“Search disruption is coming!” and 9 other expert insights From LSA16
The Local Search Association held its annual conference last month, where search and marketing experts in the local space provided fascinating insights into trends and challenges that the advertising, marketing and search industry faces today.
Here are 10 of the top insights shared at LSA16.
1. Search disruption is coming
Online search has essentially followed the directory listing model, whether it be search results from Google, restaurant reviews on Yelp or hotels on TripAdvisor. Yet a number of speakers at LSA16 shared innovations that deviate from this traditional model that owes its genesis to print directories.
Virtual assistants and artificial intelligence have been talked about for a number of years since their launch in 2011. Google voice search was launched in mid-2011, and Siri was launched towards the end of 2011. However, they’ve largely been limited to setting calendar events, making witty responses to dumb questions and inspiring dreams about what the future could hold. Search performed on virtual assistants was negligible. Until 2015.
In 2015, voice search soared to 10 percent of all search volume globally. According to Timothy Tuttle of MindMeld, that’s a jump from a statistical zero to 50 billion searches a month that are now being performed by voice search. The numbers are corroborated by an eMarketer report that cites even higher usage.
Voice search is resulting in longer natural language queries on Cortana, according to Microsoft. And these queries reveal greater intent by the user that give better search results leading to declining importance of keywords. TalkLocal explained that queries for “help fixing a leak in my pool plumbing” or “my water heater burst and it’s coming through the ceiling” are superior to a keyword search for plumber.
Jonathan Swanson, co-founder and president of Thumbtack, also spoke at LSA16, where he shared that the company’s business model likewise was built on innovating search away from the traditional listings model. Thumbtack takes customer input on what is needed — such as details on what days, time, distance, number of dogs, breeds and neighborhood for a dog walker — and returns task- or project-specific bids by professionals packaged with profiles, reviews and other information.
Speakers from Retale and Aisle411 talked about Virtual Reality and ways that VR can be practically utilized in retail, automotive and real estate, such as in-store navigation and experiencing a product before purchase. This is another technology that is no longer conceptual in adoption, with estimates that VR will be a $30 billion market by 2020. Consumer and business interest is booming, as revealed by Twitter impressions at SXSW: VR had more than 100 million impressions at the conference, with the next highest technologies being mobile apps and robotics, at about 30 million impressions each.
2. SMBs need help and aren’t getting it
The day before LSA16, we held an SMB Bootcamp, one of four we have planned for the year. At this interactive one-day education-focused event, the question was asked, “How many currently have a paid search campaign?” Only two or three people out of about 100 raised their hands, yet it seemed half the room indicated they had tried a paid search campaign in the past.
It’s clear that many local businesses have had a poor experience or were disappointed with the performance of paid marketing campaigns. It’s likely they are managing these campaigns on their own; according to a study shared at LSA16, 71 percent of small businesses manage their own marketing.
Of those that do work with a marketing provider, churn remains high, over 50 percent. Previous studies showed that the biggest complaint by SMBs about providers was that they didn’t provide any value. Yet even when they handle it on their own, SMBs remain skeptical about the return they are getting from digital media buys and struggle with measuring performance and ROI.
3. SMBs want providers to “show me the money”
Providers are responding to demands for proof that digital marketing is working. ReachLocal changed its business model based on experience that smaller budget clients want to see metrics and analytics that show the value of the work they are getting compared to higher budget clients that want more hand-holding and service. This is a win for both sides, as metrics and analytics can be provided on an automated basis without the need to incur costs for servicing those with less to spend.
Google data support that practice in finding that more frequent reporting is directly related to lower churn rates. Frequent reporting also correlated to higher ratings and higher satisfaction of those reports. Those who received weekly reports rated reporting as excellent or very good 54 percent of the time. Forty-eight percent did so for monthly reporting, and only 14 percent did so when reporting was less often.
Google also reports that providers can win back clients by committing to some changes. Fifty-eight percent of former customers state they would return if they saw results or a better explanation of results, were offered different pricing options and/or received better support.
