Localyte: start up surprise #1 from PhoCusWright 2009

A PhoCusWright side effect that I look forward to is meeting online travel companies that I have never heard of but are number one in their category by some reasonable measure.

This year two companies had me turn to the blogger next to me and in shared geek awe (with a hint of punditry arrogance) say "how come we never heard of these guys before".

[update May 13 2010 - Localyte has been bought by Nile Guide. Tnooz story here]

Surprise number 1 - Localyte

Localyte is a online content company that allows travellers to ask direct questions of and search content produced by "local experts". Classic UGC and social networking stuff. The surprise factor with Localyte is the staggering the amount of content they claim to have amassed. At the PCW Innovation Summit Localyte head of Biz Dev Doug Renert claimed 40,000 individual contributors – self appointed local experts – providing content and direct response answers to questions on what to do in a location. This has generated an SEO content well with a depth of 700,000 reviews and a mind boggling 20 million words per month. This is extraordinary for a company founded just over two years ago (Aug 2007) and drowns out any question of whether or not they have met my 3 rules for a content start up.

In his blow by blow summary of each of the Travel Innovation Summit presenters Phil Caines of Tourism Tide has a great summary of Localyte's business and product.

"Grabs recommendations from a 40k strong army of local experts to provide travel advice. Can be used by travel agents to advertise their location. Growing to 700k reviews in 2 years. Travelers can pose questions to locals and they will respond accordingly. The program can be used using the Global Sherpa iPhone app. the locals get a system of points and rewards to motivate the contributors. They throttle questions so people don’t get inundated. Open API so that anyone can integrate this technology into their sites."

Impressive. Surprising.Now to the challenges.

There is an viable business model for this level of content though not a guaranteed one. Traffic and content is a great foundation for an online media business but monetisation will still take effort - if Facebook cannot be certain of its revenue streams then niche social media content sites need to work even harder for monetary success. In Localyte's favour there are potential B2B revenue streams through destination marketing organisations as well as the typical ad sales and transaction referral commissions.

The main question for Localyte is - what constitutes a local expert and how to verify. In a Tnooz post of mine that included them I said

"I have concerns about the accreditation of the local and how to be sure they are not a rep of a particular travel product and therefore biased"

Sean Keener of Bootsnall via a tweet put it even more bluntly

"What constitutes a local expert? - local tour provider often times equals spammer in my experience. "

For my local region (Bondi in Sydney) the number one expert on Localyte is a travel agent living in Sydney. As a Sydney based travel agent it is true that this Localyte member is going to know what to do and where to go. But there is also a commercial angle here. The challenge for Localyte will be how to balance the commercial interest of the expert with the brand pitch for providing unbiased local advice.

My Localyte Summary - a very impressive level of content and worthy of our surprise. But challenges in executing on monetisation and ensuring the independence of the experts.

If you would like to read more on them then the tweets around the Localyte PhoCuswright presentation that were hashtagged #pclocalyte can be seen here.

Here is the Localyte demo from PhoCusWright

Tomorrow will post surprise number 2 - Geckogo