“Google+ is all about protecting its search business” – Robert Scoble

Commenting on a recent Google+ story on Techcrunch, Robert Scoble wrote : “I believe Google+ is all about protecting its search business. It is scared that Facebook is going to become a search engine. It already sort of is. A lot of people are moving behaviors over to Facebook that they used to do in search. Instead of Googling “sushi san francisco” we’ll just ask our friends “hey, where’s the best sushi in San Francisco.”

What it means: Looking at this through the filter of the consumer purchase decision process (see below), this is extremely significant. By expressing needs/problems in social media and having people/companies come to them with solutions, consumers bypass “search” and go straight to purchase. This is a serious threat to companies like Google who have built a huge ad business based on search.

Twitter: the Next Five Years

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!

John Battelle: Small Businesses are Driven by Local, Social, and Real-Time

Late on Friday, John Battelle wrote a long post about Groupon and what’s driving its success. As always, when Battelle writes about local media, he hits it on the nail. The following is also very enlightening as he talks about small business owners:

First, small business owners (SBOs) care deeply about location. Are they in a good location? Will customers be able to find them? Is there parking? A good neighborhood? Strong foot traffic? Second, SBOs care deeply about relationships and word of mouth or what we will call social. Do people refer their friends and family to the business? Are people happy with the service? Will they say nice things? Third, SBOs care very much about timing what I call “real time” in my MOLRS breakdown. What are the best hours for foot traffic? What are the best times to run promotions? How can I bring in more business during slow times? How does seasonality effect my business? When should I have a sale? In short, SBOs are driven by local, social, and real time.

What it means: Battelle could have mentioned the temporal Web instead of real-time and he would have written about all my current favorite topics (I recently published a presentation about the potential of the temporal Web). I think these three elements bring about structural changes in the way we do local business. Make sure you have incorporated these in any local media strategic plan.

With our Needium customers, we’re finding the exact same thing. Small and medium-sized businesses definitely care about local (no-brainer), social (word-of-mouth, followers/fans, loyalty, conversations) and real-time (meeting customer’s needs when they have them, answering questions).

Introducing Needium – The Social Media Lead Generation & Reputation Management Dashboard for SMBs

Four years ago, around this time of year, Praized Media’s co-founders got together for the first time to discuss the possibility of launching a startup. We were very excited about the blogosphere and the quantity of local content being created in this new space. We thought there was an interesting business to build at the intersection of local search and local conversations happening in blogs. The first products we released (two years ago, almost to this date) were local directory and editorial tools that can be integrated within WordPress and MovableType, two leading blogging platforms. We also launched a Facebook application. All of those tools enabled structuring and aggregating of local conversations around merchant profile pages.

Turns out we were right about conversations but wrong about where and how the bulk of them would take place. We didn’t foresee the rise of the statusphere. In 2006-2007, the place where local “conversations” were happening was definitely blog posts (and associated comments) and consumer reviews in sites like TripAdvisor and Yelp. Fast-forward to 2009-2010, the blogosphere still exists but local conversations are now happening on Twitter and on Facebook, mostly in status updates. Check-ins are also part of the conversation and are being used in Foursquare, Gowalla and other location-based social networks. Social media (Facebook, Twitter, etc.) is now a mass-market. Facebook has close to 500 million monthly active users. Twitter has rocketed to 190 million monthly users, writing 65 million updates PER DAY!

Pew Internet said in October 2009 that 19% of Internet users now say they use social media services to share updates about themselves, or to see updates about others. That’s a huge number! It dwarfs consumer reviews and check-ins by a large factor. And according to a recently published ComScore report quoted by Brian Solis, “23% of Twitter users follow businesses to find special deals, promotions, or sales. Of that, 14% of Twitter users reported taking to the stream to find and share product reviews and opinions.”

Last year, I also discovered local user reviews are not that exciting from a monetization point of view as they happen at the end of the consumer purchase decision process, at post-purchase. The real money is earlier in the process, when consumers realize they have needs and when they start doing the research. I wrote about this in July 2009. And can you guess when business directories are being used most often? When consumers have needs (“I need to order take-out”) or are going through life events (“I’m getting married!”), early in the consumer purchase decision process.

When we built our real-time local activity stream and real-time local search technology last summer, it allowed me to see the enormous quantity of “local” information being publicly shared on Twitter and Facebook. Millions of consumers are now sharing activities and opinions about local businesses using Twitter and/or Facebook. They are also expressing needs such as “I’m hungry”, “My car just broke down” and “Does anyone have a dentist to recommend?”, even in smaller cities. I coined a new name for this: the “Needium” (the “need” medium). Local businesses would definitely benefit from hearing the voice of the consumer and engaging with them but these activities are happening on many sites and can be hard to discover through the noise. In addition, small and medium-sized businesses (SMBs) are extremely busy. Realizing this, we rolled up our sleeves and came up with this new game-changing product:

Introducing Needium.com

Needium.com (http://needium.com) is the social  lead generation and reputation management dashboard for SMBs. Needium monitors social media sources and detects business opportunities based on local user needs and life events. It also listens for merchant name mentions to enable reputation management functionalities. Needium aggregates and structures that information in a Web-based dashboard where merchants can log-in to easily join conversations (and more) without having to monitor all social media sites individually. Based on merchant information in our structured database, a series of pre-configured results are automatically created for them, using their location, categorization and some user social actions collected from publicly available social media activity streams.

