advertising model


Why Zomato paid $60 million for Urbanspoon and what it means for your business: founder Deepinder Goyal tells

1:34AM | Wednesday, 14 January

Zomato’s acquisition of restaurant and café directory Urbanspoon for $60 million is set to have big implications for Australia’s hospitality industry.   Global restaurant search app Zomato announced yesterday it had acquired Urbanspoon for between $US50 and $US60 million ($61.4 to $73.7 million).   The all-cash deal marks Zomato's entry into Australia, with Urbanspoon users and content to be migrated across to a new platform.   The move will see Zomato hire around 300 people in Australia “in the very short term” with an investment of $10 million planned over the coming year to consolidate its market leadership position.   Zomato's core content features include scanned menus and photos sourced by its own team, the ability for users to create their own network of foodies for personalised recommendations as well as the user rating and review system for restaurants already utilised by Urbanspoon.   The deal extends Zomato’s presence to 22 countries across the world and increases its restaurant coverage to more than 1 million worldwide.   Traffic is expected to double to 80 million visits per month.   Deepinder Goyal, founder and chief executive of Zomato, told SmartCompany he was interested in Urbanspoon as Zomato had been looking to enter the US, Australian and Canadian markets for a longperiod of time.   “We found the opportunity was quite good, the geography complemented what Zomato was doing and it made perfect sense for us to go there,” he says.   Goyal says the deal only took six weeks to pull together from the first phone call.   “We will be making the product better using the best of Urbanspoon and the best of Zomato,” he says.   Goyal says the deal has a lot to offer restaurant businesses in Australia as Zomato's “hyperlocal” advertising model, combined with the Zomato for Business app suite, will allow restaurant businesses to reach out to, connect with, and engage customers like never before.   “We will have people in every city working on content, collecting and updating restaurant information, collecting menu cards and collecting pictures,” he says.   “The sales team goes out meets restaurant owners and sells them ad space on the website that is the business. ”   Goyal says Zomato is careful to ensure it minimises the inherent conflict in selling advertisments to businesses which are being reviewed anonymously on the site.   “Our salespeople are not even allowed to talk about reviews or ratings,” he says.   “If someone says ‘I got a bad review can you do something about it? The sales people can only say no. So far in all the countries we have been in we have been able to do a very good job.”   Goyal acknowledged Urbanspoon has attracted criticism in Australia over fake reviews including one instance of a café which attracted negative reviews before it even opened.   “A local presence solves a lot of those problems,” he says.   “Urbanspoon does not have a single employee in Australia, so a local team will be able to look at a lot of these problems.”   Goyal declined to reveal the current turnover of Zomato or Urbanspoon and says Urbanspoon’s current turnover is not relevant.   “Current turnover doesn’t matter to us as it comes from network ads, our new revenue line is direct ad sales,” he says.   Four years from now our target is $75 million a year in turnover from the Australian business.   The deal marks Zomato's sixth acquisition in the last six months, and the biggest one to date.   The review site has recently acquired local dominant restaurant search players in New Zealand, Poland, Czech Republic, Slovakia and Italy, and Goyal says there is still potential for more acquisitions.   “We are talking to a couple of players in South East Asia and in Europe as well but it is too early to say how these discussions have gone,” he says.   This article originally appeared at SmartCompany.

