The Praized Blog

Are user reviews important in local search? Data from the latest Kelsey Group/comScore survey presented today by Brian Jurutka from comScore seems to indicate it is critical from a user point of view as 24% of online consumers have used an online review site prior to buying an offline service in the last 3 months.  In addition, more than 75% of those review-informed purchasers cited online reviews as influential in their purchase decision process.

Why are consumer reviews influential?

• They are seen as unbiased 3rd party feedback
• They are efficient
• They provide an opportunity for feedback

Who writes reviews?

• Broadband users, young professionals, 25-49. 46% of review users have contributed a review as well.

Why do consumers write reviews?

• Helps other consumers (62%)
• Gives me “consumer power” (44%)
• It’s a fun activity (33%)
• It helps me “get back” at a provider after experiencing poor service (24%)
• I was compensated to do it. (19%)

Other highlights:

• Better reviews drive higher revenues. Consumers were willing to pay 20% more for services that were rated 5 stars vs. 4 stars.
• In addition, a significant portion of people were not willing to purchase from a 1-star place.
• 97% believed the review was accurate post-sale.

Update: the official press release.

In his keynote address, Jake Winebaum also told the crowd how he thinks directory publishers can succeed in local search.

Here are those 10 things:

1. Keep it simple
2. Be on the offensive
3. Invest in talent
4. Invest in technology and acquisitions
5. Become a metrics-driven organization
6. Focus on user experience
7. Ubiquitous distribution
8. Leverage sales force and advertiser base
9. Transparency of pricing and results to advertisers
10. Enjoy the ride

Jake Winebaum, President, RHDi, CEO, Business.com, took the stage yesterday afternoon with a very interesting keynote address at the Kelsey ILM 07 Conference in Los Angeles. Winebaum joined RHD three months ago following the acquisition of Business.com by RHD in July and he offered his first observations on the local search market and the blessings/curses of being an incumbent publisher.

On the blessings and curses of being a media incumbent, he listed “brand”, “scale” and ”business model” as both blessings and curses with the only differentiator being strategy and execution.  RHD has a great brand with Dex but that brand does not necessarily mean local search.  Scale (especially in sales) can make you very successful but at the same time can be very bureaucratic. The yellow pages business model is an amazing one as it is an pure advertising model with great cash flow and margins but it’s tempting not to question it and protect its large margins.  He added that incumbents usually start with a defensive strategy when competitors attack and that they need to attack their own business in order to be win in the long run. He concluded that the strategy needs to be focused on offense, that it needs to take into account the needs of both advertisers AND users and finally that execution has to be efficient and crisp.

On his first observations about local search, he listed the following challenges:

• Local search is fragmented from both a user and advertiser point of view.  To compete effectively in local search, companies have to aggregate a critical mass of local queries and local advertisers to create a true performance-based ad marketplace.
• The IYP user experience is compromised by selling rules as it is built on print model and rules. It needs to become relevancy-based.  Companies that create a better match between users and sellers will create more loyal users and generate better ROI for the advertisers.

He also listed the following opportunities:

•  The yellow pages advertiser base and sales force offers unmatched market coverage and advertiser penetration.  Companies that effectively leverage their existing sales force and advertiser base will be winners in local search.
• Ad dollars follow usage. As the local search market is in its early stage of development, local usage currently exceeds local advertiser adoption. Companies that make it simple and easy for SMEs to harness the Internet efficiently and effectively will be winners.
•  Vertical user experience. Current local search user experience is generic. Companies that can aggregate deep vertical local content and create unique vertical user experiences will be winners.

What it means: again a very honest look at the local search market from one of the top executives in the US directory industry.  I had the same feeling when I listened to Scott Pomeroy at the last Kelsey conference in September.  I think Winebaum is right when he says it’s now time for clear strategy and crisp execution.

My friend Heri “twittered” me this picture of a Google print ad published in the San Jose Mercury News that uses a trackable barcode (so-called QR codes). These codes come from a Google open source project called ZXing attached to their Android mobile platform. From what I understand, you basically take a picture of the code with your camera phone and it loads up a web page with more information.

