Twitter and the Local Ecosystem

I recently shared with a potential Needium partner the volume of local tweets we’re indexing daily in major (and some smaller) North American cities.

US/Canada:
Atlanta, GA: 709,427
Austin, TX: 116,756
Calgary, AB: 60,603
Cary, NC: 153,315
Charlotte, NC: 171,001
Chicago, IL: 712,399
Cincinnati, OH: 110,975
Columbus, OH: 221,920
Commack, NY: 116,145
Creve Coeur, MO, 43,829
Denver, CO: 172,762
Des Moines, IA: 28,702
Fort Lauderdale, FL : 118,670
Indianapolis, IN: 224,871
Laguna Beach, CA: 58,186
Long Beach, CA: 113,404
Los Angeles, CA: 1,126,143
Miami, FL: 509,411
New York (Metro): 2,746,757
Ontario, CA: 59,705
Phoenix, AZ: 230,260
Redondo, CA: 66,490
San Bernardino, CA: 36,799
San Francisco, CA: 354,707
St. Louis, MO: 255,415
Tampa, FL: 125,341
Toronto, ON: 546,470
Vancouver, BC: 173,340
Washington DC: 551,126
West Palm Beach, FL: 31,665

Europe:
London, UK (Central): 60,128 (more than 1M tweets per day when you index the greater London metro area)
Paris, France: 346,197

Remember: these are tweets PER DAY per city. As you can see, those numbers are quite impressive and we’re just starting to scratch the surface in terms of implicit geo-location. We’re adding new geo-clues like neighborhood names, points of interest, foursquare check-ins, etc. to help us increase that volume. And we’re slowly getting to a point where our community managers know what’s going in specific cities and neighborhoods.

As I wrote earlier this year, “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.” That’s even truer today as more people are joining Twitter (100M montly active users at last count), people use it more (250M tweets a day) and they geo-localize themselves more.

And yesterday, I was happy to see that people are starting to notice. Read what smart VC Dev Khare wrote yesterday:

Dev is probably using crude tools (maybe Twitter Search?) to retrieve the info and he’s starting to see “local” value. Imagine when we’ll be able to surface that information in a much more substantial way!

The same day, Mark Suster (a VC who invested in Twitter) wrote “We Have Only Scratched the Surface of the True Value of Twitter. Here’s What You’re Missing“.  He starts by explaining that there’s more to Twitter than “what am I eating for lunch?”. As my readers know, I wrote a whole presentation on “why you should care what @joepublic had for lunch” but that’s another story…

Mark goes on to talk about Identity, Object Communications, Predictive Data, and Augmented Data. A couple of quotes stood out for me:

“I believe that Twitter is becoming the most interesting and predictive dataset in the world and that every large company (and many small ones) will consume the Twitter stream in order to gain insights, determine actions to take and gain competitive advantage.”

“The future of data interpretations will be augmented. We will look at both the steam and the “meta stream.” We will want to augment with: location, demographics, affiliations, authority by subject area, gender, topical interests and a whole lot more.”

That’s it. That’s what makes Twitter such a powerful communication tool and even though, as the Wall Street Journal writes this morning “Web companies often upend industries but they can labor for years to fully make money on their revolutions”, social networking revenue is growing (eMarketer predicts this morning that “Worldwide social network ad revenues will surpass $8 billion in 2012 and approach $10 billion by 2013”) and will rocket past many online ad categories. As for Twitter, I believe they will find monetization success through local advertising. It’s too good an opportunity to pass.

Google is Rolling Out Its Fixed-Fee Local Ad Product

For a flat monthly fee of $25, businesses can enhance their listings that appear on Google.com and Google Maps with a yellow tag that emphasizes specific information such as a coupon, video, website, menu, reservations, photos, or a custom message. Tags do not affect the ranking of the listings, and we clearly indicate which parts of the search result are sponsored.

Google Local Ad Product Tags

via Google LatLong: Google Tags rolling out nationwide.

First found on Blumenthals.com.

What it means: related to my previous post about local monetization, Google is now launching a fixed-fee product called “Tags”. This has been the bread and butter of online monetization at directory publishers. The model is proven and will resonate with small merchants. Question: why did it take so long for Google to launch this?

