Interactive Marketing Blog

I’m big believer of localization or should I say Glocalisation. Everyday I run through hundreds of data points where I need local information. Some critical, some very critical related to my business needs and some trivial as finding the next Pizza station around my vicinity. I know I can Google it (yeah I trust them in giving me the best results at one shot and within 1 single page), but I always thought of having my local-google at hand. However, I still think Google-India doesn’t serve me that well (otherwise I wouldn’t have spend a moment writing about it, isn’t it!)

Although there are host of local search engines like AskLaila, Sulekha, OLX India, Yahoo Local, Onyomo and many more but I still think most of these lack the scale, width and spread that I would expect (if I think of replacing my by-default global search engine, Google at least). But yes, immediately one search engine comes to my mind (thanks to their recent TV promotions) which has been able to break the shackles of scalability i.e. Just Dial. But then it makes me wonder then why haven’t we been able to makes these above mentioned local search engines as big as Just Dial. Now as I see it, 3 branches of discussion comes to my mind:

1. Consumers: Yes, an important point here is that lack of awareness and exposure to the new local business search options among the mass population is a major hindrance.

2. Culture: We are still the lot who would ask a close-by friend or relative about any local info rather than typing in search engines to give us answers. Fair enough since we all live in a close knit society where close-by recommendations rule supreme.

3. Funding: I still think most of the VC’s who are interested to Indian internet space aren’t looking at local search engines as much as they do in other allied internet based media outlets since of all the above mentioned factors plus many more varied reasons. So its a vicious circle if we talk about growth and scalability for local search engines to flourish.

Now if you’re thinking about why JustDial.com succeeded then a quick recap would make things easier. Mind it, JustDial is not just an internet based search engine. Infact, most of the times, I’ve used it through calling their phone number. So its a web based entity with offline reach which makes more sense in India since we have nearly 10 times mobile users than internet users. So JustDial’s business model is slightly different.

On the same page, off late I was just discussing the mobile penetration issue with one of the local search engine guys and they too said they are working on similar models since for Indian local search market, marriage between Internet+Mobile will work wonders (both from users and business point of view).

Off the rack, today I read an interesting post on Alootechie who presented a good case study sort article on ‘How local is the local search market in India?’. Some of the most convincing points I found there were opportunity cost of forgoing the huge pool of untapped market potential hidden in local & small business entities.

…Presently in India, there are around 7.5 million small and local businesses that are willing to target 1.1 billion consumers by advertising their services. Out of these businesses, 5000 are deep pocketed corporates who can go for broadcast and offline media. This means that there are a lot of local and small businesses who are potential advertisers on the internet.

Now doing some basic math shows that they are letting go about more than 99% of potential business entities who could benefit from such listing on local search engines or targeting about 1.1 billion people. Now I know that 1.1 billion is just plain vanilla thing. But if we get dirty with the stats then these could be possibilities:

• 7.5 million small & local businesses (Potential)
• Out of which, 5000 are big shots who has deep pockets
• So that makes, more than 99.9% untapped market. Whoa! Talk about opportunity.
• Now there are about 50 million Indian internet users roughly. About 400 million mobile users.
• So main equation stands at: 99.9% business entities can target at least 50 million users.
• So that makes 1 business entity for every 7th user. Talk about demand-supply mismatch where supply is more than demand at this point of time. But clubbing mobile users, then we have la perfecto scenario.

Still all I can say is even if 50K business entities joining on-board to target these users, then the local search engines could make a killing out of it. But that would mean, huge sales force who can pitch in, in-house information support (and I’m even discounting number of associates for in-bound call support) etc. In layman terms, cash flow. So slightly capital intensive prima facie. So as I mentioned earlier about the vicious circle in point no. 3 above becomes one of the biggest hurdle. Hence, all these unscalable models.

But on the hindsight, I still think that we can have profitable business proposition if we slightly fiddle with the business models. Though I’m not sure about the sustainability but initially lot of thrust would be levied on user base. But recently, what Mahalo did really excited me.

Hope to hear more from you guys. So what do you think?

Note: On the same issue, couple of months back, I wrote a post wherein I presented the case of how social networking sites should incorporate local search engines for strengthening its bottomline and ease the friction of loosing users to competition by making use of social graph and making it relevance based model.