Opening Keynote: The Local Social Paradigm Shift Greg Sterling, Search Engine Land & Internet2Go The local market is on fire, thanks in part to the rise of mobile. It’s also in a state of profound transition. Google is going after local consumers and advertisers with unprecedented focus. Social sites are driving an evolution of the way consumers access and interact with local businesses. And daily deal platforms inject a potentially disruptive element into tried and true local ad models. The local market has never been more dynamic — or chaotic — for consumers but especially advertisers. We’re in the midst of a “paradigm shift” in local. Greg Sterling will identify critical trends that are shaping the future. He’ll also tell you who he thinks will win and who will lose in Local 2.0.

1. Greg Sterling
Sterling Market Intelligence/Opus Research
November 18, 2010
Me, Here, Now:Me, Here, Now:
The Local Paradigm ShiftThe Local Paradigm Shift

2. ‘Paradigm Shift’
We’re in the midst of a shift—driven by mobile and social media
—dramatically changing the way we communicate, navigate
relationships as well as the world around us.

3. Market Noisy, Chaotic, Accelerating
• Market has become increasingly “noisy” for advertisers
(SMBs, even brands)
• Consumers too: information overload, paradox of choice, too
many new gadgets
• Pace of change is picking up, time accelerating (toward real-
time)

4. Convergence of Trends
You Are
Here
Catalyzed by “internet in
your pocket”
LocalSocial
Mobile

5. Bridge between Online and Offline
53% of mobile search has local intent
70% of mobile search tasks completed in 1 hour (vs. 1 wk for PC)
Source: Microsoft (2010)
People finally recognizing connection between internet and
offline behavior
Power of the “check in” (drive foot traffic to stores)

6. Mobile Will Dominate—Soon
• 5B mobile subscribers
• Smartphone penetration 28% US, 37% Spain

7. Old Simplicity Gone—Forever It Seems
• Old days: local media monopolies (YP, newspapers, radio)
made life simple for consumers, advertisers
• Internet and now mobile have disrupted usage, margins and
business models to varying degrees
• Disruption accelerating further
• Two examples: daily deals, local database

8. Deals Gone Wild
• Groupon: $400M topline this year
• LivingSocial: “well over $500M in 2011”
• “Come out of nowhere”
• More than 120 companies operating in the US in
June; dozens in Europe
• “Customers not clicks”
• Models that push risk out of system for advertiser
threaten traditional local ad models

9. SMBs Prefer Groupon Model (Conceptually)

10. Local Data Become ‘Commodity’
• Had been a primary source of value
• “Free” database of places can now be had from:
- CityGrid
- Google
- Facebook
- YPG
- Factual
- Placecast
• Not in Europe—yet

11. Local Data Become ‘Commodity’
“Two guys in a garage” via APIs can now build competitive local
sites/apps (not possible before)
Independent developers don’t
face same inertia, cost
structures or corporate
inhibitions
Better position to compete for
verticals or specialized
consumer apps

12. Online Brands Highly Perishable
• Examples: Friendster, MySpace, Digg
• Citysearch and now . . . Yelp?
• Yelp:
- Founded in 2004
- Became leading local brand in US through content and
dedicated community
- Almost bought by Google for $500M; now facing more direct
threat by Google
- Movement toward “lists” and “Likes” threatens longer form
reviews content

13. Google: Local-Mobile Juggernaut
• Local search
• Reviews
• Maps
• Navigation
• Shopping/products
• Voice search,
visual search
• All PC  
mobile
Google “owns”
Android devices

14. Google “Boost”
Automated SEM for SMBs

15. Facebook Also Has Designs on Local
• Facebook has replaced Google as the “it” company
• Haven’t totally figured out local strategy
- Places
- Check-ins (+ Deals)
• Perhaps 2+ million SMBs with Pages?
- Active vs. presence only
- Penetration in some categories high
• Compare: Google Places (4M+)

16. Facebook Largest Mobile Network?
• FB: 200 million active (daily) mobile users
• Top mobile site/apps
• “About 70% of Facebook users are outside US"
Source: Nielsen (October, 2010)

17. Twitter Too
• More than 200 million users globally
• More than 65 million “tweets” per day
• Wants to figure out local
- Playing with deals
- Wants to offer ad product for SMBs
“We’re thinking of a more self-serve process to advertise on Twitter,
where a local coffee shop can advertise on the service looking for
Twitter users in the area . . .”
-- Biz Stone, Twitter co-founder

18. Rise of the Local Ad Network
• About 8 or 9 bona fide local ad networks (many in
mobile) that help monetize local impressions/searches
• High eCPMs
• Some YPs now involved (APIs, etc), but should have
been the network themselves

19. Explosion of User-Generated Content
• User-generated content has
exploded
• Whole businesses built
around reliance on
freelancers
• Demand Media: IPO
• Associated content bought
by Yahoo for $100M

20. Traditional Publishers Squeezed
• Traditional local media publishers need to use G, FB, TW for
distribution/exposure
• But G, FB, TW also trying to be marketplaces that make
traditional less necessary
• Sales channel/customer service (“hand holding”) never goes
out of style
• Local advertisers have more options, more confused than
ever
• Outlook for consumer usage less certain

21. Traditional Publishers: TAC
69% of IYP traffic in US not owned and operated

22. Traditional Publishers: Identity Crisis
• A sales channel/agency for our advertisers and
onramp to network?
- SuperMedia: “the full service digital ad agency for
America's local small-to medium-sized businesses”
• A trusted consumer brand for local
information across platforms?
• Answer this: Why should consumers use IYPs
or comparable local directories?

23. Some Quick Summary Thoughts
• Google will “own” NAP lookups – the bottom
of the funnel
• Big brands dominate (but room for “flavor of
the month”). Perpetual instability
• Facebook becomes a local powerhouse (risk of
poor execution)
• Traditional local media struggle to compete
against either/both
• X-platform strategy required; mobile
continues to gain

24. You Are Here—or Will Be
You Are
Here
LocalSocial
Mobile

25. Greg Sterling greg.sterling@gmail.
com
Twitter.com/gsterling
Follow or Contact Me