Update: thoughts from Greg Sterling on this announcement. He adds “The mobile distribution of Tags may ultimately turn out to be more significant than on the PC.”

Local Monetization is Still a Challenge

My friend Mike Boland (BIA/Kelsey) discusses check-ins, geo-location startups and monetization over at SearchEngineWatch:

(…) But in all of the excitement, there’s still something missing; a clearly defined path to monetization. Some of the players mentioned above are exceptions with national advertisers, and other revenue streams such as carrier deals. (…)

The problem is that this ignores what those in local space have known for years; self-provisioning ain’t that simple. But the line is still the same from newcomers to the geo-location game: “Why wouldn’t any SMB want to sign up for something that drives foot traffic into their store or restaurant?”

In theory, I agree. But the thinking falls apart with the reality that most SMBs don’t have the time, technical competence, and inclination to launch and manage these promotions. Plus, don’t forget the complexity of countless sales reps and new digital options flying at them from all angles. (…)

via Mobile & Location: Checking in on the Latest (Part 2) – Search Engine Watch (SEW).

What it means: Monetizing online “local” is very difficult. Even Google has had difficulties with it. The only ones who have been massively successful are directory publishers but they forgot to take care of users all these years. It’s difficult to monetize but not impossible. Just look at Groupon. And I think we’re starting to see savvier small merchants out there, who are starting to use the Web in a very strategic fashion. But it will take time.

Jon Brod: "Local is Not a One-Ton Gorilla, It is 2,000 One-Pound Monkeys”

Jon Brod, executive VP, AOL Ventures, was keynote speaker today at the BIA/Kelsey Marketplaces 2010 conference. He gave us a good update on AOL’s local strategy centered around Patch, the hyperlocal/citizen journalism initiative at AOL.

Highlights from his keynote:

  • Local is the largest opportunity YET to be won online
  • AOL’s five pillars: content, advertising, communications, ventures, local
  • Patch’s mission: to improve communities and the lives of their residents through information.
  • Patch consists of i) a scalable technology platform, ii) structured data, iii) professional journalists in every community
  • Monetization: i) self-serve ads 2) Ad sales reps
  • Operating Patch is 4.1% of the cost of a like-size daily newspaper
  • AOL will soon to relaunch City’s Best brand (was dormant)
  • AOL will soon relaunch MapQuest as well

Additional notes from Local SEO Guide:

  • Patch has grown from 3 markets one year ago to 41 communities on four different states.
  • They have a LocalFund to invest in local startups.
  • AOL on the record as investing $50MM in Patch and City’s Best this year.

Brod mentioned they had this quote about local: “local is not a one-ton gorilla, It is 2,000 one-pound monkeys”.

Twitter's Future According to Loic Le Meur

Loic Le Meur takes a stab at predicting Twitter’s future and lists 30 predictions on his blog. Here are some related to local media:

  • “It will reach masses of people”. Reaching masses of people means “mass media” but with a strong local tangent.
  • “Status updates will be open across social software. All social software will have status updates”. I make the same claim in the “perfect local media company” presentation I’m doing at the Local Social Summit tomorrow.
  • “We will laugh thinking we were updating them all manually. Location will be one of the most widespread status update”. From a local point of view, expect mobile devices to ping Twitter with our permission.
  • “Live reviews of any place and product will deeply influence it though”. Ah! Couldn’t agree more. This is the biggest opportunity and threat for traditional local media.
  • “Promos by brands and retailers will have big success for last minute deals”. This will be the core monetization model of real-time conversations and search for local media. Newspapers & coupon companies are already well positioned for this kind of product. Directory publishers not so much.
  • “Talking to shops and restaurants via Twitter will become standard and will get opt in coupons as we enter a shop, based on location”. This is the natural evolution for small businesses. First they will listen, then they will engage and offer promos.
  • “Hyperlocal news sites with Twitter geotagging feature”. Obviously, Twitter will be a powerful broadcast mechanism for local news.
  • “Google will have its own Twitter and won’t acquire Twitter”. This means traditional media publishers will have to contend with two (three if you count Facebook) major worldwide competitors (or coopetitors depending how you see the world).

