I’m a little late covering this (the news was announced on Monday) but the Yellow Pages Association just announced a rebranding as the Local Search Association.
From the release:
The Yellow Pages Association (YPA) today unveiled a new name – Local Search Association – alongside a new visual identity, reflecting the industry’s transition from print publisher to a provider of local search services to small businesses and their consumers.
The announcement is an important step in the right direction for the industry but is not surprising. Major directory publishers had started making the transition from “directory” to “local search” as early as 2002-2003 (I was part of the team that made the change at Yellow Pages Group). Most of them now behave like large local search agencies who also own media properties. So, the name fits perfectly the new strategy (by the way, anyone else thinks it’s amazing that the name was still available?)
I would have liked to be at their conference this week, to take the pulse of the attendees regarding the change. As I told Neg Norton, the Local Search Association president, when we discussed the announcement, the real litmus test will be when new local search industry stakeholders become members en masse on both sides of the spectrum. First the big players like Google, Microsoft, Facebook and maybe Twitter. And then, small local search engine marketing agencies. These guys will infuse new cultural strains and help propel the association forward. But a clear “what’s in it for them” needs to be presented and event/membership competition in the very sexy geo-space is fierce (I counted at least 12 different geo and local conferences in 2011). I think they can do it but there’s a lot of work ahead.
Twitter: the Next Five Years
March 25, 2011
Flick picture by Melanie Cook
Last weekend, I was interviewed for an article that was published on Monday in Montreal’s La Presse, one of the major Canadian daily newspapers. In the context of Twitter’s five-year anniversary, Alain McKenna asked me to gaze in my crystal ball and to play the prediction game for Twitter’s next five years. Alain published a few of my suggestions in the article but I thought the complete answer would make an interesting blog post.
So, without further ado, here are my Twitter predictions for the next five years:
The company:
- With their $360 million in VC money, we can expect the number of employees at Twitter to continue growing quickly especially at the San Francisco headquarter. I also expect the company to open international offices especially in countries where the service is popular. Already, they’ve inaugurated a London office reflecting the high Twitter usage in the United Kingdom.
- Twitter will continue to reinforce its technical infrastructure and we will probably see the extinction of the infamous “fail whale”.
- Twitter’s usage will continue to grow in its own North American backyard but, in the next two years, Europe will see tremendous growth. I predict France, Italy and Spain to furiously embrace it. This will follow Facebook’s European usage pattern, with a two-year adoption lag.
- With more and more people joining the service, Twitter will discover that its real utility is at the local level. Twitter will become the often-wished for democratic and commercial local space we’ve been expecting since the beginning of the Web. Citizens/consumers, merchants, politicians, and news sources/journalists becoming an intrinsic part of the same communication and relational system.
- The company will definitely have its initial public offering (IPO) in the next five years and if you twist my arm, I’ll predict 2012 or 2013. Twitter’s co-founders have had entrepreneurial successes in the past and want to leave a long-lasting trace instead of doing a quick sell-out. They’ve probably already received offers for an insane amount of money.
Functionalities:
- The major product challenges for Twitter are 1) enabling users to increase their individual reach within the service; 2) increase the quantity of conversations; 3) create mechanisms to discover new relevant accounts to follow; 4) develop robust filters to surface relevant content under two dimensions: topics/interests (for example, who are the ornithology experts on Twitter?) and local (what’s going on in my region, my city, my neighborhood?).
- I expect Twitter to quickly adopt two winning functionalities from Facebook that are fast becoming standards in social networking: attaching and maybe threading all comments on an individual tweet and the ability to “like” a message. These functions will allow for a better social signal to discover important messages and increase the level of conversation (today, we see a lot of unidirectional message broadcasts).
- Without neglecting the Web, I expect that mobile will the main way people will access Twitter in the future.
Business model:
- Within five years, Twitter will have discovered its winning business model. I don’t think it will be one of the models currently in trial (like sponsored tweets). I think we will see the arrival of paid professional accounts for users who have thousands of followers. These paid accounts will provide additional exposure in the network, integrated promotional tools, extensive reporting and a guarantee of superior service. In addition, Twitter will build psychographic profiles for users and identify influencers. Consumers will be courted by big brands and local merchants based on their interests, lifestyle and influence. Twitter will sell privileged access to this information to enable better targeting. For example, movie buffs will receive invitations to see movie premieres. Cola drinkers will receive a case of that newly launched soft drink. Foodies will receive a rebate to try their new local bistro or revisit one they haven’t been to in a while. We could eventually see the arrival of new financial model systematizing word-of-mouth by rewarding consumers who talk positively OR negatively about brands or local merchants.
There you have it. I hope my crystal ball wasn’t too muddy. Here’s to many more exciting years! Happy 5th anniversary Twitter!
