What Intuit’s Demandforce Buy Says About the Future of Hyperlocal Marketing

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When your dentist texts you a reminder for an appointment, that’s probably coming from a company called Demandforce. This one of the many marketing and customer-loyalty services that Demandforce pulls into a single, simple-to-use online dashboard. Demandforce users can syndicate marketing messages, monitor content of reviews, and deliver customized sales offers against multiple social networks, all from a simple Web interface.

The company targets many high-service local niches that are resource-constrained and dominated by mom-and-pops. Think not only dentists but doctors, hair salons, bakeries, restaurants and many others. Backed by heavy-hitting VC Benchmark Capital, among others, Demandforce was purchased by bookkeeping and finance software company Intuit on April 27 for a healthy $424 million. This marked the biggest purchase of a hyperlocal technology startup to date in the B2B realm. What makes this buy particularly interesting is what it says about the hyperlocal tools market.

First, lets discuss the buyer. Intuit is perhaps the savviest SMB software company. Another notable purchase, targeting their consumer users, was the acquisition of Mint.com in Sept. 2009. Intuit has steadily and smartly layered on related product offerings to its original and still primary SMB bookkeeping franchise (QuickBooks) in ways that expanded its reach out into different niches in the sector, such as construction, retail and food. Intuit is also not known for overpaying. There was a big debate after the Mint deal as to whether the founder Aaron Patzer could have sold for a lot more money.

In fact, Demandforce is the biggest acquisition of a dot-com by Intuit and one of its biggest to date. This leads me to think that the sharpies at Intuit see a big profit future in providing social media and marketing tools to the millions of small mom and pops. And I happen to agree (I wrote earlier about the myth of the dumb momandpop shops). The Demandforce sale only reinforces this belief, which I also feel is a function of demographics and age cohorts as much as technology progressions. Plain and simple, younger generations of mom-and-pop shop operators grew up in a world subsumed by social media. For children of this environment, using social media and many other novel technology driven tools (SMS, social networks, Twitter, group buys) is probably not a huge leap out of their comfort zone.

At the same time, Demandforce does a very good job bringing the 80% of social media marketing tools that an SMB is most likely to use into a single service and a single dashboard. That’s critical, because for mom-and-pops using more than one tool is simply not an option due to their time and attention constraints. To date, most of the technology solutions for social marketing for SMBs have had gaping holes that forced customers to look elsewhere — that’s partly the reason why so few have gained any real traction.

With Intuit taking a big interest in hyperlocal marketing, too, for the first time ever a massive brand with huge marketing bucks for promotions is going to plug social as a key part of the SMB survival quiver. That is significant. And it means both that hyperlocal marketing has actually arrived in terms of market and investor recognition, and that hyperlocal marketing is something that will likely be baked deep into existing SMB products such as QuickBooks. Consider this move to be the precursor of a comprehensive SMB dashboard incorporating cash flows, balance sheets, text and tweets – something that is sorely needed and could help drive more complete offerings across the hyperlocal tools space.

Alex Salkever is an executive at a cloud computing company and a former technology editor of BusinessWeek.com. The views expressed in his column are his own and not those of his employer. His Personal Fight column appears Wednesdays on Street Fight.


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