Zomato revenue is primarily from advertising ? by leasing out space on its web/mobile interface to restaurants that place banner ads. Zomato charges its clients an upfront subscription fee on a quarterly basis. Price revisions happen periodically. Rates vary from INR2,000 to INR100,000 a month. Zomato offers no commitment to the restaurants in terms of clicks or leads.
Management expects that any major city will take two to four years to become profitable, depending on existing competition in a particular city. The company believes that having a local field sales force is its key advantage in scaling up new locations. According to management, Zomato has a strong local team in all its foreign locations and is not constrained on management bandwidth yet.
Zomato?s advantages in a new market are 1) the product, 2) traffic on its site and 3) the field sales force ? which is able to educate businesses who may not be tech savvy about the benefits of using Zomato.
Zomato believes they can be the top restaurant discovery provider in every market they enter. In the markets where they have been present for a while, they are significantly ahead of the competition.
Zomato (with Urbanspoon) attracts 80mn+ visits per month and has upwards of 48mn user ratings. For Zomato, the immediate focus is on monetizing Australia and Canada, while in the US they will run a few pilot projects initially before expanding. In Australia and Canada Zomato will look earn revenue through own listings, while in the US they will consider monetizing the traffic.
On the question of why Urbanspoon was acquired for valuation less than that of Zomato (which was valued at USD660mn in recent fund raise), management commented that valuations were a function of growth, product and competitive scenario. The founder members of Urbanspoon had left the company while its owner IAC was looking to exit.
