The Praized Blog

Loic Le Meur takes a stab at predicting Twitter’s future and lists 30 predictions on his blog. Here are some related to local media:

• “It will reach masses of people”. Reaching masses of people means “mass media” but with a strong local tangent.
• “Status updates will be open across social software. All social software will have status updates”. I make the same claim in the “perfect local media company” presentation I’m doing at the Local Social Summit tomorrow.
• “We will laugh thinking we were updating them all manually. Location will be one of the most widespread status update”. From a local point of view, expect mobile devices to ping Twitter with our permission.
• “Live reviews of any place and product will deeply influence it though”. Ah! Couldn’t agree more. This is the biggest opportunity and threat for traditional local media.
• “Promos by brands and retailers will have big success for last minute deals”. This will be the core monetization model of real-time conversations and search for local media. Newspapers & coupon companies are already well positioned for this kind of product. Directory publishers not so much.
• “Talking to shops and restaurants via Twitter will become standard and will get opt in coupons as we enter a shop, based on location”. This is the natural evolution for small businesses. First they will listen, then they will engage and offer promos.
• “Hyperlocal news sites with Twitter geotagging feature”. Obviously, Twitter will be a powerful broadcast mechanism for local news.
• “Google will have its own Twitter and won’t acquire Twitter”. This means traditional media publishers will have to contend with two (three if you count Facebook) major worldwide competitors (or coopetitors depending how you see the world).

Le Meur is also the organizer of the LeWeb conference happening in Paris in December. I will be attending the conference as an invited blogger.

Merchant review functionalities and sites are all the rage currently in the Yellow Pages industry. In the last 2 months, amongst others, we have seen:

1. Truvo launch their own social site under the Truvo.com URL
2. Eniro launch a beta social site under the Rejta.se URL
3. AT&T Interactive announce the launch later this year of a social Yellow Pages site under a different brand than YellowPages.com
4. Herold, the Austrian directory publisher, make an investment in Tupalo, a Yelp-like destination site.
5. Canpages, the independent Canadian directory publisher, acquire assets from ZipLocal, a Canadian merchant review site.

Often called Social Yellow Pages sites, the biggest representatives of that category are Yelp (US, UK, Canada) and Qype (most of Western Europe). Both are independent, venture-funded companies. As of June 2009, more than 22 million people had visited Yelp in the past 30 days according to published internal numbers. Yelp users had written over 6 million local reviews. Qype had 9M+ unique users in May 2009 (+350% in 12 months) and 1M+ reviews.

Impressive usage numbers but an important challenge remains for these sites: monetization. For example, even though Yelp has been extremely successful from a user point of view, revenues are still low in proportion. Articles from 16 months ago mentioned Yelp’s revenues were “rumored to be sub $10 million/year” (I discussed Yelp’s monetization strategy here.)

On the other side, directory publishers, even though they’ve had for the longest-time advertiser-focused web sites, have been extremely good at generating revenues out of their web sites. For example, Yellow Pages Group (Canada) generated $C 247 million in online revenues in 2008. Over the same period, Pages Jaunes Groupe (France) achieved 471 million euros in online revenues. In the US, Yellowbook’s online revenues were up a spectacular 97.5% to $US 227 million in the last fiscal year.

Why is that? Yes, we could obviously underline the fact that these publishers represent trusted media brands, that they have large sales forces and that regular merchant contacts all play a big role in their financial success. But I would posit the moment in the consumer purchase decision process when online directories are used plays a bigger role in monetization potential.  Looking at the traditional decision process (see diagram below), online directories are clearly used when consumers are doing information search and evaluation of alternatives. Consumer reviews only happen at the end of the whole decision process, at post-purchase evaluation. Consumers will obviously look at past reviews as a proxy when doing information search but I don’t think it’s as attractive a real estate for advertisers.

Figure: Consumer Purchase Decision Process (source: Tutor2U)

I’m definitely not saying consumer reviews are useless from a strategic point of view. Consumers love to provide feedback and they love to read comments on merchants to make up their mind. I’m saying directory publishers should see reviews as one of the elements on which they build their social media strategy and one that happens at the end of the purchase cycle. It should be integrated within a more complete social media consumer purchase decision process strategy.

