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Conference Preview: Talking Mobile Local with Metric Voodoo

Monday, July 27th, 2009

This week, I was able to catch up with Michelle Moore, director of search engine strategies at Metric Voodoo. We’ll be sitting on a panel on Mobile Local Search at SES San Jose next month, along with the head of this blog, Steve Espinosa.

In anticipation of the panel, we had some time to discuss the areas where mobile local marketing needs improvement, or requires different ways of thinking. These will also be key areas of discussion the Local Search Summit happening the same week as SES, as well as September’s  Directional Media Strategies conference run by my company, The Kelsey Group.

Here are a few excerpts from the interview.

MB: What are the biggest market factors that you see driving mobile search adoption on the part of both users and content owners or advertisers?

MM: Technology adoption with regard to smart phones is outstripping most previous major technology adoption rates, including touch tone phones, cassette tapes, hi-def TV and DVD video players. There’s an entire generation in high school right now who’s never known a time without cell phones. This ubiquitous adoption is already causing a measurable trend where smart phones are replacing computers, especially with regard to localized searches. People’s habits are changing - when that happens, it forces market adjustments all the way around, not only with how advertisers will get their messages in front of consumers, but also what sorts of targeting these users are willing to accept. Phone searchers love being “helped” but they hate being “tracked.”

MB: What are some of the fundamental differences of mobile marketing and SEO, compared to online marketing and SEO?

MM: I think the main difference now (which I’m single-handedly trying to rectify, heh) is that mobile marketing is a better proving ground for what I call “pervasive SEO.” You’re already dealing with limited screen space. How much more impactful do you think it is to be mentioned on the first 15 search results on several other sites when someone searches your chosen keywords, than to just be number three and show up once for your own domain name. Even if you’re number one, if you’re only there once someone else placing pervasively on ten or twelve OTHER sites will look more appealing, or more like an expert, or more prevalent. Internet users aren’t naïve anymore. They know that what’s on your web site was put there by you. If a dozen other sites are also saying good things about you, that’s much more effective in terms of earning consumer trust.

MB: What are some of the most common mistakes or misconceptions of companies entering the mobile space (media companies, app developers, web publishers, advertisers, etc.)? What about misconceptions preventing companies from playing in the mobile sandbox?

MM: I think there’s still a disconnect between the left and right brain that prevents advertisers from recognizing opportunities in the mobile space, especially for small to medium-sized business. For example, local search - which is one of my main prongs of attack with any business that has a physical location… it takes me about a dozen repetitions and even demonstrations over several weeks of the immense practicality of local business search on a phone before the little light bulb starts to glow. Ultimately, I have to sit back and wait for my clients to actually use their phone in this manner to make a decision or a purchase or answer a question, and then point out to them afterward why they ended up using the vendor they selected. “Do you remember why you ended up calling CVS Pharmacy?”  “Yeah, the first phone number I found for Foster’s Pharmacy wasn’t in service anymore.” “OK, so what happens when you change your business phone number and no one bothers to update all your local business listings that are floating all over the internet?” It’s as if small business owners think that because they have a web site with their name and address and phone number, that’s all they need. They don’t think far enough down the smart phone path to realize that their site might be all in Flash, or that the average local business search through a smart phone portal may put results from CitySearch or Superpages above your business’ own domain name… and oddly, SMBs are who absolutely need to succeed in this arena or get overrun by the big chains.

MB: Is the state of the economy currently having an effect on this adoption, any more so than other media? In other words is mobile’s “experimental” nature preventing companies from utilizing it as a content and/or ad delivery platform in uncertain economic times?

MM: I think this depends on who you’re asking. I don’t know a single consumer who’s given up their mobile phone. But I read all the time about companies abandoning or “back-burnering” their mobile marketing initiatives. It makes me want to ask marketers, “why are you doing this when that market is one of the only markets not shrinking?” Fewer and fewer people read printed newspaper, but more and more people use cell phones.

MB: Conversely, is mobile’s targeting capabilities, greater ad performance (CTRs etc.), and measurability making it resonate to a greater degree during these times when advertisers are demanding more concrete ROI?

MM: You’d think, wouldn’t you? I’m not sure about national numbers, but in the South where most of my work is done, it seems that there’s a different barrier to entry. Much like with social media, there’s a general lack of awareness (and therefore, confidence) in mobile marketing.  I’m constantly preaching a reduction in faith-based advertising models like television, radio and newspaper, and a shift to trackable advertising, whether it’s plain old PPC or mobile advertising. But there seem to be a lot of marketing execs who lack experience with the medium, making it harder to convince the rest of the C-suite to support mobile marketing initiatives. It’s like the fact that you can measure ROI at all doesn’t matter - they’re not willing to dabble in mobile unless you can prove ROI to start with. It makes no sense to me.

