Facebook: No SMB Resellers (for Now)

Facebook logoStreetFight published an interview with Facebook’s Dan Levy who oversees SMB programs. The thrust of the interview focuses on the declining organic reach of Pages.  It has been controversial and some see a conspiracy to generate more ad revenue for the company. 

What was more interesting to me, however, was the part of the interview in which Levy is asked about Facebook and its attitude toward SMB resellers. Here’s the excerpt:

SF: Last year, it appeared as though the company was committing to a reseller approach. Is that still the case?

Levy: We’ve talked to just about every major distribution partner that works with small businesses across the world. And they’re all interesting because they reach a lot of small businesses and they provide something that’s really important, which is kind of the human connection with those businesses.

However, historically, we’ve not found it hugely valuable yet, simply because we have such a challenge in front of us already with 25 million active, engaged small business pages and only a million advertisers. We already have the touch point with the business, and for us it’s about trying to continue to prove the value to get them to engage more deeply and become advertisers, whereas I think a lot of the value of the channel is actually kind of getting out to reach those businesses. That is a fortunate problem that we don’t have right now.

Facebook believes that on its own it can convert some percentage of its massive “installed base” of SMBs into advertisers. That may be true but it’s going to be considerably more challenging that the company currently believes.

Advertise on Facebook

Mark Zuckerberg himself probably has some — though perhaps limited — understanding of the needs and attitudes of small business owners. (His dad was reportedly a dentist.) However COO Sheryl Sandberg is pretty familiar with the challenges of converting SMB advertisers, having been one of the early movers and shakers behind Google AdWords.

What’s clear is that Google was never able to successfully figure out a way to make self-service truly accessible to mainstream SMBs. The company cultivated and later reinvented its extensive (if troubled) network of resellers. Most of the resellers themselves are ambivalent at best about their relationships with Google.

I had a conversation the other day with one of its prominent resellers who was interested in migrating away from clicks/leads sourced on Google because of their cost and the fact that they provide thin margins.

But back to Facebook. For self-service advertising to succeed, Facebook would have to do a number of things:

  • Establish an ongoing dialog with small business owners (advisory council, regular focus groups)
  • Provide much more education (online, in person) for SMBs about how to succeed
  • Simplify advertising on the site even further (much more than Facebook realizes)
  • Offer a directory of approved providers who can “do it for me” if the SMB can’t or doesn’t want to
  • Offer live customer support

If it can do all these things and do them well then it has a fighting chance to bring some of those 20+ million SMBs over into the advertiser ranks. I suspect however that Facebook will do some of the things above and ultimately conclude that it needs resellers to touch the millions of SMBs it wants to advertise on the site — even though they may already have Pages.

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Surveys Show How Consumers Distrust, Seek to Avoid Marketers

At a minimum US consumers are ambivalent about marketing. But it’s probably more accurate to say they mostly don’t trust and try to avoid it.

A recent YouGov survey finds that half of Americans distrust advertising (generally). The other half are more trusting and find ads “fairly honest or “very honest.” According to YouGov, trust in ads is inversely tied to education: “65% of post grads think advertising cannot be trusted compared to 44% of those with a high school education.”

YouGov distrust ads

The survey also polled respondents about categories of advertising. The following, in order, were the least trusted types of ads: 

  1. Diet products
  2. Financial products/insurance
  3. Pharma/prescription medicines
  4. Cars
  5. Cosmetics and beauty
  6. Fast food
  7. Health foods
  8. Travel services

Then there is Nielsen’s 2013 global trust in advertising survey about media channels. It found, once again, consumer recommendations to be the most trusted form of “marketing” (so-called “earned media”). Online ads were at the bottom of the list but their standing has improved in the last several years.

Most trusted ads Nielsen

According to Nielsen and its survey data, trust translates into action. The more consumers trust a channel or form of marketing the more they’re likely to act or rely on that marketing.

Nielsen trust vs action

In some cases there was a gap between trust and action. Consumers still said they acted despite a lesser degree of trust.

