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When you have access to $3 million of VC money, you are going to eventually want to spend some of it. That's what Smalltown, an IYP site with social aspects via reviews, calendars and (now) top 10 lists, is doing. Five months after launching SME-oriented sites in San Mateo and Burlingame, Smalltown has announced three new Bay Area locales, added video uploads, hired a VP of sales and begun a Google campaign.

The new locales are Foster City, Millbrae and Belmont. The new sales leader is Daniel Payomo, who comes most recently from Backfence's Bay Area site and previously served with many of the Bay Area newspapers at one time or another (The Merc Center, The Examiner, MediaNews Group's ANG cluster of local papers). And BigFoot, too.

CEO Hal Rucker says the eight-person company has created 15,000 “Webcards” for local SMEs, referring to the very attractive, very functional microsites that are Smalltown's calling card. I'd probably want one if I owned a San Mateo barber shop or butcher.

As with all IYPs, however, the challenge is to upgrade the SMEs to a premium tier, which costs $40 per month. At this point, fewer than 400 have signed up for the premium tier. Most of those have come in on a promotional basis (i.e., free). A hundred are actually paying. With Payomo now on board, they'll see what the demand is actually like. Other marketing has been oriented around cooperative relationships with chambers of commerce and other local entities. For instance, Smalltown sponsored the San Mateo Chamber's annual Halloween parade.

Usage-wise, Rucker says he's got 3.5 percent of the launched communities visiting on a weekly basis. About 1.8 percent have registered, which gives them the right to review sites, etc. Rucker is aiming for a registered base of 3 percent. About 50 percent of the users are coming directly from the site, while 50 percent come from the Google AdWords program launched a few weeks ago (which makes them newbies and not necessarily committed to the site).

The most successful category is restaurants, where the reviews are “read a lot,” says Rucker. “Health and Wellness” is also a major category, via masseuses and personal trainers. Dog walkers and gutter cleaners are also clicked on, but Rucker says that to some extent, the latter categories may be randomly clicked on by the site's tire kickers.

The addition of video is the biggest change. Video is becoming a must have for every site and in this case is being provided as part of the premium tier. Users have an option to click on video when they visit a business' Webcard.

Production, however, is another issue. The site is likely to find a way to work with SMEs to produce the video. Comcast and Omnivision have provided sample videos, but they charge approximately $2,000 per video for production, says Rucker, who says he is likely to end up using an assortment of video providers, including an in-house team. Rucker also says he is interested in partnering with content companies such as newspapers, radio stations and others. They could syndicate the Webcards and drive additional traffic.

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