The Daily Deals Industry in Numbers
March 23, 2011
(picture by Kenny Herman)
Jim Moran, Cofounder at Yipit, took the stage this morning to share with us many interesting quantitative data points about the daily deals industry.
About the daily deals market:
- It has low barriers to entry. Yipit has identified 400+ daily deal sites in North America
- That number has been increasing rapidly because of white-label technology platform providers and the entrance of major media companies in the space.
- The market has high barriers to scale though. You need to scale sales, geographies, salespeople, number of deals, media buying (to advertise your service), subscribers, offer deal personalization and increase conversion in order to truly scale. Jim showed a great slide showing the “virtuous cycle of daily deals”.
- Looking at a slide that presented the types of stakeholders in the ecosystem, you could clearly see that the next big opportunity is “Merchant Agencies”, that would negotiate deals across providers.
In the top 20 markets (February 2011 data):
- Groupon had $39M in revenues (#1 player)
- Livingsocial: almost $12M in revenues (#2 player)
Top daily deal verticals by revenue:
- Hair removal
- Food/grocery
- Massage
- Outdoor adventures
- Spas
- Automotive services
- Yoga
From a merchant economics point of view, Yipit found:
- A breakage rate smaller or equal to 20% (this is the percentage of deals unredeemed)
- That deals became profitable for merchants if they were able to retain 19% of coupon buyers
- High merchant satisfaction: 93% said they would use a daily deal site for another promotion
- Some ad spend shifting: 43% say we’re reducing other advertising spend after running daily deal.
His biggest surprise from the data they collected: the gap between Groupon and LivingSocial seems to be narrowing. You can review his complete presentation here.
Following Jim Moran’s presentation, we heard from Eric Eichmann, COO at LivingSocial. Here are the interesting tidbits from his keynote:
- LivingSocial describe themselves as “the local commerce expert helping people discover new experiences in their neighborhood”
- Daily offers is a pivot for LivingSocial (like Groupon). They used to be a Facebook applications developer.
- Their pillars of success are: local, mobile, social and commerce
- They like to target neighborhoods as opposed to cities
- They launched “Instant deals” in their mobile app. They are real-time mobile deals.
- LivingSocial today: 12 countries, 230 markets, 24 million members, 1200 employees
At the BIA/Kelsey ILM East 2011 conference this morning, we heard from Lior Ron, the Group Product Manager for Google Places (including Maps and Hotpot).
A couple of interesting information points came out:
- Google Places contains 50M places around the world
- They felt they were missing “people” in the local equation and that’s why they launched Google Hotpot
- Hotpot is all about organizing the web around people and places and is a local recommendation engine.
- Hotpot now has generated more than 3M reviews and ratings (see this BIA/Kelsey post from last week for more data points)
Lior Ron said that Hotpot is not about Google building another silo or reviews site. It’s about collecting short signals to enable better ranking/relevancy. A few conference attendees were not convinced by that statement.
Seven Drivers of Interactive Local Success
March 22, 2011
In a short presentation yesterday afternoon at the BIA/Kelsey ILM East 2011 conference, Peter Krasilovsky presented several slides about the local media industry. In them was, I think, an interesting nugget of information: The seven drivers of interactive local success within a media organization.
They are:
- Strategic separation of business units. This is key to develop a solid new business that’s not encumbered by traditional thinking and conservatism. In the words of the BCG Matrix, it reminds me of the need to nurture “rising stars” that will eventually kill “cash cows”.
- Investment. A must. In addition, risk-taking must be rewarded, not punished.
- Social media
- Search
- Geotargeting
- Multiple users and business touches. Fragmentation brings with it the need to re-aggregate to help advertisers make sense of the media/advertising/social media landscape and create substantial value.
- Mobility. Creates ubiquity, permanent access to the internet.
I would add Human resources to that list. You need visionaries/thinkers that can innovate and execute quickly. That’s a huge challenge for traditional media company today.
At the BIA/Kelsey conference yesterday, I had the opportunity to sit down with the two co-founders of SeniorChecked, Chris Spanos and Scott Knowles. Both ex-AOLers with solid experience in the local space, they’ve built this vertical local directory site targeting Seniors and their family.
Their mission is to help reduce the risk and incidence of fraud against Seniors by connecting them to trusted local businesses. Local service providers pay them $700 a year for a detailed review which eventually gets them a seal of approval from SeniorChecked. This is the list of things they investigate before approving a merchant.
Obviously a great vertical with the aging baby boomers population (Yellow Pages Group had published a print directory on the topic a few years ago) and an important life event that involves many business categories, Scott and Chris have stumbled upon a better business model than I had expected before sitting down with them. This is not a business directory play, this is a “seal of approval” play.