The filter of the consumer purchase decision process is very powerful to see who’s competing against you and to identify opportunities. Google, for instance, is clearly used by consumers when they do information search and comparing alternatives. This explains why the search giant from Mountain View is perceived as a serious threat by most directory publishers.

Enter Twitter and Facebook, the new juggernauts of the real-time conversation and real-time search world. Where do they fit in that purchase decision process? They’re definitely used for information search as well. If you search on Twitter for “Can anyone recommend” or “Looking for“, you’ll see that, every day on Twitter, thousands of people are asking for recommendations and advice. That’s why, by the way, we implemented a social media broadcast mechanism in our Praized-powered Local Answers module (used here by Yellow Pages Group in Canada) to send consumer requests to Twitter and Facebook. But I think what’s even more powerful with this new real-time conversation world is the fact that people are now actually expressing needs to the world. More than 100 people per day on Twitter say:

• their car or someone’s car broke down
• their dog is sick (or they’re sick as dog!)
• they’re moving out
• they (or someone they know) is getting married
• someone they know just died (mom, dad, cousin, grandma, grandpa, aunt, uncle, etc.)
• they (or someone they know) just had a baby
• they (or someone they know) are going to college

All these consumers are facing major life events (or know someone that are facing one) and are amazing advertiser leads for any publishers that can corral them. Consumers now want to express their needs/problems and have people/companies come to them with solutions. As I expressed in my “I have seen the future of local media” blog post, this is a new and important consumer behavior online. That’s why I believe every local media publisher will be introducing locally-relevant real-time conversation and real-time search tools within their Web sites in the next three years. That’s why I believe social media lead generation, customer and reputation management tools will become more prevalent in the next few years. That’s why publishers will introduce social ratings/reviews functionality to allow consumers to close the purchase loop after expressing needs and shopping for options. But be aware that Twitter and Facebook will certainly go after this market. This is probably the biggest opportunity directory publishers have seen since the arrival of the world wide web but it needs to be a complete strategy. Merchant reviews alone do not make a social strategy.

Bloomberg just published a short interview with Tim Kendall, Facebook’s director of product marketing for monetization. In it, we learn that small businesses seem to be embracing Facebook ads.

Facebook Inc. said the number of customers using its automated online-advertising system more than tripled in the past year, a sign more small- and medium- sized businesses are turning to the social-networking site.

The ads, which include text and photos, target users that might want to go to a local hair salon, hire a wedding photographer, or are close to buying other products, said Tim Kendall, Facebook’s director of product marketing for monetization. The service lets companies target users based on the information they put on their profiles, he said.

“You basically just have a greater diversity of people using our ad system — lots of businesses, lots of local businesses finding success,” Kendall, 32, said in an interview. “It’s really been a steady, successful growth pattern.” He declined to provide specific revenue data.

What it means: not surprised that early adopters in the small business community are creating ads on Facebook.  You can do great local targeting because many users have disclosed their location or city network. For example, in Canada, you can target over 1.3M people living in the Toronto area.  Additional targeting on age, sex, specific profile keywords, education, workplace, relationship status, and language allows for precise reach. For example, did you know 1,182,540 people have the keyword “travel” in their profile in the US? And you see your potential total “reach” in real-time in the targeting tool.

Because Facebook advertising is performance-based, you only pay for clicks to your web site or Facebook page.  I suspect though the click-through rate must be low today and that it’s currently  a number’s game, i.e. get the ad in front of as many targeted people as you can.

In my humble opinion, Facebook’s current ad product is not optimal. It still does not leverage the social connections (what are my friends buying or suggesting) or the social intentions (what were your recent status updates about? Are you signaling an unmet need?). When the Facebook product team pushes forward with improvements like those, expect ads to become very interesting from a ROI point of view.

To provide an actual example to my readers, I found this Facebook ad from a Montreal-area flower shop called Camille Fleuriste Boutique Inc.

They describe themselves on Facebook as “a full service floral shop with over 40 years of experience”. They created an ad that points to their Facebook page.  I wonder what their experience with Facebook ads has been.

