Monetize Local Biz Directory

[painperdu]

I'm seeking opinions on two different monetizing scenarios for a local business directory.

Scenario #1

Include all businesses in the directory for free and feature a few businesses at the top of the page for money.

I believe this would be more user centric as it gives the user a choice in the variety and amount of businesses in the directory.

Scenario #2

Only include those businesses that pay money to be in the directory.

As a portion of the fees to be listed will go toward promoting the biz directory this option will appeal toward participating businesses since there will be less competition in the directory but it will also mean less choice and variety for the directory users.

Which of the two scenarios would lead to a more successful directory? Is there another option besides these two?

[vangogh]

My first question is do real people use your directory at the moment?

If the directory does not currently get a lot of traffic then it has 0 appeal to a business owner and you probably aren't going to be able to charge for anything. On the other hand if there is traffic to the directory or if you can prove there will be then you could probably sell both regular and top of the page listings.

Understand though, that for the most part search engines killed directories as a business model. Also consider there are tons of directories out there now. You really have to come up with a good reason why someone would want to be listed in yours. For the most part directories now exists to provide links to websites and those links are generally not worth all that much. The key to building a directory you hope to make money from is to build something valuable that people will want to visit and find useful.

[Business Attorney]

I agree with Vangogh that creating a successful business directory is going to be a tough job, but I do still see a potential market for comprehensive and well done local directories. If someone in Terre Haute is looking for a plumber, then a good directory could be much more useful than searching "terre haute plumbers" in Google and starting to click on websites. Of course, there is already a lot of competition out there, including things like Angie's List, Dex, Yelp and others, not to mention Google Local. The fact that there is a potential need doesn't necessarily mean that the need is not already being filled.

The key to getting consistent traffic is to get repeat business. The way to get repeat business is to have a directory that meet's a users needs. Generally, the way to be meet a user's needs is to have useful information.

While sites like Yelp do that by having extra features such as reviews and ratings, I think that the most important for you initially would to be comprehensive (i.e., include everyone). If someone goes to your directory to look for plumbers and all you have listed are the one or two plumbers who have paid to be in your directory, I doubt that the user will try your directory the next time they need to look for a business.

How do you plan to build traffic? Dex (formerly known as the R.H. Donnelley yellow pages) is flooding the radio waves and other media with ads (at least in Chicago). Why would someone use your directory rather than Dex, Yelp, Angie's list, or even specialty sites like restaurants.com (http://www.restaurants.com/), Dentist Office Directory (http://dentistofficedirectory.info/) or the thousands of other niche directories? What is your hook?

[painperdu]

I use a business directory as an hypothetical and what I really have in mind is much more specific than that. I'll PM you guys with what I'm really up to shortly.

All other things being equal, which of the two scenarios would make more sense.

Again, #1 would be more advantageous to the advertisers since they would be competing with less businesses; however, #2 would benefit users more since presumably more businesses would list their business and give more choice.

[vangogh]

I got your PM and realize what you're doing is more than a directory. I think what you're attempting can work, but it's still not going to be easy. I think you can actually do both of your options as long as you go with scenario #2 first. It's like paying to be in the phone book and then paying more for an ad and then paying more for a larger ad. You could even set something up where some people get a free top listing at random in order to convince them to pay in the first place.

My comments about needing traffic still apply. Until real people are visiting the site it's not going to have value to an advertiser. You might try building it up as a free source of local information first and then start selling the listings. You might even want to give away free listings for a month, 3 months, 6 months, whatever just to have some businesses listed. If those businesses are making money through your site they will be willing to pay after the free time has ended.

I really think your first step is going to be building something valuable for the community to get the people there. Once you're getting visits it'll making selling the listings/advertising much easier.