Another angle on the trust question appears in a recent Harris poll about online behavior since the NSA-Snowden revelations. The survey found that 47% of respondents “said that they have changed their online behavior and think more carefully about where they go, what they say, and what they do online.”

Other findings:

  • 26% reported they are now doing less banking online and less online shopping.
  • 14% said they’re doing less online shopping
  • 19% said they’re doing less online banking
  • 24% said they are less inclined to use email

Another survey released in March by Communispace found 87% of respondents would enable a “do not track” button if it were available; and 30% would be willing to pay to prevent marketers from capturing their data. A Pew survey from Q3 2013 showed that consumers were after more privacy and security online — in part to avoid advertisers.

What do all these surveys taken together reflect? They show that marketing is a kind of cat-and-mouse game with consumers, who mostly are wary about advertising and its claims and often simply want to tune out and avoid ads all together.

Disagree?

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SMBs: Our Websites ‘Critical’ but We’re Not Investing in Them

Another survey (from Browser Media) has found a kind of SMB paradox. The December 2013 survey found that SMBs overwhelmingly believe their websites are important or critical to their success but most aren’t investing to improve or market them.

The survey, conducted in the UK with a relatively small sample of 188 mostly SMBs, found that 79% see their websites as very important or critical. However nearly 60% aren’t investing in them.

UK SMBs and websites

This SMB “inertia” (“we recognize it’s important but aren’t doing anything”) was also on display in a recent survey about mobile US and UK SMB mobile marketing from directory publisher Hibu.

In that survey the publisher found that only 6% of respondents had mobile-optimized sites  (45% in both countries had no site). The business owners said a mobile (optimized) site would generate more revenue; yet only 12% said they were likely to develop one in the next 12-18 months.

In an Opus Research survey last year of roughly 1,200 SMBs in the US, the business website was also seen as a critical asset. It was the number one answer to the question, “If you had a significant increase in your [marketing] budget where would you choose to put that money?”

This “passivity,” observed in both the Browser Media and Hibu studies, is very curious. Which of the following do you think best explains it:

  • Lack of money to invest
  • Lack of resources or knowledge of where to turn for marketing/development help
  • Insufficient time to act on desires because of demands of running the business day to day
  • Other

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Survey: Facebook the Top Mobile App for Writing Local Reviews

Facebook PlacesAccording to the newly published “Local Mobile Trends Study” from the Local Search Association (conducted by Thrive Analytics) Facebook is the by far the app of choice when writing a local review on a smartphone or tablet.

The survey, which involved just over 1,000 US smartphone owners, asked how many people had written reviews and then about the preferred device for writing them. Among those under 53 years old, about 70% said they had written a review online.

Facebook local reviews

Roughly 15% of users preferred to write reviews using their smartphones or tablets. The remaining 85% said they preferred to do so on the PC.

The majority of mobile review writers said that Facebook was the app of choice vs. Google, Yelp, TripAdvisor, Foursquare, OpenTable and “other.” This finding again illustrates Facebook’s significant opportunity in local, which the site has yet to fully seize upon.

Separately the survey, among other things, asked about local search activity by category. The following were the top categories where local search activity was concentrated during the past 30 days (prior to the survey date):

  • Restaurants — 47%
  • Pizza — 44%
  • Retail stores — 38%
  • Banks — 22%
  • Doctors/hospitals — 19%
  • Travel services — 18%
  • Insurance — 16%
  • Auto dealers — 14%
  • Auto repair  – 14%
  • Pet care — 13%
  • Real estate — 11%

In other words, respondents said that 47% of their local search activity was tied to restaurants and 11% related to real estate.

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Yelp Could Solve Many Problems By Emphasizing Transactions

Yelp logoYelp has done a number of high profile deals recently. Earlier this year Yahoo announced it was integrating Yelp content into its local results. More recently Yelp and YP unveiled a partnership, which benefits YP advertisers.