MB: It’s my contention that mobile and local are so closely related. Online, searches with explicit local intent are about 10% of overall searches. On mobile, it is currently about 2x-3x more than that, and growing. Do you agree?

MM: Yes, I do agree. Every statistical report I’ve seen in the last 8 months indicates that at least 25% of all searches on phones are local business searches. This is why I start my discussions by showing folks the Sprint commercial that was released in May - “Right now, 6000 people are researching restaurants in the back of a cab.” How many “right nows” are there in a typical day… times 6000.

MB: What are the capabilities of the mobile device that will force advertisers to think differently when it comes to marketing or content delivery? Too many advertisers are porting over existing strategies (i.e. display ads) to a smaller screen. Will this change and “grow into” the capabilities of the mobile device including portability, location awareness, etc..?

MM: I think what consumers react most strongly to in the mobile arena is the gradual return of instant gratification. That’s why local business search volume is soaring. What businesses are slow to realize is that searches on phones are not in any way, shape or form about your web site. They’re about your physical location. This is why porting existing ad campaigns from the web will not be sufficient. I’m waiting for someone to fully develop an app that lets you not only research the restaurant, but see a layout, pick your table, and make your reservation without making a traditional phone call or sitting on hold or even talking to another person… then tie into Match.com and hook you up with a dinner date too.

MB: Who is doing it right? Any mobile sites or apps that you admire for delivering content in a way that is fitting to the mobile device and the way people are using it?

MM: The most awesome new phone app I’ve seen was on a Nationwide Insurance commercial. You have a wreck? You click an app that’s connected to everything you need - it calls emergency services for you, it gives you a checklist for your information exchange, locates the nearest agent or office for you, takes pics of the damage for you, starts your claim process for you, and even includes a flashlight function! This is an example of the total 180 that major companies are going to have to learn to do. This app is all about the consumer. Of course, it doesn’t do you a lot of good unless you are a Nationwide customer but this app is all about helping the consumer handle a difficult situation. Companies have got to figure out that they will get a lot farther when their advertising models are more focused on the consumer, not all about the company. On another note, I’ve seen the television commercial announcing this iPhone app ONCE - it made that much of an impact that I defied all “repeat seven times” advertising advice and remembered it after one viewing… I cannot begin to count how many Allstate, Geico, Liberty Mutual and Progressive commercials I’ve seen. I have no idea of the estimated cost of all those commercials compared to the one airing of the Nationwide commercial that I saw, but I can guarantee you that when my insurance renewal rolls around, I’ll be getting a quote from Nationwide for good measure. The return on the investment in more efficiently serving the customer will most definitely pay off with a higher ROI than those 6 million untrackable television commercials for the other major carriers.

MB: Any other advice for companies entering the mobile space or online publishers trying to seek out opportunities in mobile?

MM: Be proactive. Buck the old traditions and hire some new blood (says the 40-some-odd year old). Take steps to build an online reputation before you are forced to take steps to correct it. Be an expert in your area and make sure to let people know about it. Put yourself everywhere you can afford in order to have the best chance of being found - be that online yellow pages, paid ads in a search engine, paid sponsorship of a mobile portal, name on a bus stop bench, name on the back of a little league jersey, where ever you can get publicity without offending people’s sensibilities. If you can associate that with a topic consumers are passionate about, so much the better.

Mobile Local Search: Where to Begin?

Wednesday, May 13th, 2009

My last LSN column attempted to look at where we are now with the mobile local opportunity: if not entering the oft-predicted “year of mobile”. Since then, the Kelsey Group’s U.S. mobile ad forecast has shed some more light.

The top line figures project mobile ad revenues to grow from $160 million in 2008 to $3.1 billion in 2013 (81.2% CAGR). Current revenues are largely made up of SMS advertising, where the most reach and scale exist.

But growing penetration of smart phones (now less than 20 percent of U.S. mobile devices) and devices that can view full web browsers will cause search to eclipse SMS as the leading revenue category by 2013.

This is also supported by the growth of the mobile web — currently at 63 million monthly users (comscore) . You know the story: The iPhone has raised the bar for mobile hardware, and copycats have begun to flood the market and compete on price.

Carriers have likewise begun to subsidize upfront device costs in order to drive long term data contracts. The price for touch screen based smart phones is starting to settle around $200.

Quickly sprouting application marketplaces will meanwhile provide the killer apps that drive the appeal and utility of these devices. This is all bringing the mobile web within striking distance of mainstream adoption for the first time.

Local Motion

The key point, as examined in the last column, is that local will be a big beneficiary of the resulting search volume growth.

