Climbing Mount Mobile

You have to wonder when newspaper publishers will ever get a break. They have been one of the biggest casualties of the digital revolution, late to the party they have been sprinting to catch up with the desktop…then mobile happened. Just in case you have been hiding under a rock for the past couple of years mobile is catching up with static viewers and the smart money says it will pass them in page views by 2015. Similarly (according to Borell) mobile ad spend is projected to out strip mobile at an even faster rate. Are local news providers geared up to address this opportunity or threat? Probably not. They are catching up with the local mobile ad space and most of them have mobile enabled content and or Aps of some kind. There are lots of loose ends..some persist with paywalls most won’t allow citizen based hyper local journalism to flourish under their editorial guidance.

End users are flocking to mobile engagement but there is nothing which guarantees local media will be the recipient of that migration. The pure plays which have already obliterated key revenue verticals like automotive and classifieds have already transferred to mobile in ways which most newspapers simply don’t have the resources to do. The danger is that the publishers will arrive panting to the online party to find it’s moved on to mobile and there’s only the clean up crew left to talk to. The message has to be Go Big Go Mobile or Go Home….sadly it’s a choice which has already been made for them in many cases.

The Click Dilution Effect

Google’s Q2 numbers are out and they are terrific. They are up 35% at about $12.2 billion, but when you look at the details some interesting questions emerge. Whilst they managed to move the revenue very nicely, they had to sell a lot more inventory to generate that number. The over all cost per click paid by all of their advertisers dropped 16%, continuing a decline that started in Q2 last year.

At the heart of this decline is the rapid growth of mobile inventory. Overall, mobile ads continue to be significantly cheaper than web ads, and with the continued and increasing growth of mobile usage that trend is likely to continue. At least part of this trend is generated by the squeeze that media growth has produced in recent months. Social media continues to generate massive ad inventory, while the opportunities for advertisers to reach end users continue to expand.

It’s interesting to note that as print media continues to decline it might lead you to think that reduction in inventory might drive the pricing up. However, national advertisers are still the major moving force in the market. They are driving the dash to mobile and taking advantage of the luxury of large volume, low cost advertising. We are currently testing multiple new media to drive results for our huge base of local businesses and so far it looks promising. Mobile is certainly leading the way (which makes perfect sense) but we see promising data from local display, as well as the more traditional SEO and SEM approaches we already employ….I’ll keep you posted on progress.

In an interesting but not directly related marketing story, it’s interesting to see the heat generated by the Chick-Fil-A. It’s been long held by many, especially those in the gay movement, that Chick-Fil-A is not gay friendly. Even so, for the CEO to come out recently that the company is “guilty as charged” is actually quite shocking in marketing terms. The company rapidly followed up with an ‘up with all people’ clarification because ‘awe shucks…we are all just people but the cat is out the bag. There will no doubt be a few days of excitement as talking heads make much of the Muppet defection or the support from Mike Huckabee. The right will defend freedom of speech and the left will cite equality under the law….the whole thing will be old news by the time the Olympics start. But…I believe there is a real “But” here. In marketing terms, there are (according to multiple sources I could find) roughly 9 million gay and lesbian people in the U.S. That’s roughly the equivalent of the population of the entire New York metropolitan area. Can you come up with a marketing or business context where the boss of a major fast food chain would come out against all of the inhabitants of any age of the entire greater New York area? No, I couldn’t either.

It is possible for one careless or ill though through gaffe from the guy at the top can have disastrous results. Way back in 1991 long before social media, Gerald Ratner, who used to run the largest jewelry retailer in the U.K., was speaking at a private function at the Institute of Directors in London, he joked about the quality of his companies products…“We also do cut-glass sherry decanters complete with six glasses on a silver-plated tray that your butler can serve your drinks on, all for £4.95.” People say, “How can you sell this for such a low price?” I say, “Because it’s total crap.” And went on to joke about the quality of their earrings … “cheaper than a Marks and Spencer prawn sandwich, but probably wouldn’t last as long.”