Le Meur is also the organizer of the LeWeb conference happening in Paris in December. I will be attending the conference as an invited blogger.

Twitter's Future According to Loic Le Meur

Loic Le Meur takes a stab at predicting Twitter’s future and lists 30 predictions on his blog. Here are some related to local media:

  • “It will reach masses of people”. Reaching masses of people means “mass media” but with a strong local tangent.
  • “Status updates will be open across social software. All social software will have status updates”. I make the same claim in the “perfect local media company” presentation I’m doing at the Local Social Summit tomorrow.
  • “We will laugh thinking we were updating them all manually. Location will be one of the most widespread status update”. From a local point of view, expect mobile devices to ping Twitter with our permission.
  • “Live reviews of any place and product will deeply influence it though”. Ah! Couldn’t agree more. This is the biggest opportunity and threat for traditional local media.
  • “Promos by brands and retailers will have big success for last minute deals”. This will be the core monetization model of real-time conversations and search for local media. Newspapers & coupon companies are already well positioned for this kind of product. Directory publishers not so much.
  • “Talking to shops and restaurants via Twitter will become standard and will get opt in coupons as we enter a shop, based on location”. This is the natural evolution for small businesses. First they will listen, then they will engage and offer promos.
  • “Hyperlocal news sites with Twitter geotagging feature”. Obviously, Twitter will be a powerful broadcast mechanism for local news.
  • “Google will have its own Twitter and won’t acquire Twitter”. This means traditional media publishers will have to contend with two (three if you count Facebook) major worldwide competitors (or coopetitors depending how you see the world).

Le Meur is also the organizer of the LeWeb conference happening in Paris in December. I will be attending the conference as an invited blogger.

Why Social Media is Not Just About Merchant Reviews

Merchant review functionalities and sites are all the rage currently in the Yellow Pages industry. In the last 2 months, amongst others, we have seen:

  1. Truvo launch their own social site under the Truvo.com URL
  2. Eniro launch a beta social site under the Rejta.se URL
  3. AT&T Interactive announce the launch later this year of a social Yellow Pages site under a different brand than YellowPages.com
  4. Herold, the Austrian directory publisher, make an investment in Tupalo, a Yelp-like destination site.
  5. Canpages, the independent Canadian directory publisher, acquire assets from ZipLocal, a Canadian merchant review site.

Often called Social Yellow Pages sites, the biggest representatives of that category are Yelp (US, UK, Canada) and Qype (most of Western Europe). Both are independent, venture-funded companies. As of June 2009, more than 22 million people had visited Yelp in the past 30 days according to published internal numbers. Yelp users had written over 6 million local reviews. Qype had 9M+ unique users in May 2009 (+350% in 12 months) and 1M+ reviews.

Impressive usage numbers but an important challenge remains for these sites: monetization. For example, even though Yelp has been extremely successful from a user point of view, revenues are still low in proportion. Articles from 16 months ago mentioned Yelp’s revenues were “rumored to be sub $10 million/year” (I discussed Yelp’s monetization strategy here.)

On the other side, directory publishers, even though they’ve had for the longest-time advertiser-focused web sites, have been extremely good at generating revenues out of their web sites. For example, Yellow Pages Group (Canada) generated $C 247 million in online revenues in 2008. Over the same period, Pages Jaunes Groupe (France) achieved 471 million euros in online revenues. In the US, Yellowbook’s online revenues were up a spectacular 97.5% to $US 227 million in the last fiscal year.

