SO MO LO - The Confluence Of Social, Mobile & Local Marketing

The Democritization of Search

Google's recent change in their secretive algorithm, intended to improve quality of search results, was met with muted response from the search industry.  While some brands were negatively affected, others were not impacted at all.  The net difference seems to be negligible.

But this move points to a larger issue.  The quality of search results is deteriorating. 

Recent incidents of gaming the search ecosytem, most notably by JCPenney and Overstock.com,  amplifies this issue.  Linking from .edu domains, as Overstock demonstrated, juices your quality score due to the presumed quality of these links.  JCPenney's "black hat" tactics, which they continue to claim was the unilateral decision of their search agency, was only discovered through a very basic analysis from a third party.  How could the crown jewel of Google's algorithm be so blatantly and easily compromised?  What does all this suggest to the future of search marketing?

Search is poised to experience the largest overhaul in it's young life, moving from the minor and periodic algorithm changes that are meant to keep SEO spammers off balance.  While these simple changes have modest and temporary success, SEO experts quickly adapt, recovering from short-term penalities.  After a few weeks, they're back to new tactics that help their clients exploit the next gap in the algorithm.  The cycle continues.  Quality continues to decline while the vastness of the Internet expands.  Search needs to respond.  And it is.

Rather than the (frequent) maniacal focus on links to content to dictate relevance, new search algorithms will strongly consider how content is consumed and shared by people.  And not just by anyone.  But by people who you know, who you trust, who you interact with and who exert influence on your decisions.  This, of course, is the world of social media.  A world where more than 500 million people convene every day, spending 700 billion minutes sharing 50 billion pieces of content.  And that's just Facebook.  Add in other social portals like Twitter and LinkedIn and the audience metrics are staggering in their size and scope.

These large audiences are creating vast troves of data that will be harvested to help solve a problem that has been a shortcoming of the Internet since its' early days...understanding the context of the content?  And this problem is getting bigger and more complex as the Internet expands, posing a threat and an opportunity to the Search industry

The Web's architecture, which does a great job of expressing how a page should appear, does little to explain the meaning of a page.  This is left to humans to interpret because machines - like the vast arsenal of machines at Google's disposal - can only do so much to understand context and meaning. 

This gap in using machines to understand meaning and relevance is magically filled by other people who influence you - in the parlance of Facebook, your Social Graph.  Search engines who tap into this data will for the first time expose, share and connect pieces of data, information and knowledge in a way that's most relevant to individual needs and interests.  Powerful stuff.

What does this all mean to marketers responsible for driving traffic, increasing brand visibility, improving conversion and increasing customer lifetime value?  It's quite simple - adapt or perish. And adapt with urgency, bypassing incremental steps in favor of bold moves. Sure, the allure of fine tuning SEO has the possibility of dropping revenue to the bottom line.  And, yes, the future of social-centric SEO remains a bet at this point.  But marketers ignore this movement at their own peril.  Action is required to define your strategy and execute.

As I've written often in past blogs, the need to aggressively build an audience of fans and followers  remains an essential first step.  And fortunately, there's many techniques that are proven to build this audience at scale.  There's also a wide array of technology providers who are delivering platforms that manage all aspects of a brand's social presence. Platforms like Buddy Media and Involver have good core functionality that speeds time to market and gives multiple avenues to build and engage your social audience.

Fully embracing Open Graph (OG)...which essentially means enabling your content with Likes...is another critial step towards exposing your content to new and emerging search algorithms.  Facebook has recently given marketers a new incentive to implement OG - "Likes" behave similar to "Shares", which is a much better consumer experience and gives brands more control over the content that appears in News Feeds. 

Complementing both activities, activating OG and building likes and followers, is a sound advertising strategy using Facebook display ads and Twitter Promoted Tweets and Promoted Trends.  These platforms are relatively immature but can drive value despite their limitations.

The looming question is this - how much time do we all have before social search becomes mainstream?  Not as long as you think. 

It's a virtual certainty that Facebook will solve social search.  Too much money and opportunity for growth in Search to cede this to anyone else.  They'll either do so through building their own capabilities, or, more likely, acquire a company like Blekko who is farthest along in social search.  Twitter is also determined to pick up more of the search pie.  Rather than syndicate their "firehose" of content to third parties, they'll have their own solution to real-time search.