His own version of, “Guilty as charged.” We always knew that their products were cheap and nasty, but to hear the boss joke about them brought it home.  Brits boycotted the stores…the company crashed, he resigned and the group had to rename itself, destroying billions in value.  Let’s see if there is a Chick-Fil-A Ratner’s effect.

The Three-A-Day Question

The raw Comscore numbers on Internet search came out and Google continues to dominate with 66.8% of U.S. search. That’s a massive lead over Bing and Yahoo who swap fractions of a point month to month. The odd thing I think is that if you run the math the 17 billion searches conducted by all Americans in June only amounts to two searches per person per day…just two! If you take out the very young and maybe the very old (although online usage continues to flourish in the senior sector) then maybe the number per American rises to closer to 3 maybe 4 per day. That strikes me as a low number. There aren’t that many things that every American does every day and each of them are major industries at the core of our economy.

We focus on local online commerce, and if the pundits are to be believed, that holds promise for the greatest growth in search and overall online growth during the next few years. Google tells us that about 20% (in 2010) of all search is clearly local in intent. So perhaps, on current math roughly four of the 21 searches we conduct are local. Can you imagine the dramatic rise in opportunity in our market if that number became five…or even six?

On a completely different tack, I have decided to broaden the ThinkJudd platform. I’ll continue to focus on our industry, but I’ll throw out a few comments on other topics from time to time. Along those lines I had a couple of random thoughts about the recent horrible massacre at the movies.

As you may or may not know, I’m a Brit by birth and an American permanent resident by choice. I happen to like many things about both countries. We are very similar in many ways and quite different in others. In Britain, the class system keeps you down where as in America if you want to work hard enough it’s much easier to get ahead. Britain has socialized medicine…the U.S. has the Medi’s and insurance. If you get hit by a car in either country, you will receive some of the best care in the world. Both countries love to laugh but have wildly different senses of humor. The people are generally nicer in the U.S…but more fun in the U.K. In many cases, the similarities are so strong that the differences stand out even more clearly.

In the context of the recent Dark Knight killings, it’s interesting to note that with two countries as similar as they are, the gun death rate per capita in the U.S. is a mere ten times higher than it is in the U.K…yes ten times. I was raised without guns…as are the vast majority of Brits. If you aren’t a cop or a serving soldier the chances that you will ever shoot, let alone own a gun, is slim to none. I have shot at public ranges in the U.S. and I enjoy it. I don’t enjoy it so much that if I never did it again I’d miss it.

The next over achieving medical student to go off the rails in the U.K. could maybe crash his car into the line outside the movies, but it would be next to impossible to get a hold of even a shotgun…he’d have to do it on the black market and certainly couldn’t do it over the Internet or quickly or without close examination.

The people in the movie house wouldn’t have to rely on the maniac’s assault weapon jamming, so that he has to resort to a shotgun to ensure their safety. If it’s not legal to own an Apache helicopter or a tank or a rocket-propelled grenade …why am I allowed to own an assault rifle? Just a thought … I could be wrong.

Microsoft Mega Oops

I track the comings and goings of the great and the good in our space, in part because it fascinates me, and in part because it helps point the way the market is headed.

Microsoft has been front of mind of late. In the specific case of our business we have been staring hard at Microsoft/Bing search traffic as an effective way to drive high-quality calls to our advertisers, and frankly we have found them wanting.

Put simply, it costs us more to drive that qualified call with their traffic than with other sources we use…quite a lot more. It’s another reflection of the struggle the mighty softies have when it comes to delivering great search and value to the ever-expanding online market.

It’s been a tough month all round. A week or so back, Microsoft finally wrote off their ill-fated aQuantive aquisition to the tune of about $6 billion. It looks like their online division (read Bing) will lose another $2 billion this year, and in a ruling today the EU may well end up fining them $7 billion for breaking their agreement to provide other browser options for Windows 7 users in Europe. This last issue is just incredible. The EU can fine a company up to 10% of their revenue for failing to comply with an agreed ruling (in this case the 2009 anti-trust case against them)…back when it was Microsoft rather than Google who was the favorite whipping boy of the EU anti-trust police. You have to ask “what were they thinking,” and did they think anyone would notice?