Yelp also has significant deals with Bing and, of course, Apple Maps. Beyond this the company has an API that numerous third parties use to integrate Yelp content into their sites or apps.

This would all appear to be good for Yelp, making it the de facto reviews source for the broader local internet. (Foursquare is trying to challenge that to some degree.) But it’s not necessarily a good thing, as Yelp’s increasing power generates increasing resentment among business owners.

The latest drama comes as Yahoo is replacing its own reviews with those of Yelp, something Yahoo confirmed. Yelp reviews have been given priority over existing Yahoo reviews. An anecdote from a Wall Street Journal article this week illustrates the problem and frustration for business owners:

Colonial Hardwood Flooring of Lexington, Mass., amassed six years of mostly positive feedback on its Yahoo Local listing, says owner Dan Tringale. But several weeks ago, after Yahoo began posting reviews from Yelp, nearly 50 Yahoo reviews disappeared, he says.

Potential customers searching Yahoo won’t see a 2012 recommendation that Carla Fortmann confirms she and her husband wrote: “This floor is beautiful and it was very carefully done.” Nor will Yahoo searchers find a June 2012 review from Regina Sasso, of Wilmington, Mass., who says Colonial “provided a competitive quote and delivered meticulous service and work.”

Such praise has been replaced by a single, punctuation-challenged Yelp review, from the “Paul M” screen name, “Respected budget got difficult stain taken care of very attentive and house got an offer opening weekend.”

There’s plenty of anecdotal evidence to suggest that there’s considerable anger and frustration toward Yelp among the SMB community. The latest episode with Yahoo described in the WSJ piece compounds it. True, some SMBs love the site but others continue to be mystified by its “review filter” and what many perceive to be too-aggressive telemarketing tactics.

Yelp platform

I believe the solution to these and other problems for Yelp is to migrate more of its revenue to a transactional model. It doesn’t currently charge businesses for appointments or reservations but it could take a fee for each booking it delivers (or a flat fee per month for the general capability).

Yelp could expand booking and scheduling across an array of services categories. The company could also get into credit-card processing on behalf of SMB customers and take a fee for handling the transaction. Assuming the fees were fair, the value of these services is pretty self evident. Most business owners would be willing to pay for them.

The company could then be more selective and targeted about the SMBs it approaches for ad revenue. Right now it’s just going after businesses with X reviews, Y positive reviews — as it has done since the advent of advertising on Yelp.

As Yelp handles more bookings it could also address its review filter problem. Like Amazon, Hotels.com or OpenTable it could follow up with customers whom it knows booked through the site. They would be verified purchasers and could be trusted accordingly.

In the process of soliciting those reviews Yelp would also be helping business owners gain reviews. This is a major pain point for business owners currently. And if the reviews were negative it could alert the business owner in advance of publication to enable “mediation” or a “make good.” (That might create a “conflict of interest” for Yelp however.)

Regardless, I think a move toward transactions and transaction-based revenue, which doesn’t preclude advertising, works for both business owners and Yelp on multiple levels. It would more directly align Yelp and business owner interests — and would help solve many of the site’s current problems and challenges.

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What Are ReachLocal’s Churn Numbers?

ReachLocal funnelOne of the key metrics that ReachLocal doesn’t disclose is advertiser retention or its opposite: advertiser churn. Yelp also doesn’t disclose this number.

I suspect ReachLocal’s churn numbers are better than industry digital averages. This is what former CEO Zorik Gordon always maintained. And they have probably improved over time as the company has diversified away from pure reliance on paid-search marketing.

Back in 2009 my vicarious understanding was that Google search marketing resellers in the local space were experiencing roughly 7% monthly churn (or 84% annually). Last year I heard from several sources that average Google AdWords reseller churn was still roughly 6.5% to 7% monthly.

When paid-search is bundled with other products churn goes way down (e.g., traditional media, web hosting, email marketing, etc.) — perhaps as low as below 2% monthly.

I’m interested to know if anyone has knowledge of ReachLocal’s churn today or wants to react to these figures generally.

