Local Advertising Booster Yodle Growing Like A Weed, Raises $10 Million

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CrunchGear Week in Review: Caged Wisdom Edition

Yodle, the New York-based startup that helps local businesses advertise more efficiently on the web, has secured $10 million in Series C financing in a round led by JAFCO Ventures and joined by Draper Fisher Jurvetson Growth, DFJ and Bessemer venture Partners. The company took the opportunity to add some facts and figures to the funding announcement, and they reflect that Yodle is doing quite well, thanks for asking.

The company, which started out in 2005, reports a whopping 700 % increase in annual revenue compared to its 2007 income. Of course, expressing growth in percentages is meaningless without actual figures, so we poked around a bit and got CEO Court Cunningham to at least share the run rate for last quarter (Q4 2008), which amounts up to $30 million. Also telling is the reported growth in employee count and signed customers: Yodle had 9 people on the payroll in 2006, it now has about 250, and the company now boasts 5,000+ customers which is up from 125 in 2006. Yodle expects to turn a profit in about six months.

In essence, Yodle is a lead generation company focused on aiding small businesses advertise their wares in search results for all major search engines. If customers have a website, the ad will point directly to it and Yodle will track and optimize actions starting from clickthrough to phone calls, etc. If there’s no web presence yet, the small business can opt to work with Yodle to create a custom so-called AdverSite which acts as a basic call-to-action website or landing page for the advertisers. Pricing for Yodle’s suite of services includes keyword bid management and optimization, website / landing page creation, and analytics ranges from under $1000 for small local business owners to over $5000 for larger businesses.

We understand that Yodle is quite persistent in generating a constant stream of new customers by using aggressive sales techniques, to the extent of local small business owners threatening to sue the company for harassment. Cunningham didn’t exactly dismiss these claims, but stated the whole thing concerns questionable methods used by isolated sales representatives who tend to “end up having a short career at Yodle”.

Yodle competes against a number of similar, venture-backed companies such as ReachLocal (which raised a substantial $65 million in funding to date), MerchantCircle (which raised its $10 million in Series B funding round in November 2007), Ingenio (acquired by AT&T, also in November 2007), WebVisible (total funding: $17 million) and a plethora of smaller companies trying to get their piece of the pie.

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