Why is that? Yes, we could obviously underline the fact that these publishers represent trusted media brands, that they have large sales forces and that regular merchant contacts all play a big role in their financial success. But I would posit the moment in the consumer purchase decision process when online directories are used plays a bigger role in monetization potential.  Looking at the traditional decision process (see diagram below), online directories are clearly used when consumers are doing information search and evaluation of alternatives. Consumer reviews only happen at the end of the whole decision process, at post-purchase evaluation. Consumers will obviously look at past reviews as a proxy when doing information search but I don’t think it’s as attractive a real estate for advertisers.

buying_decision_process

Figure: Consumer Purchase Decision Process (source: Tutor2U)

I’m definitely not saying consumer reviews are useless from a strategic point of view. Consumers love to provide feedback and they love to read comments on merchants to make up their mind. I’m saying directory publishers should see reviews as one of the elements on which they build their social media strategy and one that happens at the end of the purchase cycle. It should be integrated within a more complete social media consumer purchase decision process strategy.

The filter of the consumer purchase decision process is very powerful to see who’s competing against you and to identify opportunities. Google, for instance, is clearly used by consumers when they do information search and comparing alternatives. This explains why the search giant from Mountain View is perceived as a serious threat by most directory publishers.

Enter Twitter and Facebook, the new juggernauts of the real-time conversation and real-time search world. Where do they fit in that purchase decision process? They’re definitely used for information search as well. If you search on Twitter for “Can anyone recommend” or “Looking for“, you’ll see that, every day on Twitter, thousands of people are asking for recommendations and advice. That’s why, by the way, we implemented a social media broadcast mechanism in our Praized-powered Local Answers module (used here by Yellow Pages Group in Canada) to send consumer requests to Twitter and Facebook. But I think what’s even more powerful with this new real-time conversation world is the fact that people are now actually expressing needs to the world. More than 100 people per day on Twitter say:

All these consumers are facing major life events (or know someone that are facing one) and are amazing advertiser leads for any publishers that can corral them. Consumers now want to express their needs/problems and have people/companies come to them with solutions. As I expressed in my “I have seen the future of local media” blog post, this is a new and important consumer behavior online. That’s why I believe every local media publisher will be introducing locally-relevant real-time conversation and real-time search tools within their Web sites in the next three years. That’s why I believe social media lead generation, customer and reputation management tools will become more prevalent in the next few years. That’s why publishers will introduce social ratings/reviews functionality to allow consumers to close the purchase loop after expressing needs and shopping for options. But be aware that Twitter and Facebook will certainly go after this market. This is probably the biggest opportunity directory publishers have seen since the arrival of the world wide web but it needs to be a complete strategy. Merchant reviews alone do not make a social strategy.

Local Businesses Starting to Advertise on Facebook

Bloomberg just published a short interview with Tim Kendall, Facebook’s director of product marketing for monetization. In it, we learn that small businesses seem to be embracing Facebook ads.

Facebook Inc. said the number of customers using its automated online-advertising system more than tripled in the past year, a sign more small- and medium- sized businesses are turning to the social-networking site.

The ads, which include text and photos, target users that might want to go to a local hair salon, hire a wedding photographer, or are close to buying other products, said Tim Kendall, Facebook’s director of product marketing for monetization. The service lets companies target users based on the information they put on their profiles, he said.

“You basically just have a greater diversity of people using our ad system — lots of businesses, lots of local businesses finding success,” Kendall, 32, said in an interview. “It’s really been a steady, successful growth pattern.” He declined to provide specific revenue data.

What it means: not surprised that early adopters in the small business community are creating ads on Facebook.  You can do great local targeting because many users have disclosed their location or city network. For example, in Canada, you can target over 1.3M people living in the Toronto area.  Additional targeting on age, sex, specific profile keywords, education, workplace, relationship status, and language allows for precise reach. For example, did you know 1,182,540 people have the keyword “travel” in their profile in the US? And you see your potential total “reach” in real-time in the targeting tool.

facebook ad targeting

Because Facebook advertising is performance-based, you only pay for clicks to your web site or Facebook page.  I suspect though the click-through rate must be low today and that it’s currently  a number’s game, i.e. get the ad in front of as many targeted people as you can.

In my humble opinion, Facebook’s current ad product is not optimal. It still does not leverage the social connections (what are my friends buying or suggesting) or the social intentions (what were your recent status updates about? Are you signaling an unmet need?). When the Facebook product team pushes forward with improvements like those, expect ads to become very interesting from a ROI point of view.