How this app creator used user-experience design to cook up a chart-topping app

4:01PM | Wednesday, 2 April

We’ve all heard of design by accident, but cooking app founder Jodie Moule can go one more and claim a successful app by design accident.   Having written a book Killer UX Design, she wanted to bring the process the book advocated to life. After she couldn’t get any existing clients to volunteer, she set about creating the Cook iPad app with her fellow authors.   The app has now become much larger than the book that inspired the idea.   The app launched in September last year, with 500,000 downloads in the first three weeks. To date the app is just shy of a million downloads, with users uploading 250,000 recipes. These include additions by renowned chefs Neil Perry, Guy Grossi, Luke Mangan, Maggie Beer and Matt Moran.   Moule says they have been overwhelmed with the response, particularly since it’s still iPad only, with plans for mobile versions soon.   Their approach to developing the app has been very hands on, with Moule and her team going into people’s kitchens and spending time with them cooking at home.   They targeted groups they thought would be interested in their idea, such as foodies and food bloggers, but were also conscious of getting feedback from people who didn’t meet their user profile.   “We deliberately approached people who thought they couldn’t cook and challenged their perception on that,” Moule said.   What they found was that people wanted to create and share family recipes with their friends and family and had no easy way to do this. It’s this sharing aspect that Moule believes has spurred the apps popularity.   While she’s proud of the number of downloads, she believes the engagement with the app is of much greater importance and the real proof of their success.   Thousands of recipes are created and shared a day, with users spending as long as 15 to 20 minutes in the app on average.   “When you’re creating product, everything comes back to engagement,” Moule says.   They are still deciding on the best monetisation strategy, but the app will remain free, weighing up possibilities like an advertising model or in-app purchases.   She says despite their huge success, most Australian investors are still grappling with the fact that they have yet to figure out revenue.   Having bootstrapped until now, they are looking for funding of around $1 million to take the company where it needs to go, with the funds most likely to come from overseas.   “I’m heading to New York to talk to investors and we’ve had a lot of good interest from over there,” Moule says.   Moule’s tips for creating chart-topping apps:   Engagement is key Crush assumptions about what your customers wants Talk to people Simplicity is key, but sometimes you need to get complex to refine Keep the team small and work together with discipline and restraint Don’t wait til you have a finished app to launch Remember, great apps take time Design is important, but the experience matters most to users   Title image: Steve Moule (co founder), Jodie Moule (co founder), Alex Johnston (co founder), Jeff Tan-Ang (co founder) and Gerald Kim (developer, employee).

Know when to pivot and do it thoroughly: Footy Tips founder shares his start-up story

10:52AM | Thursday, 10 October

The business model beneath the Footy Tips platform evolved several times in the 13 years Heath Kilgour put into his start-up.   Due to share his start-up tips at an upcoming Startup Grind event in Melbourne, Kilgour spoke to StartupSmart about his entrepreneurial journey so far, after he decided to launch his first business over a beer with a friend in the late 90s.   “It was 1999 and the internet seemed like the obvious next step for footy tipping. I registered the domain, and with that much market research we were off. It seemed obvious to us it would go online, so it was about who would win the audience, rather than if it was there,” Kilgour says.   Building an online business in the late 90s was a significant challenge. The Footy Tips team built the website via a dial-up modem and the only way sites and promotions could go viral was via email.   He adds the quick-to-market strategy meant they didn’t investigate their options for business models until a year or so in.   “We were so excited that we never thought past year one. We got to the end of the year and went, ‘Well, we’re not billionaires yet, Jesus we need to start this again’,” he says.   As the size of the potential market spurred them to launch early, Kilgour says an advertising model felt like a no-brainer, but they had to pivot to a different revenue focus within their first year.   “It took ten years for the audience to mature so the business model took that long to reach fruition,” he says. “When we realised a few months in that we weren’t dealing with a very big market yet, we shifted to focus on a white label service, and looking after the backend for pretty much every media service in the country.”   In 2008, Kilgour says they pivoted back to an advertising model and wound down the white label services.   “This change required a pretty big pivot in the way our business operated and who we had to hire and the relationships we had to let go. It was a big risk for us,” Kilgour says, adding this was a time when relentless focus was key to their survival.   “The landscape changed for online advertising, and it went from about 5% of revenue in 2007 to 80% when I sold the business in 2012.”   Having overseen the growth of the company from two guys with an idea to a thriving online business, Kilgour says he sold the business because he decided it would reach its full potential under a larger team.   “I thought we’d done an exceptional job building it that far, but it felt that a bigger company would get better leverage from it. We had a period of great growth, and the growth chart was looking really healthy so it was a great time to sell it.”   Kilgour is currently consulting with a range of start-ups. He says he’s keen to start another company, but has to find the right fit.   “If I start another business, I want to pursue it for the long term, so it has to be something I’m very passionate about and want to commit 10 to 15 years of my life towards.”

THE NEWS WRAP: Retail Coalition set to ramp up its fight this week

1:21PM | Sunday, 16 January

Some Queensland businesses won’t survive the floods, despite the massive clean-up operation that is underway, according to the state’s leading business lobby group.