Local.com Shopping Spree Yields Deals and Real-Time Product Search

Local.com, operator of a local search and advertising network, entered the daily deals game with the launch of Spreebird as it acquired advanced product search tech via Krillion.

The company hopes to diversify its offerings – and revenue – while using the red-hot daily deals category to upsell local merchants to other ad products.

Local.com claims more than 20 million users of its search for businesses, products and services on Local.com and partner sites. It offers advertisers a mix of subscription, performance and display advertising.

Krillion aggregates and matches consumer product information from multiple retailer websites and data feeds to create an up-to-the-minute structured index of categorized consumer products, from diapers to video games. The data index incorporates product images, current pricing, manufacturer or retailer discounts and real-time in-stock information.

Local.com recently bought the iTwango deal platform, upgrading and rebranding it as Spreebird. Spreebird aggregates deals from across the United States, overlaying its proprietary search technologies to let consumers browse and buy deals, as well as to share them with their social networks. It plans to launch mobile phone apps later this year.

The plan is to gradually add in daily deals sourced directly from local merchants. Spreebird.com launched with original deals from Denver, Philadelphia and Orange County. Seventeen additional markets are expected to go live by the end of the year.

It has some competition from Google Places, which displays relevant products in local search results, as well as via Google Product Search. Google recently added the ability for retailers to highlight popular products in-stock. But this requires individual merchants to set up their own product feeds.

In an earnings conference call today, Local.com CEO Heath Clarke said these acquisitions increased the company’s sales force, allowing it to better serve small businesses, while also expanding its inventory of products to sell.

Clarke said more acquisitions are in the works. “We think daily deals are here to stay, because it allows our industry to demonstrate the value with no money down. This model shows small businesses how powerful, immediate and effective online advertising can be.” The plan is to upsell other ad products after merchants try daily deals.

Another item in Local.com’s shopping bag is Krillion’s StockCheck, a real-time tool that lets online shoppers find, compare and buy products from nearby retailers.

Krillion and Spreebird will be part of a network of distributed content, services and advertising that also includes the distribution to third-party ad networks of geo-targeted, hyper-local interactive shopping data via rich media, thanks to the Rovion business unit, and similar distribution of the data to geo-targeted shopping sites powered by Local.com’s OCTANE360.

A barrier to local search advertising in general has been the lag in SMBs getting online, but this may have reached a tipping point. Research firm Borrell Associates recently surveyed 2,872 small and medium sized businesses, finding that, while 86 percent had websites last year, a full 91 percent expected to have one in 2011.

The big question for these newly digital SMBs is getting visibility for their websites, and Borrell noted that local media companies can play that role.

Having a website is only the initial challenge for merchants. Setting up and maintaining feeds from their inventory systems to a proliferating number of local search services is far from seamless. And determining whether a daily deal will bring in new customers or break the bank is still a dark art.

Research firm BIA/Kelsey recently forecast that local online/interactive advertising revenues will climb to $42.5 billion by 2015, while consumer spending on daily deals could reach $3.9 billion in 2015.

BIA/Kelsey vice president Mark Fratrik agrees that the daily deal is more than a fad, although there will be an inevitable shakeout.

“It’s getting really crowded, ” he told ClickZ. “One question we have is, how much fatigue consumers will have. If they are sent two or three different offers each day, how many will a consumer click on each day?”