Scale Economics (continued)

The most interesting news on Techmeme this morning (to me) is that Yodle is operating at a $30mm revenue run rate. I don’t know Yodle’s competitor Reach Local‘s annual revenues, but I suspect they are at least double that and probably more. When you add up all the competitors in the market for selling search solutions to the "local" and/or "SMB" markets, it’s probably at least a couple hundred million in revenues and growing fast.

On one hand, we are bemoaning the potential loss of local news organizations and on the other hand we are witnessing a significant new market getting built selling search and other tools to local small businesses.

As more small businesses find channels and tools to buy targeted media, this market is going to start to benefit from scale economics just like Google and the display ad networks and exchanges have in the past few years.

We talked about all of this in the revenue breakout group at the Networked Journalism Summit last fall and I just found Scott Meyer’s notes on our breakout group. Scott called it "How Joe The Plumber and Google Saved News". That sort of sums it up.

But the big point here is that Google is not an end to end solution although it’s a critical component and there are many innovative new companies building some pretty big businesses on top of and around Google in the local small business market. There is an opportunity for all local media companies including newspapers to do this. But sadly most of them aren’t interested in reselling Google and other scaled and targeted advertising systems to their customer bases. Apparently they should be.

A good place for any local media company with such an interest to look for a solution is our portfolio company Clickable‘s services offerings. Clickable’s partnership with Lexis Nexis is an example of the kind of thing that local media companies should be doing today.