(Flickr photo by Chika)

According to Wubbahed.com, “Google is going to trial QR codes with print advertisers. This shows that Google is going to start actively pushing bar codes, but more importantly, it shows that they’re moving more into the print area, even if it is just to link people to online services.” Wubbahed.com also had a slide from MobileCampNYC showing what Google is thinking of doing with those barcodes.

What it means: as most of you know, Google is on a quest to make all advertising trackable (therefore proving ROI to advertisers). Barcodes are one of the way (along with trackable phone numbers and URLs) to directly measure offline advertising success. Multiple companies have tried to build a business around barcodes in the past with not much success (among them Digital Convergence and NeoMedia). Going open source might be the way to create a de facto standard. Big question: I wonder if Google will be able to track the traffic going through open source deployments.

Update: Sean Owen from Google provides some additional information in the comments: “One teensy clarification — the codes are not generated by the zxing project; it’s just a decoder. And so far it is not part of Android, though we hope to release our Android client pretty soon here.”

While the blogosphere is slowly discovering what Facebook Beacon does, MoveOn.org, a US advocacy group, has launched a campaign against the new advertising system. They’re asking users to sign a petition and join a Facebook group to protest what they call a “huge invasion of privacy”.

With the help of this blog post from Charlene Li (Forrester Research), I’m starting to understand more what the Beacon ad product does. Charline explains that her husband bought a coffee table on OverStock.com and that when she next logged in to Facebook, she saw this mention at the top of her newsfeed.

She explains that “Facebook Beacon is merely a small piece of script that allows the partner site to put a cookie on your browser. So when I bought the table, an Overstock cookie was created, which then transferred the information to Facebook. Facebook then checks to see that the same browser is logged into Facebook, and shows the information.”

Many in the blogosphere are concerned by this new ad product. In response, Chris Kelly, chief privacy officer of Facebook, said in Wednesday’s Wall Street Journal that “Facebook is transparent in communicating to users what it is tracking. When a user visits an outside site and completes an action like buying a movie ticket, a box shows up in the corner of his Internet browser telling that person the outside Web site is sending that information to Facebook. The user can opt out by clicking on text that reads “No, thanks.” If the user doesn’t, the next time they visit Facebook, the user will see a message from Facebook asking for permission to show the information to their friends. If the user declines, the information won’t be sent.”

Phil Windley from ZDNet has a great conclusion to the whole fracas: “Facebook realizes that simply relying on the targeted ads of the past won’t garner much attention and that they have a tremendous asset in the social graph within their system. Facebook Beacon is an attempt to capitalize on that by using the social graph to make advertising more useful for the customer and more profitable for Facebook. Unfortunately, they got it wrong. Instead of advertising, they should have focused on recommendations. No one is going to say “please show me more ads based on what my friends like.” But plenty of people will ask a friend to recommend digital cameras or books to them.”

Update: Peter Kafka (at Silicon Alley Insider) offers Facebook two solutions to resolve the situation. “The short-term solution: Turn off Beacon until you can make it fully opt-in. The long-term solution: Let users sign up for Beacon via Facebook, and give them a reason to do so.”

According to Keller Fay Group (via the Center for Media Research), there are 3.5 billion brand-related conversations per day in the U.S. 8% (280MM) of those are happening online. Let’s speculate for an instant. If 25% of those online conversations are local in nature, that means an impressive 70 million local conversations are happening online every day in the US in e-mails, instant messenging, blogs, forums, social networks and other online communities.

Let’s equate these conversations to local searches and compare them with ComScore “IYP” searches. According to this article from SearchEngineLand, these totaled 808MM in the US in Q1 2007. In a three-month period, 6.3 billion local conversations are potentially happening online. That’s 7 times the total “IYP” searches universe! And a whopping 35 times the total of the current leader, Yahoo!