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Survey: iPhone 6 Demand Higher than 5s

According to ChangeWave US consumer survey data, a larger-screen iPhone (or iPhones plural) could driver higher sales than the 5s. That’s because there’s significant, pent-up demand for a larger screen iPhone — which are rumored to be in production.

iPhone 6 Demand

If I’m reading the chart above correctly, it indicates that 40% of respondents are either very likely or somewhat likely to buy an iPhone 6. The chart below compares demand for an iPhone 6 with pre-launch data for earlier models.

iPhone 6 demand

The chart reflects that pre-launch iPhone 6 demand is greater than for its predecessors. If the device fulfills expectations and is elegantly designed, with a larger screen, it should see considerable success and even capture some would-be Samsung buyers as well.

Apple sold 153 million iPhones in calendar 2013.

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YP Adds Cloud-Based ‘Mybook’ to Boost Engagement, Utility

YP logoYP has formally announced its multi-platform favorites functionality called Mybook. Simply put, Mybook offers a way for signed-in consumers to organize and save businesses for later review or retrieval from any device.

I’m a big fan of save-for-later lists and Mybook could prove very effective for YP engagement and loyalty across platforms but especially on the go. Users save business lists by category in “collections.”

YP Mybook

YP says that since the feature was quietly introduced last fall, it has “drawn in more than a million people to try it out.” Here’s a brief list of its current functionality and capabilities (YP descriptions):

  • Take Notes – add notes to mybook entries like favorite dishes or a salesperson’s name
  • Map View – see mybook entries on maps to make planning a breeze when on the go
  • Chain Listings – quickly find nearby chain stores and restaurants saved to mybook
  • Easy Sharing – share individual business contacts saved in mybook with friends and family

One can imagine opt-in push notifications tied to saved businesses so that it could be come a CRM-style communications channel for local businesses. I could also imagine a range of other push capabilities tied in.

YP is unlikely to do this but I could imagine this as a useful core feature of a stand-alone YP-branded travel-planning/travel app built around hotels, restaurants and top attractions. There are many interesting possibilities.

While the business listings database is now a “commodity,” though accuracy varies, functionality like this will potentially help YP differentiate and boost user engagement. YP is doing lots of interesting things these days, such as buying Sense Networks and doing distribution deals with Yelp.

The company is also one of the few YP players that continues to invest in and promote its consumer brand.

What are your thoughts on this new personalization/favorites feature and whether it will boost engagement with YP across platforms. The YP mobile app is generally quite successful according to various measures and data sources.

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Local-Mobile Ad Revs about $1.6 Billion Today

BIA/Kelsey just published an updated local-mobile ad forecast. The firm says that “U.S. mobile local advertising revenues will reach $4.5 billion in 2014, up from $2.9 billion in 2013.” It also estimates that US local-mobile ad revenue will reach nearly $16 billion in 2018.

That projection is probably too aggressive. But more importantly, the current numbers are overstated.

This morning the IAB released its 2013 full year digital ad revenue figures. These figures are more reliable than the various analyst forecasts in the market because they’re based on direct surveys of advertisers.

Ad revenue by format/segment (IAB/PwC)

IAB revenue formats 2013

According to the IAB data, mobile ad revenues grew from just under $3.4 billion in 2012 to nearly $7.1 billion in 2013 — essentially doubling. BIA/Kelsey’s estimates argue that $2.9 billion (41%) of this $7.1 billion was geotargeted or location-based in 2013.

I’m a big proponent of the “local” market and the value of location-based targeting. But these numbers are inflated.

The top 10 ad networks/publishers control about 71% of online advertising revenue according to the IAB. In mobile it’s “worse.” There are fewer than 10 companies that basically own 75% to 90% of mobile ad revenue: Google, Facebook, Twitter, Pandora, YP, Millennial Media.