4. Online-to-offline attribution will get a big boost from mobile
Most sales are still made offline. xAd cited data that 90 percent of commerce is offline and 75 percent of mobile users convert offline. To satisfy SMB demand for demonstrable ROI from marketing, the attribution of offline sales to online media must be made.
Trying to track a user who sees an ad or clicks forward to a landing page with someone who later walks into a store has traditionally been a challenge for marketers, and that’s one of the main reasons SMBs express dissatisfaction with digital marketing. Fortunately for marketers, the surge in mobile is helping make that connection. With consumers checking smartphones on average 150 times a day, and about half of all use occurring while they are out and about, location technology is making true attribution possible.
Jason Uechi, Director of Engineering for YP Mobile Labs, shared how YP uses its 150 million profiles of users to tie ad impressions and engagement to those who show up in stores. Store visits are captured through a variety of methods based on mobile device location, including GPS data from apps, background tracking, check-ins and beacon technology. The visits are then matched with data on profiles targeted with ads including impressions and clicks.
Case studies shared by YP, xAd and Foursquare all demonstrated a lift in store visits that were attributable to digital advertising by using these “tracking” metrics, and it is measurable results like this that SMBs are looking for.
And who has more reach than Facebook? At LSA 16, Facebook shared its offline conversion lift testing through “closed loop measurements,” where it creates a control group with no ad exposure and a test group to whom ads are delivered. Facebook will take uploaded conversion data, compare it for both groups and calculate the lift provided by the ad campaign.
5. Differentiation is needed in a commoditized marketing environment
Marketing technology — such as programmatic buying, automated CRM tools like online booking, DIY portals and free platforms like social media pages — have led to a commoditized marketing environment. This presents two problems: shopping for a marketing partner becomes a “lowest bidder” decision, and it is much harder for marketing providers to distinguish themselves from the competition.
Several speakers at LSA16 from Yahoo, DialogTech, Milesone Internet and Tiger Pistol described how to overcome these problems by creating an identity through branding and by emphasizing personalized service as a value add.
MapQuest incorporated both of these means in redefining its product. MapQuest faced real threats to its relevance from other more widely used maps that were usually integrated with users’ mobile device operating systems — Google Maps and Apple Maps. Yet Brian McMahon, MapQuest’s General Manager, distinguished the company’s product from the mass audience maps of his competitors by changing its culture.
MapQuest is leveraging its small size to relate more to users and to build a brand around human experience, life moments and everyday decisions. Instead of being just about maps, information, directions and search, MapQuest wants to be about discovery, exploration, suggestion and insight. They even put a customer service phone number on their map. Check out this video to get a feel for how they are connecting with their customers.
6. The Evolving Sales Model
SMBs have clamored for some time that they need people to help them, not sell them. This seems to finally be getting traction with marketers, as recognized by BuzzBoard, G/O Digital and Vendasta at LSA16. Especially given the rise in content marketing, it is increasingly important for marketers to know their customer, the product or service and their audience in developing suitable content.
ReachLocal is an example of how drastic a difference such changes can make to a business’s success. By shifting from a media delivery model to a client-centric model that emphasized client service, customized goals, staff training and tying sales compensation to retention, ReachLocal boosted client retention by 50 percent in one year.
We saw these principles in practice at our SMB Bootcamp, where we have a “no sales pitches” policy for speakers. SMBs became much more relaxed and open as they understood they were getting helpful information, and the event maintained a highly positive vibe. Everyone expressed a genuine desire to see local businesses succeed, and as a result, the speakers were not just applauded, but cheered. In the end, those same business owners, in turn, sought out our sponsors and speakers in the exhibit hall, where sales pitches were welcomed.
7. The no-selling sales model
Thumbtack uses no sales force. That’s zero sales reps. Yet it drives more than $1 billion in annual revenue for local service providers that use its site and recently received $125 million in its fourth round of funding over the last two years. At LSA16, Jonathan Swanson, Thumbtack’s co-founder and president, shared the business model that made this possible. Consumers fill out forms that detail what kind of project or work is being requested. Those requests are forwarded to service providers that closely match the location and work request. Thumbtack only charges a fee when the provider responds to a lead with a price quote and message.