Friday’s New York Times analyzes a quote from one of the VCs that has invested in Twitter. We learn that shopping and e-commerce might play an important in monetizing the social network’s product recommendation traffic:

Someday, when you ask your Twitter followers to recommend the most comfortable running shoe or the best digital camera, you might be able to go one step further and buy the product on the Twitter site.

E-commerce, including links to products and turnkey payment mechanisms, is a likely revenue stream for Twitter, said Todd Chaffee, a Twitter board observer and general partner at Institutional Venture Partners, which has invested in Twitter. (…)

Many companies are already on Twitter, monitoring what customers say about them and offering discounts and promotions to their followers. And many people use Twitter to ask for recommendations, like which type of gadget to buy or which movie to see. Since Twitter is already becoming one of the best shopping resources, Mr. Chaffee said, why not enable people to make purchases from the site as well?

“Commerce-based search businesses monetize extremely well, and if someone says, ‘What treadmill should I buy?’ you as the treadmill company want to be there,” Mr. Chaffee said. “As people use Twitter to get trusted recommendations from friends and followers on what to buy, e-commerce navigation and payments will certainly play a role in Twitter monetization.”

(seen in Mashable)

What it means: for Twitter, everything points in the direction of word-of-mouth monetization through shopping. E-commerce is a low hanging fruit given the strong existing affiliate program eco-system on the Web but the natural extension for Twitter will be local merchants (including services). And what is the equivalent of e-commerce affiliate programs for local? Possibly request-for-proposals and pay-per-call.

Update (June 22, 2009): Evan Williams, Twitter’s CEO, replied to the New York Times article and, according to ReadWriteWeb said “To be clear: Todd is a Twitter investor and a very smart and helpful guy. However, he is not actually on Twitter’s board and, in this article, he’s brainstorming on his own. These are not in the least bit concrete plans of the company.” I’m still convinced they will go in that direction. It’s a completely natural evolution, whether they want it or not…

If interested, follow me on Twitter at @sebprovencher

Heard from Stephen Taylor, Qype’s CEO, this morning in a presentation titled “Competition from new business models”. As most of you know, Qype is a social local site in Europe (we could say it’s the equivalent of Yelp there).

Here are some interesting data points about them:

• The largest local review site in Europe (also present in Brazil) – 6 languages
• Reviews in 140 countries (I think they allow anyone to add listings from any country)
• 9M+ unique users in May 2009 (+350% in 12 months)
• 1m+ reviews
• They monetize using display advertising, Google AdWords, eCom and transaction revenues and premium business listings

As Taylor said, their business leverages the fact that anyone with a keyboard is now an author, that anyone with a browser is a publisher. With the rise of social media, presentation of facts/data is not enough to sustain an audience. It’s now about sharing, community, connecting with other people. I think he described it perfectly when he said ”people + algorithm is better than algorithm”. Today, we’re in the fourth phase of the evolution of search (he calls it social search) which includes editorial, automation and topology.

As for future developments, Taylor offered the following advice: recognize where audiences are and he mentioned the long tail of the Web (smaller sites, blogs, forums, etc.). He said that’s where people are connecting. Qype is ready for those new opportunities via their open API currently in v1 (which exposes geo content). v2 will allow content to be written.

What it means: I think Qype is a very interesting company. They’ve been able to corral the voice of the European consumers. I agree with the future direction, of trying to embed yourself in smaller web sites. I was a bit disappointed by their monetization strategy. I was hoping they would have been further ahead in terms of sources of revenues.

In the last couple of weeks, I’ve been reading the various news around the newspaper industry: fundamental reorganizations, large-scale layoffs, difficult collective agreement negotiations.  But not all is doom and gloom. According to an MS&L survey, discussed in Advertising Age, “84% of digital influencers go online to find out more about something only after first reading about it in magazines and newspapers or hearing about it on TV or the radio. ”

Most of my readers know I’m a newspaper junkie. Ten years ago, I was subscribing to 3 daily papers.  Today, none.  I still buy the Saturday print editions (for my US readers, Saturday editions in Canada are the equivalent of Sunday editions in the US) of two newspapers though. But, guess what? I’m not consuming less news than 10 years ago. In fact, I think I consume more news today but its format has changed. We have access to news 24/7 on a variety of offline and online medium.  I watch news on TV in the morning before leaving for work, I listen to news on radio while surfing media web sites on my mobile device during my public transit commute, I get news pushed to me by my Twitter and Facebook friends, I read the free transit daily newspaper during my lunch hour, I do the radio/mobile Web thing in the commute back and I often catch the late night news (at 10pm here).  Did I tell you I love news and newspapers?

