LocalMobileSearch

Much has already been written about Siri, the app turned “intelligent assistant” that Apple embedded into the iPhone 4S – and will presumably integrate more broadly into iOS in the future. Siri is one of the surprising factors behind the success of the 4S, which initially received a lukewarm response from many critics because of its too-similar appearance to its immediate predecessor.

Unlike other voice apps and services that came before it, Siri has managed to captivate people’s imaginations and even become a source of national news and controversy. It has also spawned imitators and “me-too” apps that aspire to similar capabilities but don’t execute anywhere near as well.

Like other new Apple product launches Siri is starting to broadly impact user expectations and the competitive landscape. Together with Microsoft’s introduction of voice control on the Xbox this week Siri creates a new standard for “natural user interfaces.” At a recent search conference someone remarked, “Voice is the new touch.”

As the report below discusses, Siri represents a kind of breakthrough moment for speech -- not in terms of back-end recognition technology necessarily but in terms of consumer awareness and adoption.

Siri is far from perfect, however. Right now one of its great weaknesses is, ironically, “local search.” We say that because Siri began its life in early 2010 as a voice-enabled local search tool. Today most of Siri’s local content comes from Yelp. Otherwise the local functionality is quite "thin."

Apple has stripped out pre-existing “transactional” capabilities present in the app before Apple bought the company. Those transactional capabilities hint at Siri’s future and how its role will likely expand. One version of that future is “search without search results.” And though it’s not true today, Siri and third party apps (and APIs) could ultimately displace conventional search engines on the iPhone and completely reshape how we think about and conduct what we today call “mobile search.”

If there's one development that is forever changing the local market it's mobile. A number of years from now we'll look back on the period between 2007 and 2012 as a seminal one that transformed the Internet and how people use it. However there are a number of other related trends in local that will have a powerful and lasting impact as well. 

I recently gave a keynote address at the Local Social Summit in London (November 9-10). Now in its third year it's a unique local event that brings together North Americans and Europeans as well as various perspectives and disciplines in an uncommon, intimate setting. The quality of the discussion is extremely high.

The attached slides are a slightly modified version of my presentation at the event. While it doesn't have the benefit of my commentary they're fairly self-explanatory and seek to point out the "big trends" affecting and confronting the local marketplace right now. I identify and try to elaborate several key developments: 

• Growing awareness and demand for local marketing (especially among brands)
• The continued growth of mobile and the rise of tablets
• The importance of social media and the "now what? problem" for SMBs
• The proliferation of local data
• The arrival of mobile payments and "real world analytics"
• The movement from ads to "transactions" for SMBs

We'd be happy to discuss any of this in further detail with clients that are interested. 

Anyone reading this already knows how quickly mobile is growing. Very soon the US market will see 50% smartphone penetration; and there are already more than 100 million US mobile Internet users. Mobile ad spending in North America has now cracked the billion dollar threshold.

Google is at the center of these trends. Now at nearly 44 percent, Google's Android platform could reach 50% US smartphone market penetration by the end of the year.

The company also recently released two additional, striking pieces of data. Google now says it has $2.5 billion in mobile ad revenue on an annualized basis and that 40% of mobile queries are "related to location." This new data point goes beyond Google's previous statement that 33% of mobile queries were local, and represents billions of searches on an annual basis. 

On the PC Google sees roughly 11.1 billion US search queries per month on the PC, with local queries representing 20% of that volume. But what are the mobile numbers and associated revenues?

The attached presentation explores these issues and estimates Google's mobile query volumes and its related local-mobile search ad revenues.

Smartphones are outselling PCs and tablets are on the rise. Within 3-5 years there will likely be more Internet access on mobile devices than on PCs. That's certainly going to be true globally if it doesn't come to pass in North America in that timeframe.

By several estimates there are already 100 million mobile Internet users in the US market. And there are many more mobile subscribers than PC Internet users overall. With the US and Europe nearing 50% smartphone penetration, local search on mobile devices must be top of mind for local media publishers and directory publishers in particular.

Local lookups on mobile devices range from one-third to one half of all queries. There’s also a sea of largely untracked local queries on smartphone apps, numbering in the hundreds of millions each month. Accordingly, mobile is a critical platform for local publishers and advertisers. But can publishers simply reproduce their online offerings in mobile form and expect to succeed -- or should there be a dramatically different and more “vertical” approach?

Every yellow pages heading could conceivably become a mobile app. However that doesn’t mean it should happen. What headings should be developed as vertical apps? And how should the traditional publisher brand positioned in a vertical context, if at all? Where does additional, “rich content” come from?

The attached 59-slide presentation explores these issues and attempts to stimulate thinking and provide guidance in addressing pressing mobile strategy and tactics choices confronting local media publishers.

Deal mania is in full swing. Already a multi-billion dollar industry after only a couple of years, daily deals have captured the attention of traditional publishers, media companies and a host of online competitors. The phenomenon has also exposed the value and potential of the local market to those who didn’t recognize it clearly before.