Take for example, this account for a Holiday Inn hotel in Boston:

The left-hand side column, Opportunities, is where merchants will find the latest business opportunities we have discovered for them. If advertisers feel the opportunity is interesting for their business, they can communicate directly with the consumer using the “reply” button. In that column, they’ll find consumers asking explicitly for their products and services (see screenshot below) or find implicit statements as well. For example, a traveler from a different city saying “I’m going to Boston in 3 weeks” will potentially need a hotel room and might patronize restaurants and museums. In each status, we show the user name, the status update, the time when it was made and the source. We use a combination of verb and noun synonyms, taxonomy and semantics to identify these opportunities.

Hotels in Boston (Needium) - 2

The middle column, Mentions, is where SMBs will find references to their business name. If they feel they need to reply to the comment (to correct an issue or thank a user for their comment), they can communicate directly with the consumer using the “reply” button. Again, we show the user name, the status update, the time when it was made and the source.

Hotels in Boston (Needium) - 3

The third column, History, is where you find the various replied done by the merchant. When you click on “reply”, a light box pops-up (see below). Merchants can then type in their message/reply and hit “send”.

Hotels in Boston (Needium) - 4

Each column comes with its search box, enabling merchants to search for specific opportunities or mentions using particular keywords.

The business model is simple: monthly fixed-fee subscriptions. The product will be available in self-service and in white-label to leverage large sales channels like Yellow Pages, search engine marketing firms, newspaper publishers and other local sales channels. Additional services available are Twitter and Facebook accounts creation and a fully-managed service where we take care of the SMB communications with consumers on Twitter and Facebook (think of it as “community management” in a box).

We believe reputation management is now a commodity, a must-have in social media filtering but that the real big opportunity is in social lead generation. Our Yellow Pages experience and expertise helps us find and surface the real SMBs business opportunities happening in social media. We think the current quantity of leads is just the tip of the iceberg. We are already working on better semantic analysis, social hints as well as a few other techniques to get an even better signal out of the noise. With that improved analysis, with more people signaling their location every day, with usage growth, hundreds of local opportunities per day in most major Yellow Pages categories will be made available. This is the true evolution of word-of-mouth marketing and tremendous value will be created by channeling this “local voice of the Internet”. As we’ve stated before, we believe local conversations on the Web are the great local search disruptor and we will be happy to work with you to empower you to capture these new revenue opportunities. If you’re interested in a test account, please contact me at sprovencher AT praizedmedia.com. You can also follow Needium news on our Needium-specific Twitter account.

Craig Newmark on Trust and Reputation

People use social networking tools to figure out who they can trust and rely on for decision making. By the end of this decade, power and influence will shift largely to those people with the best reputations and trust networks, from people with money and nominal power. That is, peer networks will confer legitimacy on people emerging from the grassroots.

via cnewmark: Trust and reputation systems: redistributing power and influence.

Update: Newmark recently told Mathew Ingram “that managing trust and reputation online was “the next big problem for the web,” and called some form of distributed trust system “the killingest of killer apps.””

What it means: this trend is a key building block for word of mouth and recommendation systems.

Craig Smith: We’ll see more change in the next 2 years than in the last 10 years

Craig Smith, CEO of ServiceMagic, just finished his keynote address the BIA/Kelsey Marketplaces 2010 conference. His business is definitely impacted by the rise of social media given the importance of word-of-mouth in service providers recommendations. ServiceMagic has embraced social features early on with merchant reviews but is now getting into Question & Answers and neighborhood group buying. He issued a call-to-arms to the industry saying that we (the industry) need to deliver more value. How? He suggests the following four points:

  1. Take risks
  2. Disrupt our current business models
  3. Invest in long term value creation
  4. Invest in deeper relationships with customers

He concluded by saying we would see more change in the industry in the next two years than in the last ten.

Dave Swanson: "Facebook and Twitter are Both an Opportunity and a Threat to Directory Publishers"

This is a post about the Kelsey Group’s DMS ’09 conference which happened last week in Orlando.

Dave Swanson Photo

Day two of the DMS ’09 conference saw a brilliant keynote from Dave Swanson, Chairman and CEO of R.H. Donnelley (RHD). After hearing sobering thoughts from European Yellow Pages leaders at the EADP conference in May (see The Wake-Up Call: “Unless We Change, on the Long Run, We Are Doomed to Disappear” (EADP 2009)), I was really looking forward Swanson’s keynote given the situation RHD found itself in (they filed for Chapter 11 protection in May) after having an amazing stock market ride in the last few years. the Kelsey Group “wanted someone who has had his butt kicked” for this keynote, someone who could explain what happened and what’s ahead for the industry and he didn’t disappoint.