The challenge with newspapers is not overall readership.  It’s about user fragmentation and how to monetize those fragmented eyeballs.

The print version used to represent 100% of readers and 100% of revenues. Now, that version represents a smaller percentage of readers but still a large chunk of the revenues. According to a report published by ContentNext, the New York Times ”would have to increase page views sixfold on its Web site–roughly on par with msnbc.com and Yahoo News–in order to equal revenues on the print side.” (source: Mediapost). Monetization is clearly an issue. BTW, any company that comes up with a better model to monetize online news will be very rich. What this means is that newspapers now need to extend their content to multiple media (print, online, mobile, etc.) in order to, at best, maintain their revenue levels.  Expansion in other media might mean future revenue growth but right now it’s mostly about short term sustainability.

Source: swanksalot on flickr

Which brings me back to the very difficult collective agreement negotiations we’ve been hearing a lot about in the last 12-18 months in the newspaper industry. Warning! I’m sure that what follows is a gross oversimplification of the situation but that’s the way I see it. As an outsider, I feel the main sticky point in negotiations is often around the ability for newspaper organizations to re-use content in multiple media. Unions are usually very much opposed to it.

My question to union organizers is: what if there’s no turning back?  What if newspaper organizations are now facing radical changes which requires them to extend the journalists content to multiple media without having the ability to increase resources?

My question to newspaper management is: why isn’t there more open discussion around that fact? Why is the union perception still that this is about creating “more” revenues? And why don’t you offer financial upside to journalists in case online monetization picks up in the future?

Radical industry changes require a new type of labour relations but that’s not what I see today.

Continuing our series on the atomization of content and business models, today I look at the newspaper industry.

First, from the user point of view: online (vs. the print version), it’s much more difficult to find the glue that will make your news container (your URL) stick together. if you have a strong brand (the New York Times, for example), people will navigate directly to your site but readers can now access your content via RSS readers, blog posts and news aggregators like Google News. These have been flourishing, reorganizing newspapers’ articles (the new content atoms), into flexible reading formats. For newspapers, it’s a catch-22. You want to be indexed by news aggregators to drive traffic back to your site but you wonder if you’re losing brand equity at the same time. Efforts at trying to get readers to register to newspapers’ sites (to generate potentially valuable socio-demographics information) have been a major failure. Clearly, the only strategy now is building a strong brand online while allowing readers to access your atomized content via a variety of vehicles but that creates problems from a monetization point of view.

Traditionally, the newspaper business model has been found in these three revenue categories: reader subscriptions, traditional display advertising and classifieds. Except for a few exceptions (the Wall Street Journal comes to mind), experiments in paid online user subscriptions have been failures as digital content is much more difficult to sell as an aggregate than print content. Classified revenues are being nuked by free sites like Craigslist or Kijiji, or aggregators like Oodle. Newspapers have been also forced to offer free classifieds, managing to generate some priority placement /enhanced content revenues but not to the previous print level. Online display advertising is working but it does not monetize as well as print advertising.

To better monetize their destination site, newspapers have been looking at various new solutions. One is in-line text ads (double-underlined sponsored keyword ads appearing directly in the article text) delivered by companies like Vibrant Media but, as I mentioned yesterday, the blurring of the line between editorial and advertising content has created ethical issues within news organizations. Already in 2006, in an article called “Is It News…or Is It an Ad?”, the Wall Street Journal exposed the various issues around the product:

“This type of online advertising within the text of an article, known as in-text advertising, has been around for a while. But it used to be relegated to niche sites like the videogamers’ haven IGN.com and ScienceDaily.com. Now it is appearing on some mainstream journalistic Web sites, like those of News Corp.’s Fox News, Cox Enterprises Inc.’s Atlanta Journal-Constitution and Hearst Corp.’s Popular Mechanics magazine. That marks a departure from a long-observed tradition in the print medium of keeping editorial content separate from advertising. “Journalism ethics counselors decry the trend. “It’s ethically problematic at the least and potentially quite corrosive of journalistic quality and credibility,” says Bob Steele, the senior ethics faculty member at the Poynter Institute, a journalism school in St. Petersburg, Fla.”

