the mobile apps (the magazine is also split into great things to taste, do and buy and the redesigned Localist website will be based around this too). 

The app is free to consumers and Glubb says it monetises this by providing services to businesses (between February and October, digital revenue has grown by 700 percent and digital paying customers have grown by 50 percent).  

Stats released recently showed only 35 percent of New Zealand businesses have a website. So Localist provides a web design service, gets them online, on mobile, on social media and then tries to drive traffic to them. It was the first Google AdWords premier reseller but it also offers video and, as of next week, it will also be providing a transactional suite. 

At present he says the website gets about 330,000 visits a month, with around 90 percent of that traffic coming from Auckland (this grew by about 67 percent between February and October). It also has 56,000 businesses listed, of a possible 90,000.

“We’re in the process of building out to Hamilton, Tauranga, Wellington, Christchurch and Dunedin. The plan was always to build it in Auckland and get it to the point where we had a business that was scalable and we feel like we’re there.”

And to help pay for that expansion, NZ Post announced at the start of the month that it's looking for a partner for a capital raising. 

"It’s underway now, and there’s been good interest. But I can’t talk too much about it," he says.  

He says the company hasn’t made money yet, “but cashflow break-even is well within sight”.

“We set ourselves the goal of being self-funding within three to four years and we’ll certainly be there well before that window.”

He says the size of the team has decreased and now totals around 65, including 20 sales people and 12 in-house developers. But he genuinely feels like it's starting to fulfill its potential. 

"It’s been a tough market but I think we’ve had really good engagement from our customers and we've got really good reach into the small business community. Going back 18 months, if I looked at what we’re about to deliver, I’d be pretty happy with where we are today. I know the revenue line is moving in the right direction and we’ve done a lot of work around costs to make sure we’ve got greater efficiencies in the business and that ultimately tells the story. And that’s also ultimately what owners and investors care about.”

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