LocalMobileSearch

In the past few months there have been some fairly dramatic shifts in the local search landscape, especially in mobile. To most local competitors it may not seem that things have changed because most of the changes have yet to fully materialize. But they are coming and have potentially serious implications for the competitive environment.

The following have happened or been announced since May, 2012:

• Google+ Local (replacing Google Places)
• Apple Maps and expanded Siri “assistant” functionality
• New visibility and importance for Yelp reviews via Apple and Bing relationships
• Android “Jelly Bean” with virtual assistant, Google Now and new “cards” replacing the traditional SERP

What these developments suggest is a future in which Google and Apple (with Yelp) dominate local business lookups on mobile devices. All this comes as increasing volumes of traffic (15% to 30%) are mobile, and many local publishers look to mobile for growth or to compensate for flat or declining growth on the PC. Yet Apple’s entry into local search and Google’s recent Android Jelly Bean-related local search enhancements emerge as potentially major roadblocks to those consumer-growth strategies.

Both Apple and Google are introducing new capabilities, content and user experiences around local that are compelling and generally beyond what most local publishers are capable of developing themselves. These services marry voice, maps, local business information and POI data with reviews and other rich content. They also have the advantage of being integrated at the operating system level. All this creates a number of heavy barriers to competitors. Indeed, we’re seeing the beginnings of what could become a kind of “duopoly” in local-mobile search.

The long awaited “year of mobile” is finally upon us. Approximately 85 million people access the mobile Internet (in the US) on a daily basis. Consumers now spend more time with apps than on their PCs. And consumer response to mobile ads is typically stronger than to PC ad campaigns.

Local is the “sweet spot” for mobile advertising, with a majority of users expressing a preference for localized ads. But local targeting can be challenging and elusive. Mobile ad networks offer different definitions of “local” and some even misrepresent their capabilities. Despite the capacity of smartphones to precisely locate their owners in space and time, most networks can’t match that precision for ad campaigns.

We wanted to test the hypothesis that local targeting improves mobile ad performance with a real-world "apples to apples" comparison. Accordingly, we ran the identical hotel ad campaign on three major mobile networks and two specialized local-mobile ad networks to compare performance. The attached report contains the complete results of the study. 

One local ad network came out on top; the other did not. The campaign also revealed the importance of multiple forms of tracking and how online impression and "CTR" metrics are not enough to capture and communicate true mobile ROI.  

Small businesses (SMBs) continue to embrace social media but with mixed results, and more of them are developing mobile websites. They value of ranking in search (read: Google) results more than any other single form of online marketing. And their top complaint about online marketing is that it's "too costly." 

The attached slide presentation contains the results of a Q4 SMB marketing survey we conducted. It's a follow-up report to the Q1 Small Business Marketing Survey Results we released last year.

The online survey had more than 2,000 SMB respondents. Here are some of the top-level findings: 

• The majority of SMB respondents spend less than $5K total on marketing annually
• Nearly 40% of SMBs are receiving at least 6 sales contacts per month
• Social Media the most widely used marketing channel and, though mixed, seen as generally effective
• SEO is the most valued single channel by SMBs
• The majority of SMBs who had tried Facebook Ads would do so again
• 75% of SMBs who had offered a daily deal would do so again
• Since Q1 there has been a jump in the number of SMBs with mobile websites
• The biggest complaints about online marketing are that it's too costly and there's not enough time to do it well

The survey explores general online marketing trends, use of social media, deals and mobile. While no single survey should be seen as defnitive, it contains some very interesting findings that reflect the challenges, fragmentation and complexity of the online marketing landscape for SMBs today.

Over the past several years a growing body of qualitative and quantitative evidence has shown that digtal ads and marketing messages with “local relevance” provide a lift and perform better vs. non-localized marketing. According to one survey from Q4 2011, 80% of consumer respondents prefer ads that are locally relevant.

Such ads are consistent with the way the majority of consumers use the Internet. They conduct online research before mostly buying offline.

While e-commerce has grown into a $194.3 billion market (in 2011), total US retail last year was worth roughly $4.2 trillion. In other words, 95% of US retail spending was in traditional stores. Beyond this, the services economy is worth about $11 trillion. All but a very tiny sliver of that spending is offline -- or local. 

Indeed, roughly 80% of US disposable income is spent within 10 to 20 miles of home. However, an increasing percentage of all this offline spending is shaped and influenced by the Internet, now extending to mobile devices.

For many years local online marketing existed as a kind of curiosity or was associated exclusively with small businesses. However as the evidence piles up it’s clear that localized advertising is applicable to all market segments.

Locally relevant ad creative and messaging more directly address the majority "research online, buy offline" buying pattern. This report and a companion slide presentation compile numerous examples and data to conclusively show why and how localized ads outperform everything else.

Notwithstanding the record growth of e-commerce this holiday season -- now approaching $25 billion in the US -- roughly 95% of retail purchases still happen in stores. In addition, the multibillion dollar SMB-dominated services industry exists in a predominantly "offline" world, in terms of fulfillment. But more and more consumers use PCs, laptops, smartphones and tablets for digital research before buying locally.

Local digital advertising has always been difficult for everyone in the ecosystem. Media buying and campaign measurement challenge national brands and agencies, as they confront a fragmented local media environment and generally can't (or don't) measure the offline impact of online campaigns. Small businesses confront complexity and confusion about what to buy and what's effective. The story is familiar to anyone operating in the local digital media space.

As suggested, the dominant paradigm for consumers is shop online, buy offline ("SoBo"). One would thus assume that advertisers would "get" how important it is to connect online shoppers with stores and locations where they can buy products or obtain services (in addition to showing them e-commerce options). But many marketers, remarkably, still focus almost exclusively on e-commerce, which is significant but ultimately a much smaller opportunity.

One problem is that many marketers simply don't "see" the offline impact of online ads. In addition empirical evidence of the online-offline effect has been lacking. There's really never been conclusive evidence of the efficacy of localized online media vs the broad reach of "generic" or national advertising, which is easier to buy and create. If localization has existed it has typically been on "page 2" or the landing page in the form of store locators. (Small businesses are somewhat different because they typically operate in single markets.)

In the attached presentation we compiled evidence from numerous sources (some of it previously unpublished) that shows localized ads outperform “generic” national ads. It makes the case for localized ad creative. Indeed, consumers generally consider ads with localized content more relevant and respond accordingly. These data show that without question. 

The results of the various tests, studies and cases presented in the slides show that the "Local Lift" is also directionally consistent across digital ad platforms: geotargeting and local ad creative boost engagement and ad performance in display, search and mobile. 

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.