No. 758
December 7th, 2010

Live Blog from Kelsey Interactive Local Media (ILM) 2010

We are live here in “beautiful” Santa Clara, CA.  Already missing the rain that I left in Portland this morning.  But I’ll get enough of that through the winter I’m sure.

I’m truly looking forward to hearing what the rockstar panelists have to say today, tomorrow, and Thursday…last year’s show was one of my favorite conferences ever.  I’ll be in-and-out of meetings for the whole conference but will do my best to keep up with as many panels as I can and will follow-up with a full recap this weekend.

You can follow the Twitter convo at #ilm10.

10:15am – Continuing the rockstar theme, “Buono” kicks the conference off by introducing some of the Kelsey Group and some general business observations about the Local space.  “Disruption in the ecosystem” is happening.

10:25 am – Neal Polachek and Matt Booth take a look at the Local space on a Macro level.  The Local Ad market has actually contracted by $20 Billion in the recession.  Even in 2014, it’s not going to get to the level it was in 2014.  The total ad market will contract as it moves online from offline, not at a 1:1 ratio.

10:30am – Wow, 2010 Local Online ad spend is only 6.9% of the $133.3BN pie.  Mobile only 0.3%.  However, the market might be coming back faster than Kelsey anticipated.  Matt McGee gets some love (OK not really), but his TRUST Pyramid Metric is perceived as key by Polachek, from B2C, B2B, etc. The clarity of what you are offering is the key when you are selling to SMB’s. Self-serve might have fallen short to date because it is too complex for them to navigate.

10:35am – The ‘net is the social Rotary club.  90% of online users trust business recommendations from people they know.

10:38 am – 2008 — YP’s were dominant channel for SMB audience in terms of who has the relationships with those businesses.  Associations like BBB, Chambers, etc were #2.  Google was #3 with Paid Search.

10:40 am – 2008 – 32% of businesses intend to build a social media page in the next 12 months.  44% of businesses less than three years old.  Assumption is Facebook. 2010 – 48.5% of businesses surveyed actually built a page on Facebook in last year. Amazing for Self-Serve market. FACEBOOK HAS OVER 4MM SELF-SERVICE RELATIONSHIPS. Came out of nowhere.

10:42 am – Power of reviews–bad PR -> negative reviews -> formerly popular sushi shop in Santa Clara out of business within 10 days.

10:46 am – Most check-ins are not going to occur in the big $$ verticals.  However, certain businesses (mobile food carts) can do extremely well via Twitter/Foursquare.

Jeremy Stoppelman Keynote

10:50 am – Jeremy Stoppelman of Yelp takes the stage. Yelp analyzes word-of-mouth recommendations to help searchers find the best _______. Yelp has 14 Million reviews now (up from 8MM at start of year). 8% of Yelp is home and local services.  50% of market is restaurants and retail, however. Yelp is in a lot more markets now, both domestically and internationally.  39MM monthly uniques, up from 26MM monthly uniques.

10:53 am – Monetization.
1) Enhanced listing with videos and slideshows.
2) Adwords look-alike on both CPM and CPC basis.
3) Groupon look-alike/Deals.
End of business update.

10:55 am – Where is Yelp getting its traffic? Google, Yahoo, Bing, Facebook. Place Search impact: Yelp has seen the writing on the wall and is not relying on Google traffic forever.

Massive shift to Mobile.  Clip of Steve Jobs talking about APPS as Mobile “Search.” This is where the opportunity for advertising is. Local information is way more critical when you’re on the go than at your desktop.

Yelp is now getting into Sentiment Analysis and pulling review highlights on its Mobile App.  Jeremy is big on augmented reality for mobile.  Knowing about a business before you actually go in it.

A business is called via the Yelp app every 5 seconds.  2.6MM monthly unique visitors of app, up from 1MM last year.

11:00 am – Advice for publishers: leverage your web assets.  If you are receiving mobile visits to your website, encourage them to download your app.  Store promotion can be huge on the App store. Partnering up with other related Apps can be beneficial “dinner and a movie.” And pre-installation on phones.

11:02 am – Shortest keynote in history.  Now up for Q&A.

Yelp still has better content than Google. Google users are going to Google and expecting them to surface the best Local content…which is Yelp.

Types of videos needed vary from business type to business type. Partnership with TurnHere has allowed local businesses to get very creative.

Deal-a-day: what is the size of the userbase? Most important question.
Anecdotal evidence of deals that have performed well. Nick’s Crispy Tacos sold over 4,000 tacos.