So change is coming to Search.  Responding to this change is not an option.  How you respond and the urgency of your response will separate winners from also-rans.

 

Merchant Madness

The dilemma - how to help merchants of products and services sell more yet enable these same merchants to control the distribution of their promotions.  Whether flash sales, group buying, deal of the day, coupon distribution, comparison shopping, affiliate programs – solving the issue of increasing demand while giving merchants control over this demand remains a significant challenge.

 

Consider the number and types of models that are emerging.  From deal sites - Groupon, LivingSocial, The Deal Map, Yipit fit in this category - to the location-based firms like Foursquare, Gowalla and ShopKick, everyone seems to be looking to local marketing as the next killer app.  Yelp and OpenTable are making forays into location-based promotions.  Facebook will surely enter this space with a bang – rumored to be as soon as tomorrow.  Google has unveiled local merchant tools as well.  All of the above will continue to improve their platforms.

 

And merchants of all types and sizes are eager to use these new tools – whether services like restaurants, auto repair and health/beauty or products like electronics, apparel and lawn and garden.  And all sizes of merchants are using these platforms too, including big-box retailers like Best Buy and apparel manufacturers like American Eagle Outfitters.  Enabled by mobile and social, the “last mile” connection between online and offline retailing is nearing completion.  Merchants are salivating.  Site traffic is growing.  Valuations are going higher.  Venture capitalists are circling, waiting for consolidation that will create wealth opportunities.  Not quite irrational exuberance.  But the buzz is deafening.

 

Yet there remains a vexing problem.   How to give merchants control over these new promotional channels when their primary focus is on store operations.  Only the biggest retailers can devote proper energy and resources to managing all three legs of the stool - demand, store experience and supply.  Even these retailers are struggling with the proliferation of demand-generating opportunities.  Which ones to use?  How to use?  How to fit into their own marketing and merchandising strategy?

 

Recent stories about merchants being overwhelmed by discount-seeking customers flooding their store, squeezing out regular customers or otherwise disrupting service, shine a bright light on the conundrum.  Yet, paradoxically, merchants seem to also love the new customers.  They just don’t love that many new customers.

 

So while those who cater to local merchants take pride in their ability to turn a customer trickle into a raging river, they’re missing the larger point.  Becoming a marketing partner for merchants is where the true value lies.

 

Merchants want customers.  They also want loyal customers.  They know that promotions typically generate customers.  And they have money set aside to promote on a local level.  Historically, though, that money was spent on newspaper classified ads, inserts in Sunday newspapers and local mailings.  Predictable responses to this distribution meant predictable demand.  An occasional great deal would get a slightly larger response, but still within a comfortable range that merchants would have no problem meeting the needs of these new customers.

 

This model is, of course, changing in pretty dramatic ways.  Good deals are instantly found and indexed by the major search engines.  The biggest sites like Groupon quickly notify their subscriber base.  And instantly, the best deals spread quickly using mobile connections and social networking.  Even loyal customers - who wouldn’t need discounts - are finding these deals.  What was once predictable is now out of control. 

 

Overwhelmed merchants are forced to make some tough choices – turn away new customers who are clogging the system or rapidly scale operations to accommodate new volume.  Both are undesirable.  Scaling operations is impractical.  Even large retailers complain that uncontrolled discounting is hurting their margins and negatively impacting customer loyalty.  They’d rather tailor offers to segments of customers based on their own customer marketing strategy.

 

The response from all these new online sources of promotional content is muted.  A few are trying to bound the offers by volume while others are restricting coupon usage and redemption.  But nobody has yet to create a marketing portal for merchants.

 

Key features of this portal would enable merchants to tailor their promotions.  For more sophisticated merchants, this means weaving their own merchandising calendar and customer segmentation strategy into promotional programs.  Merchant portals will include features to micro-target, select customer segments, and define offer and treatment strategies (even multi-stage offers).  These systems will closely monitor budgets, drawing these budgets down when offers are redeemed.  Creative treatment will be more closely managed so as to ensure brand consistency.  Reports will be available on-demand, giving merchants a lens into their program’s performance whenever they choose.  And these reports will automatically note exceptions to key metrics, quickly calling out techniques to optimize program performance.  The best tools will automatically optimize given agreed-upon parameters, informed by sophisticated embedded analytics that constantly scan data for opportunities.