Search is the biggest component of mobile advertising today (as it is online), and perhaps as much as 50% of mobile revenue. If that’s correct it would mean paid search was responsible for nearly $3.5 billion of mobile ad revenue in 2013. Roughly 95% (or more) of that money is Google’s.

Not long ago I asked Larry Kim, founder of Wordstream, about use of location extensions in AdWords. He told me that about 15% of the total population of AdWords advertisers were using location extensions. That doesn’t mean that 15% group constitutes all mobile paid search advertisers using location. Marketers can bid on geomodifiers (“San Francisco,” “SOHO,” etc.) outside of location extensions. However it’s at the very least a “directional” indicator.

Among Facebook, Twitter and Pandora locally targeted mobile ads are growing but represent a minority of ads — and nothing like 50%. By comparison all or nearly all of YP’s $350 million mobile-attributed revenues are location-based or have a location component. That’s also true for xAd, Verve, JiWire, PlaceIQ and a few others.

It’s probably accurate to say about 20% to maybe 25% (on the high end) of mobile display revenue generally carries a geo-targeted or location-based component today. That percentage will grow. However there are complications and emerging nuances.

One challenge is that location is now being used to generate audience profiles and in many instances pushed into the background, which creates a bit of an “accounting problem” in determining accurate local-mobile ad revenue. For example, does a mobile campaign that targets business executives 30 to 50 years old (using location to profile the audience segment), but doesn’t explicitly use location in the creative, count as a “local campaign?” Should 94% all mobile ads involving traditional retailers (independent of the targeting or creative) count as “local” ads because 94% of retail spending is in stores and mobile users convert mostly offline?

More on all this to come. But putting the totality of these things together it’s probably more accurate to say that between $1.4 and $1.8 billion in mobile ad revenue in 2013 was location-based or geotargeted. However those figures may also be high.

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Can MapQuest Come Back?

Mapquest mobile logoA major question that haunts AOL, Yahoo, Microsoft (now with Nokia) and others is “can they come back”? Once losing a leadership or number one position are they simply relegated to second-tier status (or worse — think MySpace) or can they recover?

To my knowledge it hasn’t been done, although Yahoo regained its number one comScore Top 50 ranking for a 3 – 4 month stretch recently. But once the public has “moved on,” people generally don’t seem return to earlier usage patterns.

AOL’s MapQuest would argue that despite losing the top slot to Google Maps a few years ago it hasn’t fallen very far and is still very much a top-tier mapping site. The company reports:

  •  45 million monthly uniques
  • #2 mapping site on the PC; #3 app, #2 mobile web
  • 15 million mobile users

Long-suffering at the hands of its corporate parent, MapQuest SVP & GM Brian McMahon explained that AOL was now firmly behind it and patiently investing.

Mapquest

MapQuest is now in the process of migrating to a new platform, launching new content and features and will ultimately change the look and feel of the mapping UI. Right now the site is playing catch up. However McMahon hopes that ultimately MapQuest will win greater usage and loyalty through innovation.

The central changes, rolling out today, involve new profile pages that feature enhanced content and functionality from a range of partners including:

  • Yelp
  • Foursquare
  • GrubHub
  • SinglePlatform
  • SeatGeek
  • Booker
  • Federal Aviation Admin

MapQuest had pre-existing relationships with OpenTable, Priceline and MLB, which will continue. New content partnerships are reportedly also on the way.

Mapquest

MapQuest’s strategy relies in part on building the richest and most functional set of local profile pages it can. It believes that content depth and the capacity to do things like reservations and scheduling will make MapQuest more unique and offer a much more satisfying and useful experience for people.

I would like to see some real UI “innovation” as well.

While the map works well as a UI in many local search contexts it doesn’t work for all of them equally. Indeed, local is a collection of verticals that each have their own “cultures” and consideration cycles — shorter for restaurants, longer for home remodeling. Those differences could be reflected in the UI, to some degree, and available content by vertical/heading/query.

I like the people at MapQuest and would like to see them succeed. However so far I’m skeptical that they can regain lost ground.

What do you think?

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