What it means: for anyone who doubted that local search was very fragmented online, I think these numbers speak for themselves. In addition, the ability to deploy a social media strategy for anyone operating in that space is key.

I am attending the Kelsey Group’s ILM 07 conference next week in Los Angeles (e-mail me at seb AT praized.com if you want to connect). Taking a look a the various speakers and presentations, here are the ones I’m most looking forward to:

Wednesday November 28

1) Industry Overview by the Kelsey Group Analyst Team. Always interesting and insightful.

2) Jake Winebaum, President, RHDi, CEO, Business.com. I’m dying to know how RHD will leverage Business.com in their core strategy.

3) Jay Herratti, President, Citysearch. Will Citysearch’s strategy change with Herratti on board?

Thursday November 29

1) Chamath Palihapitiya, VP of Product Marketing & Operations, Facebook. Will we learn about Facebook’s local strategy?

2) The “Localized E-Commerce” panel. I’m a strong believer in the “last-mile of local search” (local product inventory, in-store navigation, tuangou, etc.) but it’s very difficult to execute.

3) The “Future of Local Mobile” panel. As local and mobile is on the verge of exploding, this will either be an incredible panel or will be very boring.

4) A Conversation With Webpreneur Jason Calacanis. Now, this should be fun!

Friday November 30

1) Marchex and The Vertical Opportunity in Local. Marchex has some amazing local assets (localized URLs, VoiceStar, SEM platform, etc.). I’m always interested in learning more about their local strategy and how these assets work together.

2) Injecting ‘Social’ into Local Media. It’s the theme of the Praized blog…

For people attending, see you all next week!

While browsing through this morning’s interesting web links, I found a praized-worthy combo of articles. The first one talks about lawyers advertising in business directories:

“The Yellow Pages AssociationT (YPAT) recently announced that, according to a new Attorney Advertising Perceptions Study from Wiese Research Associates, consumers have rated Yellow Pages as the most acceptable form of attorney advertising. Almost half of respondents said they would use the Yellow Pages to select an attorney if they were not familiar with or referred to a particular attorney. So, it’s no surprise the “Attorneys-Lawyers” Yellow Pages heading ranks sixth out of more than 4,000 headings and generates nearly 290 million references annually.” (via the West Virginia Record)

The second is a letter from a reader of the Sarasota Herald-Tribune talking about their new Superpages directory:

“My new Verizon phone book arrived, and in leafing through it, I discovered that lawyering appears to be the biggest business in town. Before I even cracked the covers of the new directory, I was exposed to five attorney advertisements on the cover’s front and back and on the binding and bottom. Inside, many residential pages had ads for attorneys. And the Yellow Pages? There were 87 pages for attorneys but only 45 for restaurants and 42 for physicians.” (source: HeraldTribune.com)

What it means: this is what I call a great vertical for directory publishers: high usage and advertising revenues. But a comment from one of the lawyers interviewed in the Record makes me think this heading might come under assault by social media soon. “Most of my clients are referrals and former clients” says Charleston attorney Rusty Webb. If the web is truly becoming a big word-of-mouth machine, usage might migrate to social media in the future and this might impact revenues if publishers do not have a social media plan in place.

(Flickr picture by brookenovak)

This morning’s Wall Street Journal summarizes the various elements of Google’s mobile strategy:

• Developed Android software for mobile phones.
• Made Google applications — including email, chat and mapping — available on cellphones.
• Sells advertisements for certain Web sites accessed by cellphone.
• Enables users to do Web and business searches with cellphone browsers, by text message or with a call.
• Is testing an advanced wireless network at Google headquarters.
• Operates a free Wi-Fi network in Mountain View, Calif.
• Expected to bid for wireless spectrum in a January FCC auction.

What it means: very serious, multi-prong wireless strategy. Google definitely sees the opportunity in mobile. BTW, I find myself blogging more and more about mobile internet. This must mean something…

Sock Puppeting: assuming a false identity online to promote a product or company online.

(in word-of-mouth lingo, as seen on MediaPost.com. Flickr photo by greefus groinks )