Use G Places as a way to get more traffic?
Places tie-in.  Go down the page, you’ll see a small Yelp logo and an incorrect review count.   Not thrilled with the current treatment.

How to sustain first player in big market rather than 3rd or 4th player in emerging market?
Check-ins. Yelp looked at it after users requested it, only if within core sphere of business.  Additional trust of reviews if accompanied by a check-in.  Also increases engagement.  A check-in launches the contribution piece.

Sales at SMB level?
Very people-intensive business. Can’t sell a lot without hiring thousands of people.  Hard to cut through noise and clutter.  Sales process has included growing pains.

Thoughts about sharing revenue with other publishers going forward?
AdSense for Local? Dropping Yelp reviews into newspaper publishers, YP publishers, etc.

Openness to partnership?  Pretty open.  Has to include a shift in Yelp’s current ad products.  Expectation on the business owner’s part is that clicks are coming from Yelp exclusively, currently.

Facebook could also be disruptive.
Facebook is local business email list 2.0.  Depends on the business vertical.  Facebook is more like a webpage for the business.  Yelp has an arm’s length relationship.  More consumer-oriented.  Hard to do both.  No one has straddled the line well.

Adoption of business tools on Yelp for Biz Owners?
They are giving a lot of tools away for free.  Business owners like that.  Hundreds of thousands have claimed or unlocked their page.

Outreach to rural or less hip urban markets? Worth the effort?
Yelp probably won’t have a community manager in the smaller (20K people) cities. Ever. But coverage will increase over time in those less urban markets.

Traditional advertising in 2011 to build Yelp brand?
Probably not.

Business Owner, Reviewers (Community), Consumers.
What principles do you use in prioiritizng among the different populations.  Bias is always towards Community first.  Everything stems from community first.  They have created Yelp’s value.  Next is the consumer…without a great audience, there’s nothing for business owners.  The real tension is when the business owner tries to game the system.  But if everyone is playing by the rules, everyone wins.

Have the service levels of small businesses improved as a result of the transparency of their service?  Jeremy’s gut says yes.

Google – Groupon merger?
Groupon walked away.  Real conversation did happen, but he doesn’t speculate on the particular issue.

Venture Capital Panel

Opinion on Groupon:
They’ve built a model that Local businesses can understand…they’ve done it quickly enough that we SHOULD be talking about them.  Cara Nortman from CityGrid thinks that there will be one or two winners in the deal-a-day space and everyone else will go away.

Data Aggregation, Reputation Management are key areas for CityGrid to grow.
CityGrid just invested in BuzzLabs in Seattle in Rep Mgt space.  Dave Khare: There’s a lot more that businesses can do in terms of pushing out commerce. How much time does the business owner actually have to do this, though? Commerce and lead-gen needs to be added.  Matt Booth: Acquiring the customer and managing them end-to-end is key. People are spending tons of money on customer acquisition vs. customer retention (as a product). Loyalty programs, mobile can help with this.

Groupon just acquired a company called Ludic Labs.
Speaks to Groupon’s understanding of customer continuum. They’ve scaled tremendously well & built a significant value proposition to both customer and consumer.  Cara is betting ON them, not against them.  Where do they go from here? Not entirely clear.

Home & Trade Services
Khare: RedBeacon / ServiceMagic – Consumers have gotten used to commerce online. Buying services is the next step. How do you offer them in a discrete way, though?

There’s a whole series of markets that have never paid for customer acquisition.  It’s all been word-of-mouth.  Handymen, nannies, etc. They don’t necessarily even go to the SEM world in the first place–nothing is affordable.  RedBeacon turns Local into Commerce.

11:55am Unfortunately I have to head to a lunch meeting.  More later this afternoon!

3:30 pm – Mike Boland has taken the stage to introduce the Mobile Local panel.

Currently 75 million US users of the Mobile internet. 200 million users of the Internet in the US.  Mobile revenues currently $500MM, up to $2.9BN in 2014.

Mobile search is the fastest-growing segment of Mobile ad spend. Steve Jobs is partly right about App-based searching on mobile devices. Users are becoming more astute about searching on mobile devices, and technologies will make it easier, though, like voice search. Mobile tends to have more commercial intent than desktop search (more monetizable).

Local advertising targeted to a user’s location–will become more granular even than city level going forward–location-targeted ads are going to skyrocket by 2014. Small-screen ad outputs are expanding quickly.

National advertisers have largely been the first ones to take advantage of these mobile ad capabilities.  Mom-and-pop businesses are the smallest percentage of the mobile local ad spend right now.  Just starting to come on board.  Idea is to make as easy or as simple as possible.  CPC’s could be worth a lot more on mobile due to the intent of mobile users.