Here’s what happened according to Dave Swanson:

  • The economy
    • “It changed everything for everybody. If you look at the timing of ad sale declines, it compares exactly with the economic contraction. If you index Google’s financial results with RHD’s, you realize they have suffered as well. We’ve seen broad-based sales compression. We had enjoyed the longest growth period in history, but it created unsustainable bubbles: housing bubble, advertising bubble, credit bubble (with mergers & acquisitions and leverage buyouts). It was an unsustainable situation because we needed to refinance regularly. There was no money left after the financial bubble burst. When I’m asked “Dave, do you regret this strategy?”  I answer, “no, absolutely not. RHD might not exist today.” “
  • Secular changes
    • “Print competition is intense. We keep pointing out the shortcomings of each other’s products. Other local media companies (i.e. newspapers) pitch “against” Yellow Pages also. Media Fragmentation didn’t help as well. Finally, the media trumpeted “no one uses the Yellow Pages anymore” and we became an “environmental hazard” for a segment of the population. We have been very good at shooting ourselves in the foot.”
  • Execution
    • New products did not deliver and had a high rate of churn.

Where are we?

  • “I hope the freefall from the economy has stopped but I think that we’re a long way to go before “main street” joins the current Wall street rally”
  • ” We need multi-platform solutions, more creative pricing, more transparency”
  • “Competitive environment is intense. We could see a shake-out. For RHD, the worst is behind us. Financial house must be in order.”
  • “We need to challenge the premise of our business”. He gave as example: “do we need separate Internet Yellow Pages platforms and ventured to answer “I don’t think so”.
  • “We will never dominate consumer usage as we did in the past.”
  • “We need to become have a service-centric model vs. product-centric model.” RHD’s objective is to be the number one provider of directional services in the eyes of the SMBs in the market they serve. Yellow Pages publishers are provisioning more keywords on search engines with small businesses than anyone else. Because of the channel, this has been a natural extension of their existing product.
  • “Execution hasn’t been very good, but we’re getting better and we’ll dominate”
  • “Publishers have to look at micro-strategy, geo-vertical opportunities. It’s not one large homogeneous search business.”

Swanson observed it would be very easy to be pessimistic but his philosophy is that when things are going very good, something very bad is about to happen and vice-versa. The next several years will be all about climbing out of the hole but “it’s going to be a hell of lot more fun than the last two years”.

Following his keynote, I sat down with Dave Swanson for an exclusive interview.

On print innovation

I asked Swanson if he thought there was innovation left in the print product, what he thought a print product would look like in 5 years. He said he thought the print book really works in smaller markets and that he didn’t see much change needed there. But he confirmed he thought the format wasn’t right for urban centers. He suggested limiting geography (smaller scopes), having more relevant information in the books (possibly a subset of headings instead of all of them) and more specialty products. But he also added Yellow Pages were not supposed to be glamorous. They have to be efficient.

On online innovation: verticalization & micro-strategy

I then asked RHD’s CEO where he thought DexKnows.com, their main online property, was going. He said he was extremely happy to have Sean Greene heading their RHD Interactive division (I interviewed Sean a few months ago), bridging print and online culture. He mentioned DexKnows’ future lies in two directions: verticalization and Micro (which I would call hyperlocal)

Verticalization is the improvement of high-potential verticals within Dexknows.com. It means depth of content, aggregate categories/headings and a combination of expert and user content. He gave the example of “wedding” as a meta-category, an interesting vertical.

Micro is recreating a community, a subdivision, a neighborhood within Dexknows.com (or maybe more “local” brands. He wasnt’ allergic to trying other online brands for this initiative). User recommendations would play a big role there. When asked about aggregating hyperlocal information that’s not directly merchant-related (classifieds, neighborhood information, municipal government info, etc.), he remarked that a lot of community information already appears in the print Yellow Pages and said there’s no reason why it shouldn’t appear online.

On social media

Swanson acknowledged that social media has the potential to be a big disruptor in local search (which made me very happy as I’ve been saying that for a couple of years). He called social media “word of mouth on steroid”. He confirmed that Facebook and Twitter are both an opportunity and a threat to directory publishers.

On combating the negative industry press

RHD’s CEO wasn’t too optimistic about industry-wide efforts to combat negative press. He suggested we change the way directory publishers market themselves and start talking to SMBs more to improve their image (instead of doing consumer advertising to garner usage).

What it means: perfect tone for the Swanson’s keynote. Things are not going as well as they used to in the Yellow Pages industry and it doesn’t serve any purpose to hide it. “We will never dominate consumer usage as we did in the past” is most realistic statement I’ve heard in industry recently. At the same time, the industry has tremendous assets it can leverage starting with the direct relationship publishers have with small advertisers. Very happy that RHD is looking at improving the print product in large urban areas. I believe there’s a lot of leg left in a print product that’s tailored to an urban consumer. Ecstatic that Swanson is talking seriously about social media. I sometimes felt like I was preaching in the desert in the last two years… We’ll have to follow RHD closely as they come out of Chapter 11 in the next few months.