Add those items up and you come to about $16 billion of trouble…equivalent to the entire GDP of a decent-sized third world country like Nepal (it is, I checked) or about 30% of the cash reserves currently on hand at Microsoft. It’s reaching a point where some heretics are even voicing the unthinkable: that MSFT should throw in the towel on search and focus on things it stands a chance of winning at and maybe give/sell Bing to somebody who might really make a difference with it … like Facebook … watch this space.

Local Search is Horrible …

That’s a direct (if slightly cleaned up quote) from my lovely wife lamenting her inability to find anything useful in local search. We were out and about looking for things for our new house. The goal was to equip our poolroom. The first search result for “pool table store” was a shop that had closed a few months ago, the next was for a local billiards hall, the next was for an installation service, the next was for a shop with a local phone number with no address, but when I called them they turned out to be in a town 40 miles away. The next five results were for various directory sites, most of which took a second search or multiple clicks to generate any results at all. After the directories came listings from Yelp for the Billiards hall and another to a repair and service company. The one shop we did go to wasn’t listed at all. The ads weren’t especially helpful either … mostly national brands.

The reasons why search is so horrible are legion; companies start, change location and fail, they frequently have little or no information available online which makes discovery by search engines more difficult. Siri on my iPhone wasn’t much help, either. In fact, it feels to me like Siri is getting more stupid over time. My instincts are that local search will remain lame until the search engines get down at least one more layer of detail and consolidate that data into one presentation. The problem isn’t necessarily that the data isn’t available. In most cases it is, however, to get to all the data the end user frequently has to leave the results and dig down into other directory sites or business websites. The directories can be hard to navigate and the vast majority of local business websites (where they have them) are brochure sites that are typically horrible to navigate.

If the search engines could do the work to drill down and discover all the data from multiple data sources (as opposed to just presenting the sources to the end user and abandoning them) then consolidate that data into a single presentation layer, I think we’d make a large step forwards. The presentation layer itself should be the map. It’s already the weapon of choice on most mobile devices and in the same way that the Yelp Monocle tried to augment reality to allow users to see data as an overlay. The much touted Google glasses are certainly a step in the right direction, but I already have a mobile device complete with a camera and screen, and that just seems to be the best fit for this kind of data delivery.

A New Sheriff in Town?

As I have said in other posts, I like Yahoo and always have. As Google went from goofy to scary, Yahoo stayed approachable and business friendly. However, during recent years, Yahoo has missed more boats than a ferry passenger with a faulty alarm clock. As mobile and social exploded, they sat on the sidelines. A decade ago, they were the leader in search, and now they run a distant third. Even with those missteps they have remained one of the most powerful online brands and maintain dominance in several key verticals like sports and news.

I have lost count of how many CEOs they have had over the last couple of years. It might be as many as half a dozen. So, I read with interest the reports that Yahoo has recruited none other than Marissa Mayer from the Google-plex to head up Yahoo. It’s quite a coup. Mayer ran search as search at Google grew to become a powerhouse. She was involved with Google+ and all things location based. In theory, she has the product smarts to really pull the ailing giant together.

The question is, does she have the high-level business experience to take on such a huge job (in addition to becoming a new mom by Halloween).

I wish her nothing but good luck, which she will no doubt need to take on such a massive task. If I could lobby for something, I’d plead for a real local strategy at Yahoo. Local has been somewhat rudderless for a while. The concern is that compared with news or sports, local will continue to be the red headed stepchild at Yahoo. Every indicator points to local and mobile being crucial to so much online growth in the near future, yet Yahoo to date has played a minimal role.

The great thing about local is that it makes money. Social media is much harder to monetize. So, Marissa, by all means do sports, do news and try social. But please focus on local/mobile. It is where the money is, and we are in desperate need of a true local leader.