Will the Foursquares of the world be able to scale with self-serve advertising? The Location-Based Services are focused more on customer retention and loyalty–very attractive–rather than customer acquisition.  Ads on these services can be more cost- and energy-efficient.

3:45 pm – Mike concludes and introduces Zaw Thet from 4info.

June 2003 – 2.5 Million TXTs a month in the US.
Today – 2.5 Billion TXTs a month.

The year of Mobile is here! Finally.

Demand for data consumption on phones–US carriers are going to go down for a day or two within the next year.  Demand is too heavy.

Online advertising from ’95 – now.  How do we apply those lessons to today in Mobile?

1) Limited time space, limited creative space.
2) Searches done on the go.

Mobile phone numbers are going to become like social security numbers. They’re going to be like gold for advertisers. Mobile ad networks, including AdMob, though, are still incredibly fragmented. Process is extremely difficult for advertisers and for users.

Applications: Apple was the first one to call AdMob.  It’s gotten harder to replace ad networks, which is why Google wanted first-mover advantage.  Apple has now taken away its ad network piece with iAd.

Bing spent about $15 million to drive downloads of its app, but usage is minimal.  How do you create retention?

Location-based ad targeting: 4info sends out about 25% of major text advertising in US.

Who will be the first to crack the local ad targeting nut, though, and send the right targeted ads to people at the right time (and create a self-service infrastructure that SMB’s can plug into)?

Another meeting, gotta go, sorry readers!

Day Two: Where Is Google Places Going?

10:30 am – Carter Maslan and Wesley Chan (Google Ventures) are taking the stage.  Carter shares a story about how he got into Local.  Jon Henke of Keyhole called him when he was still at Microsoft, which piqued his curiosity: how to you organize the world’s information geographically?

Carter shows a Mondrianic visualization of clickthroughs from Google Places…”How do you exponentially expose the great content on the web?”  There are a ton of ambiguous references to places.  “So much depends on where you’re standing” when you interpret a search.

10:37 am – New presentation of results on Place Pages launched October 15. They launched an expansion of reviews from around the web YESTERDAY.  Seems like he is trying to placate the directory publishers in the room by plugging how much they’re exposing the rich sources of information from within Places.

Places visual interface launch increased the clickable targets to external sites 400% “sometimes.”  The fastest way to discover rich information about a particular business.  “Increase the surface of results.”

Local content types pervade a lot of other search result types.  There is a role for directories as credentialing organizations, lots of different types of content that Google helps to surface.

10:42 am – There is an incredible demand for accuracy of exactly where specific businesses are.  It’s critical to be precise, especially for mobile search.

We all have a vested interest to  “Get 10s of millions of local businesses online and represented accurately.”  It’s a huge collective challenge for us to get them online.

Polachek: What is the role of a Yellow Pages publisher to fit into this need?
Maslan: Vertical directory of credentialed businesses. Locksmith spam, cable installers, etc.  Having GOOD directories that are extremely well vetted is super-important for Google.

Polachek: How successful have Tags been and where are they going?
Maslan: Small businesses needed a simpler way to promote themselves. Adwords was too difficult. High performance, but too many knobs.  They are doing their best to make things self-service simple, but they do recognize that some people need to have their hand held.

Audience: Speculation about change in the PlaceRank algorithm?
Maslan: References their video just published last week. Relevance to query, how well-known is it across the web, what is the distance sensitivity by category?  They’re now looking at it in combination with web ranking signals.  Holds true for mobile as well, but distance is more important.

Elephant is brought into the room: automated access to Places for SMB’s.  How do you say to YP providers that we aren’t stealing your business?

Don’t do this OR that…it’s more important to know where your customers are coming from and where I should be spending my ad dollars based on data.  Carter thinks a rising tide lifts all boats.

The Place Page link is to clarify the searcher’s query intent: “Show me everything you know about this Place.” There’s now one click to get a search result.  Growing the surface area of clicks to third-party sites.

SMBs across US — 48% say they have a business page on Facebook.  Is that true? What are the implications?
“Get search results better for broad categorical queries for restaurants in NY” — drill down to Hotpot users, make you feel comfortable that you’re selecting a place you’ll like.

TripAdvisor review problem was a bug.

Fake Addresses is a top spam-fighting priority.

Where is Google headed with Couponing? Carter highlights Coupons have been part of Places for awhile.

What is Google’s stance on tracking numbers…how do they affect Place rankings?
When you use tracking phone numbers throws off Google’s view of prominence of the Place.  They might see it as a different Place and thus not as prominent.