More recently, Tim McGuire from the Walter Cronkite School of Journalism in Arizona wrote about its use in the Arizona Central web site:

Michael Coleman, Vice-President of Digital Media for AzCentral, told me late Friday that the site has been using Vibrant Media for “two or three weeks.” Coleman described the relationship as a test and said this is not a “Gannett roll-out” of the concept even though some Gannet papers are using the system. “We’ve got a pretty non-committal contract with them, Coleman said. “The publisher made the call, and we decided to try it and see what happened.” Coleman said the experimental aspect of the deal explains why nobody has announced this deal.

Business Week wrote about the phenomenon in December:

Many journalists believe that selling the words in a story blurs the line between editorial and ad content. Some worry it creates an incentive to insert ad-linked words or order up certain types of stories. Forbes’ online arm caused a ruckus in 2004 when it rolled out in-text ads. After an outcry among the editorial staff and negative media coverage, Forbes ended the practice. (…)

Publishers are paid by Vibrant and other marketing companies based on how many times readers scroll over a word. Advertisers only pay Vibrant for how many times a reader actually clicks on an ad. In-text ads draw a higher response than traditional Web ads: About 0.2% of Web users click on posterlike ads known as banners; Vibrant CEO Douglas Stevenson says 3% to 10% scroll over and click on in-text ads, depending on the category.

I think the use of in-line text ads might be problematic thus far because newspapers have been using the technology to better monetize their destination site. I would suggest that the better use of this new ad vehicle would be to monetize a smaller atom of content, i.e. the news article, decentralized from the destination site. Embedding in-line text ads within RSS feeds or other distribution mechanisms might be a small price to pay to allow readers to access news article outside of the newspaper’s site. Another option would be to have RSS ads, like the Feedburner Ad Network.

I think the general takeaway here is that newspapers shouldn’t look at the same business models to monetize centralized and atomized content.

Update: The Kelsey Group discusses “Newspaper Next 2.0, a “progress report” by the American Press Institute on the evolution of newspaper companies beyond the print edition.” I took a quick glance at it (it’s a 110-page document) but it does not seem to address many of the business model issues that newspapers are facing. As my friend Peter K. says in the post, “The report has a better fix on consumer-oriented solutions than business solutions. But that’s not surprising for a newspaper industry (i.e. editorial-driven) product. If the Yellow Pages Association commissioned similar research, it would probably be the other way around.”

TechCrunch offers a list of new start-ups operating in the space they call “the holy grail of mobile social networking”: “physical presence detection and information exchange with other users.”

Aka-Aki (Germany): “create a profile and download the java app to your phone. You can also create and join groups that say things about your life, job, etc. When you are near other people who are members, data about you is transmitted to them via bluetooth, and vice versa. Users have control over data flow with privacy settings.”

Imity (Denmark): “it detects other members via bluetooth and send basic profile information to your phone. It also keeps track of people on its website, so you can check that out periodically from your normal computer. It’s bridges mobile and traditional social networks, which may help it gain critical mass.”

MeetMoi (USA): “it uses text messaging to help connect people. It’s dating focused – text your location to the service and it notifies other users in your area that you are there. If they are interested, they can contact you.”

MobiLuck (France): it “is another bluetooth solution similar to Aka-Aki and Imity. Download the software to your phone and it vibrates when other users are nearby. You can then chat with them, send photos, etc.”

BrightKite (USA): “serves location based notifications (”place streaming”) over email, instant messaging of text messages. The idea is to stream content about a place, from a place. Friends are alerted when you are nearby. You receive offers from local businesses. Etc. Targeted towards conferences, bars, parties and public places. It is also a platform for third party applications.”