To provide an actual example to my readers, I found this Facebook ad from a Montreal-area flower shop called [praized subtype=”small” pid=”b81dda5d4408d50353047977e86d1b2dc0″ type=”badge” dynamic=”true”].

facebook ad flower shop

They describe themselves on Facebook as “a full service floral shop with over 40 years of experience”. They created an ad that points to their Facebook page.  I wonder what their experience with Facebook ads has been.

Twitter Business Model: Shopping?

Friday’s New York Times analyzes a quote from one of the VCs that has invested in Twitter. We learn that shopping and e-commerce might play an important in monetizing the social network’s product recommendation traffic:

Someday, when you ask your Twitter followers to recommend the most comfortable running shoe or the best digital camera, you might be able to go one step further and buy the product on the Twitter site.

E-commerce, including links to products and turnkey payment mechanisms, is a likely revenue stream for Twitter, said Todd Chaffee, a Twitter board observer and general partner at Institutional Venture Partners, which has invested in Twitter. (…)

Many companies are already on Twitter, monitoring what customers say about them and offering discounts and promotions to their followers. And many people use Twitter to ask for recommendations, like which type of gadget to buy or which movie to see. Since Twitter is already becoming one of the best shopping resources, Mr. Chaffee said, why not enable people to make purchases from the site as well?

“Commerce-based search businesses monetize extremely well, and if someone says, ‘What treadmill should I buy?’ you as the treadmill company want to be there,” Mr. Chaffee said. “As people use Twitter to get trusted recommendations from friends and followers on what to buy, e-commerce navigation and payments will certainly play a role in Twitter monetization.”

(seen in Mashable)

What it means: for Twitter, everything points in the direction of word-of-mouth monetization through shopping. E-commerce is a low hanging fruit given the strong existing affiliate program eco-system on the Web but the natural extension for Twitter will be local merchants (including services). And what is the equivalent of e-commerce affiliate programs for local? Possibly request-for-proposals and pay-per-call.

Update (June 22, 2009): Evan Williams, Twitter’s CEO, replied to the New York Times article and, according to ReadWriteWeb said “To be clear: Todd is a Twitter investor and a very smart and helpful guy. However, he is not actually on Twitter’s board and, in this article, he’s brainstorming on his own. These are not in the least bit concrete plans of the company.” I’m still convinced they will go in that direction. It’s a completely natural evolution, whether they want it or not… 🙂

If interested, follow me on Twitter at @sebprovencher

Qype: "People + Algorithm Better than Algorithm" (EADP 2009)

Heard from Stephen Taylor, [praized subtype=”small” pid=”e05a4250d652484974e47fda5bd84b6b” type=”badge” dynamic=”true”]’s CEO, this morning in a presentation titled “Competition from new business models”. As most of you know, Qype is a social local site in Europe (we could say it’s the equivalent of Yelp there).

Here are some interesting data points about them:

  • The largest local review site in Europe (also present in Brazil) – 6 languages
  • Reviews in 140 countries (I think they allow anyone to add listings from any country)
  • 9M+ unique users in May 2009 (+350% in 12 months)
  • 1m+ reviews
  • They monetize using display advertising, Google AdWords, eCom and transaction revenues and premium business listings

As Taylor said, their business leverages the fact that anyone with a keyboard is now an author, that anyone with a browser is a publisher. With the rise of social media, presentation of facts/data is not enough to sustain an audience. It’s now about sharing, community, connecting with other people. I think he described it perfectly when he said “people + algorithm is better than algorithm”. Today, we’re in the fourth phase of the evolution of search (he calls it social search) which includes editorial, automation and topology.

As for future developments, Taylor offered the following advice: recognize where audiences are and he mentioned the long tail of the Web (smaller sites, blogs, forums, etc.). He said that’s where people are connecting. Qype is ready for those new opportunities via their open API currently in v1 (which exposes geo content). v2 will allow content to be written.

What it means: I think Qype is a very interesting company. They’ve been able to corral the voice of the European consumers. I agree with the future direction, of trying to embed yourself in smaller web sites. I was a bit disappointed by their monetization strategy. I was hoping they would have been further ahead in terms of sources of revenues.