Wesley Chan: What is Google Ventures?  A financial arm of Google that helps find and fund great entrepreneurs, and provide Google expertise to help portfolio companies achieve a high growth rate.

What are the great opportunities, ventures, happening around Local? Right now they’re focused on US alone.  There is still plenty of room for growth in this space.  Look at e-Commerce, still plenty of investments happening in a decade-old space.

Groupon will be one of many couponing/deal-a-day companies.

They are independent.  They can place bets on companies that aren’t necessarily in Google’s best interests.  Their strategic investments leverage Google expertise and knowledge to provide a financial return.

They’ll invest seed money in companies that provide user experiences that no one has seen before, no matter where these companies exit.

Wesley spends 50%+ of his time in Local.  He’s super excited about demonstrating value of both online and offline advertising for small & local businesses.  Drawing on his Urchin -> Google Analytics experience.

The Deal-a-Day Segment

Bobbi Loy Luster from Kelsey introduces the afternoon sessions.  The deals space is exploding right now. Should companies build their own, white label, is it a fad? Stay tuned to find out. It will be critical to close the loop with the SMB advertiser to make sure they know how to make these D-a-D guys repeat customers.

Stats from Groupon:
77% of deal-a-day customers are FEMALE. 68% are under 35 years old, 75% work full-time.
Customers spend 60% above the deal value
92% of business owners said these deals brought in quality customers.

Personal follow-up from the SMB is critical to maintaining D-a-D customer loyalty.

Jim Sampey from ValPak takes the stage.  Their print cash flow is still excellent. They’re just trying to figure out how to extend their success digitally. 800 sales reps on the street. 22 Billion coupons printed.  They’ve done a great job at automating their print process from business to sales rep to consumer. (Unfortunately this seems to be turning into a sales pitch.)

What Happened with the Google-Groupon Deal?
Sean Smyth, Groupon: One of the best customer-acquisition ploys they’ve ever had. 3 million new subscribers thanks to all the PR (as opposed to 1 million in a normal week.)

DealChicken – Arizona Republic. Deal-a-days are a great play for publishers with a built-in audience. It’s a real business.  Sales channel is partly flat-fee, and contains a commissioned upside on deals that “hatch.”

Angie’s List has bucked the trend of reviews first & gone straight for coupons and deals. In order to get ON to Angie’s List, an SMB has to offer a coupon.  So it’s been baked into their DNA. You can bundle a membership and a coupon at a comparative discount.

96% of advertisers have renewed contracts with Angie’s List.  Very high quality leads.  A high percentage of ideas for what deals to offer actually come from the SMB’s themselves.  They coach SMB’s on how to make sure that their members actually go back to Angie’s List to submit a report on their experience.  This helps the service provider continue to build their profile in the community.

Smyth: You have to create great deals for the merchant as well as consumers. They are very aware of the merchant loyalty issue.  It’s critical to understand their business before proposing a deal.

Groupon Stores: If you’re a merchant and want to make a second deal, you can create your own deal and re-target the same customer base that bought your first deal.  It’s up to the SMB, though, to re-engage and retain those customers.  How far are they going to go down this route?  No specifics, but they do not want to compromise how easy it is for merchants and customers to understand what they do.

Groupon has 1500 sales reps…are you going to add additional products to the bag?  They’re not really interested in adding additional products or offerings at the moment.  They run 650 deals a day (260 in North America).  They’ve built some serious scale around this product.  They’re most interested in finding ways to get in front of people.

Groupon does not share its email list with its whitelabel partners (like the Chicago Tribune), nor vice versa.

Angie’s List is also sticking to their existing model.

Merchants seem to really like Groupon’s targeted email list.  Groupon really needs to understand the salon with three employees.  They are very dedicated to personalization features–they hired a guy from Netflix to get the right deals in front of the right people.

The Angie’s List merchant is typically not a storefront operation, so knowledge of the merchant’s geotargeting is essential.  The size of the list can’t be too large in order for the merchant not to get overwhelmed and frustrate Angie’s List members.

How do you monitor the sales team to make sure they’re not signing up poor-quality deals?  They have specific people in place in each market to vett every deal.

Where do you find the best sales folks? They have both inside and outside sales reps (most of the latter from media companies).  They just naturally attract a lot of mid-20’s sales people in Chicago who are just super-excited about Groupon.  Typical media sales reps do not follow up with the merchant and with the customer throughout the process to make sure it’s a positive experience for both.

A new panel has taken the stage.