Thumbtack is able to attract service providers with low-cost access to consumers and a fee model that guarantees high-intent leads that the provider can evaluate before paying for it. If you have something people want, it seems they will knock down your door to get it.
Giving users what they want is also the foundation of Google’s approach to innovation, according to Ben Wood, director of channel sales at Google. While Google does have sales teams, it has built its business on others, such as ad agencies, selling for them, which is only possible because it has always been user-focused. As part of that mindset, Google recently eliminated ads in the right rail/column of its search engine. For a company that makes 90 percent of its revenue from advertising, with much of that from AdWords, that action seems contrary to a successful sales model. Yet putting users first and constantly adapting to new expectations is what drives Google’s success.
Yelp has likewise adapted its platform to cater to users’ wants, leading to its reach of more than one-third of all US adults and almost 100 million reviews. Yelp COO Geoff Donaker stated that in response, Yelp now has 100,000 paying advertisers and two million claimed business profiles. New functions Yelp has added include booking, integrated commerce, messaging and a Thumbtack-esque request for quotes from home service providers.
8. Simple and easy also sells
I remember wondering why people would pay 99 cents for a song on iTunes when they could download it for free from Napster. Staples’ Easy button campaign sums it up: easy sells. Even as digital technology is meant to simplify marketing, the plethora of digital products and services competing for attention can be suffocating. Anything that cuts through the clutter is appealing.
Constant Contact just added its version of the “easy button” to leverage client email contacts and content for use in high-demand social media marketing. When clients send out an email blast through the platform, they can also choose to run a Facebook campaign. Constant Contact develops a Facebook post from email content and targets those same contacts through Facebook’s Custom Audience. While clients could upload the contact list to Facebook on their own and cut and paste part of an email into a FB post, the one-step convenience offered by Constant Contact is selling. So far, about 10,000 customers have elected to try the service.
Thumbtack also built its marketplace of service providers from scratch by offering to auto-post services on Craigslist, so that advertisers wouldn’t have to repeatedly repost their classified listing to keep it fresh. Again, this is something that providers could do on their own, but the convenience factor (and that it was free) was attractive.
9. Print may not be sexy, but SMBs dig it
Four SMBs from the Bootcamp agreed to join a Q&A panel about issues they face in marketing. Unsolicited, they each expressed the importance of print marketing in maintaining current business. The uses included directory listings, ads in tourist maps, flyers and print media ads.
It’s not that they were unsophisticated business owners. Far from it. However, they did express concerns with digital marketing, as discussed above. They viewed digital media as necessary for engagement, particularly on social media, where they knew their customers spent time. They also viewed digital marketing primarily as a growth strategy. But every one of them emphasized that print was a vital part of their marketing. Print helped them retain existing customers.
10. A bird in the hand is worth 5 to 10 in the bush
Kristin Coit of Google shared some data regarding churn that supports the above SMBs’ attention to existing customers. It costs five to 10 times more to attract a new customer than to retain an old one. So losing a customer to churn hurts.
Retaining customers is not just important from a cost standpoint, but from a revenue one, as well. Revenue can be expressed simply as Revenue = Acquisition + Upsell – Churn. Kristin shared that the probability of selling to an existing customer is 60 percent to 70 percent, compared to five percent to 20 percent for a new prospect. So investing in taking care of your existing customers is a prudent business decision.
Churn is a big enough issue for Google that it has made it a “20-percent time” project out of which products such as Google News, Gmail and AdSense were born. It now offers some programs to help its partners support retention and reduce churn, including predictive churn reports, churn history analysis and advertiser tenure and performance reports.
In all, we had a great conference, and I hope you can join us next year. If you’ve made it all the way through these 10 points, here’s a bonus for you. Check out this video of 11 Predictions for Local Marketing in 2016 made by marketers attending LSA16. If you don’t have six minutes, skip to the 5:19 mark. Enjoy!