The portability and location awareness of the mobile device is highly conducive to local search, meaning local intent on the mobile device will outweigh the roughly 11 percent of searches online that are local (TKG).

Google agrees, citing that local search on the mobile device indexes higher than the desktop by about 2x to 3x. This lines up with the Kelsey mobile forecast data that show local searches make up about 28 percent of mobile searches.

That figure will grow to about 35 percent by 2013. But more importantly, revenues from local search will surpass 50 percent of mobile search revenues. This is due to the premiums that will be placed on content and advertising that’s location targeted to mobile users.

Given a new form factor, new ways of thinking will be required for content delivery. It won’t just be a matter of transferring online models to a mobile device, and measuring clicks, impressions and the standard set of online performance metrics.

Other content and ad formats will evolve based on the portability, immediacy and location awareness of the device. In addition to the CPCs and CPMs that rule the online world, this could include more pay-per-call models in some categories (i.e., professional services) or cost-per-action models in others (i.e., retail)

This can involve retail data feeds (i.e. Krillion, NearbyNow) which tap into POS inventory systems to indicate prices and availability. The fact that the phone gets you closer to the point of purchase can also bridge the online-offline gap that’s traditionally been a source of uncertainty in local search campaign effectiveness.

Now What?

So the opportunity is there… now how do you tackle it? Application marketplaces have standardized and lowered the barriers to distributing mobile apps. But there are still barriers.

Like lots of things (i.e. writing columns), one of the biggest challenges is figuring out where to start. Given finite development resources, where do you prioritize developing apps for a highly fragmented world of mobile operating systems, devices and formats?

SMS has the most adoption and reach (i.e. all cell phones), but the iPhone has the most engagement. Between the two lies a spectrum of options including web apps, and java apps that have to be customized for a long tail of hundreds of devices.

Yellow pages publisher Dex just launched a series of mobile products that attempt to hit up all the points of this continuum.

“It’s all about extending your reach through different devices and platforms,” Dex director of mobile and personalization Deborah Eldred told me. “We want to make sure we hit the mass of the subscribers but also hit the mass of usage, which is smartphones.”

This represents a common yellow pages attitude lately to jump on the mobile opportunity. They can afford to do so — Though it’s often clouded by valuation declines and dept loads, Yellow Pages publishers still have a fair amount of cash on hand. But what about companies that don’t?

“We’ve had a lot of success with our iPhone app, and we know we have to put more resources into mobile development,” says Sonia Survanshi McFarland, Yelp head of business development. “But you have to quantify how much it’s going to cost from a human resources perspective and weigh that against what else that developer can work on.”

The Short Answer

Perhaps the “short answer” is to look at mobile platforms whose data consumption is growing. These are iPhone and Android according to AdMob data. And what about the Palm Pre? Could it be the dark horse, given the levels of market anticipation it’s seeing?

android

Yelp’s McFarland points out this is risky territory – iPhone development came with the benefit of 12 months of usage that predated the app store. This meant usage metrics were available in advance of app launch: Not the case with the Pre.

Windows mobile 7 is likewise unproven territory with no guarantee of release date or quality. Many carriers and device manufacturers planning Q4 releases (read: holiday season), could therefore bank on the safer option: Android.

The platform question is still an open one, and like a lot of things “it depends”. Lots of factors come into play: target demographics, advertising goals, verticals, etc. The question also comes down to whether you want to go after reach or engagement.

side effects of relafen

Over the next month, I hope to answer some of these questions by getting down and dirty with carriers, local media publishers, and app developers. The result will be a TKG report, which I’ll come back and summarize here. Stay tuned.

Local Search in '09: Going Mobile

Wednesday, December 31st, 2008

If you go by the predictions heard during the last ten years of industry conferences, mobile search’s tipping point is perpetually 18 months away. But now we’re in a stronger position than ever, thanks to quickly evolving device standards and open source mobile platforms that welcome third party innovation.

This of course was ushered in with the iPhone, but will continue with a second wave of devices and the continued death of the carrier-controlled environment that has caused a sub-par set of products to dominate the market over the last 10 years.

And though the iPhone only represents about one percent of the global cell phone market, sales have been ramping up quickly. It’s now the top selling cell phone in the U.S. according to NPD group (beating out the Motorola RAZR V3) with 6.9 million phones sold last quarter.

comscore5

This trend will continue as prices drop and as it becomes more of a mass market device. A big step was taken in this direction this week when iPhones began selling in 2500 nationwide Walmart stores.

All You Can Eat

The key point here is that the iPhone’s user-friendly interface will cause the growth of mobile data consumption to correlate with this market penetration. iPhone users map to greater data consumption, supported by Net Applications data that show iPhone web browsing share ramping since the June ’08 release of the iPhone 3g.