Group buying moves local advertising into a performance-based model.  There will be many more advertising models that continue to evolve in the next couple of years.  Integrating it into the search experience in some way is one direction this could go in.

Extending the relationship between merchant and customer over time, providing for eCommerce…this is where the space is headed.

Tipper saw the disruptiveness of Groupon and LivingSocial for local media publishers in terms of the relationships between their sales reps an advertisers.  Their idea is to provide these publishers with the technology partner that helps them solve this problem and enables them to white label a competing platform to those two companies.  Too difficult for media companies to catch up on their own.

Adility came to the same conclusion as Tipper.  Too hard and too expensive to build a big consumer brand like Groupon and LivingSocial.  They zeroed in on their existing relationships with Local merchants, and bring those relationships to publishers and via their API.  App developers now become the retailers for offers.  Make the “content” (deals) available in the easiest possible way to everyone.

How do you build the relationships with the merchants?  How do you curate the offers to make sure they’re presented properly?  The publishers may not have the ability, or may not be locally-focused enough.

Tipper has promoted the Open Deal format initiative…increase the openness of the deal ecosystem.  Allow anyone to come along and grab the deal feed to increase the visibility for merchants across multiple platforms.

The final panel in this segment (aggregators) is taking the stage.

Both 8Coupons and TheDealMap are aggregating deals around location data.

The Deal Map has recently announced The Deal Exchange, with a scalable API.  Their coverage across all markets in the US is terrific.  Crocs partnered with them at a big scale and saw a 7% conversion from their Mobile app.

8Coupons is built around more than just deals–standard coupons as well.  They started purely in mobile but have now partnered with a bunch of HyperLocal blogs to syndicate their deals to as well.  Curating the deals is the most difficult part of the process.  De-duping deals, making sure that the right deals are available at the right time to the right people, making sure geocoding is accurate…it keeps them both up at night.  Algorithms built around sentiment, relevance, location, performance/conversion rates.

The Deal Map tries to walk the line of helping deal providers get more exposure while still protecting their individual brands.

From Landy Ung of 8Coupons: In terms of revenue splits, they’re anywhere from 10% – 35%.  Out of Groupon alone ($2 Billion a year in revenues), that’s $200 Million a year that’s available at a minimum.

Mobile: it will be important to streamline the UI and the payment process for the deal space.

Location Based Services

Gillian Heltai from Comscore is on stage with some data on LBS’s.  Jobs is wrong. Even iPhone users are dedicated to mobile search.  After weather apps, search-in-a-browser is the second-most frequently performed activity.

Facebook Places is attractive for a VERY young male demographic, between 18 and 34.  They’re checking-in as an extension of their core social experience.  On Gowalla, it’s similarly for the connection to friends.  “Peer pressure” is really important for all of these LBS’s.

People are still concerned about privacy, but no so concerned that they stop using the tools.

Andy Ellwood from Gowalla follows up.  Idea is to inspire people around the places that they go. Not all about the check-in…people like to tell a story about themselves with their friends and followers, and stay connected with them as they discover where they are.

Over 600,000 users worldwide (60% of those are in the US), 2.2 million places crowdsourced on Gowalla.  Every business has been curated by Gowalla’s users.

Gowalla’s “Passport” is their version of a Facebook or Twitter profile.  Gowalla 3.0 allows you to check-in to Foursquare, Twitter, and Facebook.  Many places on Gowalla get a custom stamp…collecting these as if they’re a stamp in your real passport.

Gowalla thinks of the check-in as currency…if a user is checking in, they’re endorsing that business…enough that they are spending money at that business. Businesses can claim their locations on Gowalla & offer a thank-you or an incentive for people who do check-in.

…Is a coupon or discount really the point? No. It’s about creating experiences or stories about and around brands.  For Disney, this was about enhancing the experience around the places they were going on the Disneyland campus, talking about Disney movies, etc.  A way to take home experiences that you had, and sharing them with friends.

Check-ins can also be used as a contest in order to do good for charity organizations.  Gowalla is working with time-sensitive stamps for events like Sundance Film Festival, South by Southwest, etc.

Question from Mike Boland: How do you broaden the market of check-in services? Skewed towards, young, urban, and male…how to make it more mainstream-friendly? Automatic check-ins? Broader set of features?

Gowalla sees check-ins as a login button to a particular experience.  Ellwood is opposed to the idea of an automatic check-in for this reason.  If a place is memorable, it’s worth the effort to check-in “manually.”  Comscore thinks it’ll be about finding ways to appeal to the audience that hasn’t yet adopted smartphones.