Why is this an important distinction? If you’re building a vertical business directory, you need to sell advertising AND convince users to come to your site. A very difficult challenge for any startup. But if you’re selling a trusted seal, advertisers will “sell” consumers to your brand. They will promote the seal in-store and in their brochures (SeniorChecked provides advertisers with a promotion package that includes stickers, logo, etc.). Consumers might eventually come back to the SeniorChecked.com site searching in the directory to make sure that the company is legit but this is not the core business. Because a seal is a simple content “atom”, it also enables SeniorChecked to distribute their approved merchants in other directory sites.
The long term picture for SeniorChecked is also very interesting. They’ve basically built a platform which enables them to launch other verticals where trust plays a big role. They want to build these verticals themselves or partner with other people, as a technology provider, to launch them.
This is not the first company to try a “seal of approval” (ValueStar comes to mind) but by verticalizing, SeniorChecked might be taking the right road to success. I’ll be following them.
The Evolution of Merchant "Presence"
February 2, 2011
Flickr picture by Andrew Atzert
Fifteen years ago, if a merchant wanted to make sure he’d be found when people were doing shopping research, it was very easy. You simply needed to have a free basic listing in your main business category in the print Yellow Pages of your city. Advertisers could extend that presence in different cities or business categories by buying additional basic business listings and if you wanted to stand out when consumers were doing comparison shopping, you could make your listing standout by making it bold or buying an informational listing (lines of text) or a display ad (graphics + text). Some people were trying to game the system by changing their name to AAAAA Joe Plumber and appear higher in the listings but buying a display ad would insure a ranking improvement in your category. Life was simple and/but choice was limited. Directory publishers were making tons of money with huge profit margins.
Things certainly have changed since then.
Fast forward to the search engine era (2000-2010), search is the main method people use to do comparison shopping now. For small and medium-sized businesses (SMBs), having a presence in the search engine era means having a Web site but ranking in search engine results pages is very random. It’s probably the equivalent of a Yellow Pages basic listing. The discipline of search engine optimization (SEO) was invented to try to improve Web site ranking in organic search results. This is probably the equivalent of print bold listings (white hat SEO) and AAA merchant names (black hat SEO). And if you want to make sure you appear above everyone else, you bid on specific business keywords in, for example, Google AdWords (search engine marketing or SEM). This is the equivalent of the Yellow Pages display in the Google era. The search engine from Mountain View is now making tons of money with huge profit margins.
The complexity of this search ecosystem means most small merchants need to rely on service providers for Web site building, SEO and SEM, three products of very high interest in the Yellow Pages space in the last 2-3 years.
But that’s not all. In the search engine era, local search sites have multiplied as well. Merchants need to make sure that their basic listing information is everywhere, that it’s correct and is the same everywhere. That’s quite a challenge given the dozens (hundreds?) of sites out there. Companies like Universal Business Listing, GetListed and Localeze have risen to the challenge to help SMBs. Search Engine Watch recently said “Your address is the new link”.
But lo and behold, Google’s search query volume seems to be plateauing. Compete says it has dropped 0.6% from December 2009 to December 2010.
Things are changing yet again…
Enter the social media era (2010-2020?), the conversation age. Consumers are now spending more time using Facebook and Twitter than anything else on the Web, even beating e-mail. As I write this, Facebook claims they have more than 500 million active users per month. 25 billion tweets (messages on Twitter) were sent in 2010.The rise of these powerful social networking and communications tools means that merchants need to be present there as well.
So, what does SMB presence means in the social media world? It mostly means building a Facebook page and creating a Twitter account. It’s actually fairly easy to do and many of them have done it already. I can also tell you every local media company and SEO/SEM firm is thinking of offering (or already does) the creation of a social media presence for small merchants who are not there already. We’ll probably see the arrival of technology companies enabling mass-creation of those pages/accounts. This is the “basic listing” of social media.
Next, how can merchants be found in social media? They’re able to buy Facebook ads or Twitter promoted ads (tweets, trends, accounts) and we’re already seeing the arrival of technology providers to enable campaign management (like we saw search engine marketing). This will be the equivalent of Google AdWords for the social media era.
What about organic “search results”? How do smart SMBs get found “organically” in social media? They join the conversation. They broadcast information about their store, they reply to consumer comments and questions, they identify potential customers and invite them to their store. Small merchants are all about relationship-building and the human touch. They just need to port this to social media but they need help. They need to understand the tone that’s required but mostly they don’t necessarily have the time to engage in and monitor social media. They need support and they need to filter the noise.
I think this space is going to be huge. As SMBs easily create their basic presence en-masse on Twitter and Facebook (BIA/Kelsey says close to 50% of SMBs have created a Facebook page and close to 20% on Twitter), they’ll be wondering what to do next. This is the space we’re trying to crack with Needium, helping SMBs figure what happens next organically after the basic social media listing. By identifying business opportunities in social media, by monitoring merchant name mentions and by offering white-label community management services, we’ve shown small merchants that there’s value in social media and exciting business life after the account creation. We hope you’ll be with us along for the ride!