ComScore VP of Marketing Brian Jurutka meanwhile presented data at The Kelsey Group’s ILM:08 conference that showed mobile data subscriptions up 37 percent in June (year over year). Unlimited data plans account for nearly all of this growth and the use of mobile browsers has grown in step.

comscore2

comscore3

But it’s not just iPhone penetration causing the rise in mobile data consumption; smart phone penetration has also outpaced the market overall. Going forward, it will be less about the iPhone’s direct impact on data consumption than the device’s influence on the rest of the market.

Copycat devices that compete on price will continue to flood the market, driven by evolving consumer expectations and competitive pressures. As this happens, iPhone-like features will essentially become commoditized and will become standard issue for the mobile mainstream.

We could even see a touch screen-based smart phone with mobile browsing, GPS, games, local search apps, etc. for under $100 this year. loxitane

Think Mobile, Act Local

Local will be the big winner in all of this. There is a strong correlation between local search and the mobile use case, which will cause a good portion of the explosion in third party app development to focus on local.

The touted location awareness features (GPS, etc.) of the iPhone and other devices will push this. But it will be more about local search’s ties to the immediacy and geographic relevance inherent in mobile search.

Think of it this way: If 20 percent of online searches have local intent, my hypothesis is that local will represent an even larger stake of search activity on the mobile device. Many other search categories like product research, reference, image search, will conversely make up smaller shares of mobile search — due, again, to the form factor and basic mobile use case.

Already, about 15 percent of iPhone apps are local. The Kelsey Group’s Mobile Market View (MMV) survey also reported in October that 15.6 percent of mobile users searched for local products and services, up from 9.8 percent the year before. This will continue to grow.

Meanwhile, social media could buttress the apex of mobile and local, as a consumer use case continues to develop around finding things to do and buy locally, while connecting with friends (i.e. Yelp, Loopt, WHERE, etc).

Supporting this, MMV shows that the number of mobile users who access social networks tripled to 10 percent from the previous year. eMarketer also projects mobile social network users to go from 82 million in 2007 to 800 million in 2012.

This will be about 20 percent of overall mobile users, but will constitute an “influencer” segment which will represent a disproportionate share of the marketing opportunity

Now, the Hard Part

So how will all of this be monetized? That’s the 12 billion dollar question (literally).

As with online search, we’ll see lots of shapes and sizes of advertising develop that mirror advertisers’ goals (i.e. clicks, phone calls, branding, foot traffic, conversions, etc.). In this sense, mobile marketing will have some limiting factors compared to online (small screen, etc.). But it will conversely have unique opportunities tied to the mobile device’s portability and location awareness.

Mobile’s proximity to the point of purchase (i.e. in your pocket), for example, opens up possibilities that haven’t really gotten off the ground in online search. These include transactional or cost-per-action models such as mobile coupons or product reservations. Picture standing in front of a store shelf and being able to find cheaper items at another store.

And since the device is, after all, a phone, there will be lots of opportunity to serve local content that is tied to pay-per-call models. Voice search will grow in’09 for the same reason. This will come from continued growth of early movers in the space such as Google (goog411), Tellme (Microsoft) and Vlingo. Each has extended its reach with on-deck voice search applications for the iPhone and others.

More so, voice search could be an opportune area if you consider the majority (86 percent) of the 228 million consumers in the U.S. who are non-smartphone users. For many of these users, voice will continue to outweigh browsing as a preferred search input; thus representing a more immediate opportunity.

Reality Check

Before we get too far ahead of ourselves, it should be acknowledged that we’re not quite there yet.

Mobile advertising was a 2.7 billion industry in ’08 (Gartner) and it will remain relatively flat in ’09. Volume isn’t where it needs to be to attract advertisers on a wide scale. More so, mobile’s experimental nature combined with a down economy will keep many advertisers away.

So mobile marketing’s real opportunity is further off. It could begin to take tangible form in 2010 as the economy improves, mobile technologies continue to improve, and mobile data consumption continues to increase. As all of these factors come together, advertiser interest/adoption will slowly follow, as it often does.

That said, now is the time for anyone interested in this space to start to develop a mobile brand. This lead time will be required to not only build a user base, but to also gather intelligence and learn what user and advertiser proclivities will be in this quickly evolving medium.

This will be vital for mobile search product development. In other words, you’ll have to be ready with a certain degree of momentum when the fabled “tipping point” arrives; when mobile local search becomes a mass market medium and marketing channel.

When will that be? 18 months. We mean it this time.

Michael Boland is an analyst with The Kelsey Group who focuses on mobile and local search. For more TKG reports, data and analysis, contact Michael directly at mbolandATKelseygroup.com.