The fast-growing deals segment is not without challenges and problems, however. Skeptics and detractors question the value of the deals product for local merchants as well as the sustainability of the model in general. As consumers and increasingly savvy “deal seekers” gobble up aggressively discounted offers, an expanding army of telephone sales reps seeks to capture local merchant marketing dollars. Accordingly, many small and medium-sized businesses (SMBs) receive multiple calls per month (even per week) from an increasing array of deal sites and vendors.

Many local merchants are attracted to the tangible and low-risk nature of the daily deals model (“customers not clicks”). However many have also been burned by a lack of education and planning. While some SMBs have enthusiastically embraced daily deals, even shifting budget from other marketing channels, a vocal minority is now speaking out against daily deals as bad for merchants.

Notwithstanding these critiques, daily deals are here to stay. They build upon Americans’ long-standing love affair with coupons and retail sales. Coupons and discount offers, more than other forms of advertising, have a proven ability to influence consumer behavior, according to several studies conducted by the National Retail Federation and BIGResearch.

While the consumer behavior behind the daily deals phenomenon is well established, the specific daily deals product will necessarily evolve and change. Competitive pressures, merchant demands and fickle consumers are forcing an evolution even now. A kind of “land grab” is underway. Deal providers are trying to build scale and position themselves to own as much of the value chain as possible. With relatively few barriers to entry, a host of companies has joined the deals fray.

Just in the past year deal competitors have mushroomed to more than 400 vendors and sites. The current market cannot sustain 400 providers, however. Most companies without sufficient scale or a dedicated niche will be marginalized in the near future. Winners and losers will likely emerge over the next 18 months. Indeed this period will be pivotal in determining the nature and structure of the US deals market going forward.

Facebook and social media are looming larger in the minds of small business (SMB) marketers and advertisers. In our recent SMB marketing survey (n=8,456) we found that more SMBs were using Facebook to promote themselves than any other site or service. This doesn't mean that they're buying Facebook ads, however. What it does mean is that "social media" are clearly on the agenda for SMBs. 

While social media are considered by some to be on the cutting edge of online marketing, more than 65% of the 8,456 respondents to the survey rated themselves "neutral" or "not savvy" on a marketing sophistication scale. Rather than for their viral capabilities or sophistication, one of the primary attractions of social media platforms, such as Facebook or Twitter, is that they're free. Indeed, 72% of these survey respondents say they spend less than $5,000 per year on all forms of marketing and advertising -- online and off. 

In this context it makes sense that the single biggest complaint among these respondents about online marketing is that it is "too costly." That also partly explains the why the "Groupon model," with its no upfront costs and guarantee of customers, holds such appeal for these small marketers. Yet there was also considerable ambivalence among those in our survey that had actually used daily deals, with a substantial number saying they would not do so again.

The survey was fielded between 1/22/11 - 2/3/11, using MerchantCircle's member database. There were 8,456 total responses with 75% from SMBs with 1-4 employees. The slide presentation below presents the basic data; reports discussing the findings will follow.

During its third quarter earnings call Google announced that it had achieved a $1 billion mobile advertising run rate. The figure stunned many people and caused several forecasters to revise projections for mobile advertising. For example IDC, which had neglected to accurately size the mobile search-ads market, revised its figures and estimated that Google now controls 59% of US mobile advertising (search + display). All others combined control the remaining 41%. 

If the numbers are anywhere near accurate it's amazing. Though the mobile market is still young the data reflect that Google is already dominant in multiple segments, including consumer search and advertising -- bolstered by the $681 million AdMob acquisition earlier this year. And Android, one of the chief engines of Google's success, shows no signs of slowing down. 

The following slides provide an overview and snaptshot of Google's position in the mobile market today. The presentation includes a roundup of Google's mobile products, performance and market share, as well as a range of data. Finally it offers some predictions about next year and beyond.

For several years a number of startups have been trying, with mixed success, to bring local product inventory data online and make it accessible to consumers on the Internet. Despite the growth of e-commerce, more than 95% of all consumer purchases in the US take still place offline. However the Internet influences a growing percentage of those purchases. In some product categories more than 90% of consumers have done online research before buying locally – offline.

There’s almost no question that Internet users are interested in local product inventory data. And the online distribution of that data offers retailers the opportunity to use the Internet (and smartphones) drive in-store traffic (or “footfalls”). Yet the complexity and challenges of acquiring product inventory data at scale have proven daunting, especially where small retailers are concerned.

Companies such as Krillion, NearbyNow (recently acquired by JiWire) and ShopLocal have been working on the problem in different ways for the past five years. They have now been joined by a new crop of startups: Milo, Retailigence, Goodzer, LuckyLocal -- and a little company named Google.

The entry of Google is significant and lends new credibility and new momentum to the segment. Local publishers now need to have position on products and consider whether they will play in segment or cede it to others. In the US, SuperMedia, AT&T and Yellowbook have taken small steps toward integrating local product data, as have Sensis, Eniro and European Directories in Australia and Europe. None of these directory implementations has been particularly compelling or effective so far, however.

There are skeptics who believe that local product inventory online is still more hype than reality. But the advent of smartphone shopping and the entry of Google and several new startups into the segment together suggest local product inventory online may be at something of a turning point. The following presentation examines the opportunity and challenges from consumer, publisher and retailer perspectives.