What it means: Talking about critical success factors, TechCrunch mentions that “what’s harder is just plain getting a critical mass of users.” I would answer that’s only one side of the equation. The other one is monetization and I believe local advertising plays a key role there. If you operate a local play, you should be thinking hard about your mobile strategy today. My gut feeling is that we’re 18-24 months from real breakthroughs in local mobile advertising but, when that happens, it might become a very important source of revenues. How big? The Kelsey Group just released a report on US mobile search advertising revenues and they forecast that it will reach $1.4B in 2012.

Yes, there is such a thing as a widget conference! I’m not there but some bloggers and one article from Online Media Daily have some insights about it:

As opt-in distribution networks popular among young consumers, widgets are on the rise, according to the analysts and agency types who gathered Wednesday in New York for the first WidgetCon. “This space is just showing some incredible month-over-month growth,” said Linda Boland Abraham, executive vice president, comScore. “If I were a widget maker, I’d be touting the young demographic that widgets are reaching.” In North America, more than 81 million consumers–or a full 40.3% of all online consumers–were exposed to Web widgets in April, according to a widget tracking service recently launched by comScore. For now, its Widget Metrix service only tracks widgets–mainly photo and video-streaming players–that can be embedded on Web pages like blogs and social networking pages, rather than desktop widgets. (Notably, it is not tracking YouTube’s video players.)

Joanna Pena-Bickley adds: “The widget is facilitating the evolution through giving us a mechanism for portable content, commerce, community and transactions in consumers lives.”

Daniela Capistrano says: “I do not believe that widgets will completely replace websites as some might believe, but I do believe they will change the way that all content is published, promoted, and shared.”

Jeremy Pepper thought that “NYC is about monetization. San Francisco is about community. Or, NY is about style and SF is about substance – either would work. And, at this conference, no one seems to care about the community. I came to this on my vacation, so just stayed for the two key panels – and walked away with the realization that while advertising and marketing (the majority of the people at the conference) are in deep in widgets, they are the last people that should be touching this space. Why? They don’t communicate – they push content, and don’t seem to care about community. ”

What it means: Widget(s) have enormous potential as a content/brand/business model distribution vehicle. When working on their design, make sure you think about the user value you’re offering. Think feature, not advertising, and let it go. If you build a large network of widget users but you’re not monetizing in the short term, don’t worry about it. It’s a great problem to have!

(via O’Reilly Radar)

Everyscape aims to be able to show you the whole world — both inside and out — from its website. It plans to do this with normal 2D photos. Using proprietary technology Everyscape will stitch these photos together and 3D-ify them. The result is a pan-n-scan world accessible through a Flash viewer.

When looking at their viewer you are presented with small, green arrows that direct you around their representation of the realworld. When you click one of the arrows you zoom though the 3D’d photo (a neat affect). It’s not just outside some of the arrows will take you inside buildings. Throughout the app you’ll see web links and info boxes in the form of small blue circles. You can currently check out San Francisco’s Union Square with the Everyscape
viewer.

To make their representation of the world Everyscape needs to know the lat-long and the orientation of the camera when a picture was taken. This data is used to stitch the photos together and place them in the world. The comparisons to Microsoft’s Photosynth are very obvious. The models generated by Everyscape are less CPU-internsive to generate and require less data, but are not nearly as detailed — given Everyscape’s goal I am not sure that it needs to be. (…)

Everyscape is launching with San Francisco this fall. They told me that they would have ten cities by the end of the year. On the homepage they list San Francisco, Boston, New York , and Seattle as coming soon. They claim that takes three weeks for them to record a city (the same number that MS quoted at Where 2.0) so expect the roster to expand quickly after the initial batch. (…)

Everyscape is still determining their revenue model. They can easily embed advertising and local search into their application. There may be other methods of monetizing their “eye-level search”. Real estate agents would probably love to put their houses up in a viewer like this. (…)

Update: Techcrunch has more information about the various players in this space.

What it means: I had seen the Microsoft technology last year at Mix06 and it really excited me. More players in the field means more opportunities for technology licensing (and better prices!). I think I’ve said before I’m a big believer in 3D visual city navigation. I’m convinced that it will become a new way to do local searches in the future. In the demo above, you can even enter in the Salvatore Ferragamo store!