 

Merchants know the days of newspaper inserts are numbered.  Yet they are hesitant to fully embrace digital distribution.  This reluctance is offset by the undeniable popularity of online promotions.  They’re feeling enormous pressure to move quickly…and when they do, it’s often with unintended consequences and undesirable trade-offs.

 

Those providers of online promotional tools need to guide merchants into this new world, providing tools to help them manage and monitor their programs.  The ones who give merchants what they’re looking for will reap the rewards of a healthy supply and demand ecosystem. 

 

These innovators will be the points of consolidation in the industry.  They will create value and be rewarded for this value creation.  Those who don’t respond to merchant needs, or who are too focused on the demand side of the equation, will alienate merchants and will have a less compelling value proposition.  They will see their business deteriorate as both supply and demand will migrate to a better user experience.

The Network Effect

For the past decade, since Google mastered the search algorithm and created the AdSense and AdWords profit machines, brands have been investing countless resources to optimize their Search Engine Marketing (SEM) practices.  Pursuing Search Engine Optimization (SEO) – often referred to as Natural Search – offered opportunities to drive highly efficient traffic.  The vast majority of online marketing was – and continues to be – focused on SEM and SEO, with Google dominating the conversation.

 

This Google-centric online marketing strategy is changing in dramatic ways.  The change is giving hope to brands that are looking for ways to diversify their traffic sources and drive better efficiency in their marketing spend.  It’s the network effect that’s crashing the Google party.

 

No longer are consumers defaulting to a search box to answer their questions, particularly when it comes to shopping.  Rather, they’re developing networks that are always accessible and always connected to one other.  And some stats bear this trend out with the network enablers now accounting for an increasing share of the time spent on the Web.  Facebook’s 500 million users are now accounting for 17% of time spent on the Web.  This #1 ranking is followed by Google-owned YouTube, which accounts for 10% of time spent.  Add sites like Twitter and LinkedIn and you find that time spent on the Web will soon be dominated by these network enablers.

 

In the device world, the other network enabler is the rapid ascent of mobile.  Apple’s success with iPhone 4 and the activation of 160,000 Android devices every day bear out the importance of mobile in the network ecosystem.

 

So now when I’m walking down the street and notice a display for an HDTV, I’m just as likely to scan the bar code, review deals from online and offline merchants, check out user reviews and product demos, fire off a post to my various friend networks to see if they have tips, immediately view Twitter conversations about the product in question, instantly download a coupon to my smart phone and make a purchase decision.  All of this happens within moments of me seeing the display.  And all of this potentially bypasses a traditional Google search box.

 

Even if I do start my shopping experience using mobile search, the differences in the user experience between mobile and desktop is upsetting the status quo.  Mobile search results on smaller formats means different copy treatments and different contribution from SEO…you just can’t fit as many results on the screen that’s 20% the size of typical desktop display.  What’s more, the click off the search results are hitting landing pages that are difficult to optimize for the mobile platform.  Even if these pages are mobile-optimized, brands are realizing that there are limitations in the user experience that impact their conversion rates and, ultimately, their efficiencies from mobile search.  It seems that only Amazon, with $1 billion in sales coming from mobile, has effectively navigated the mobile shopping world.  This is largely due to their superb integration of one-click and how they have wrapped other cutting-edge capabilities into the mobile experience. 

 

But the shift away from traditional search isn't explained by social and mobile alone.  Display advertising is also carving into search dominance as networks of consumer profiles and behavior data are linked with targeted advertising to drive efficiencies.   Layer on top of this the hot market for real-time bidding and other demand-side aggregation technologies and display advertising has rediscovered its mojo.

 

Even in the display advertising space, Facebook is creating a machine of their own.  Their built-in network of friend relationships, which is accounting for their #1 ranking in time spent, also translates into 16% share of the roughly $9 billion market.  Google’s share is well under 3%.

 

Am I suggesting the demise of Google as a major source of  online traffic?  Of course not.  But I am suggesting that brands wake up to these changes and move quickly.  Brands need to build networks of interconnected audiences, each interacting with networks of content that deliver unique and relevant user experiences.  Marketers need to aggressively move into the world of multi-channel online marketing, placing particular emphasis on mobile and social so that the end-to-end user experience - between desktop and mobile device - is optimized.

 

While not an easy transition to make, there are some concrete actions that will give marketers the platform necessary to exploit this network effect.

 

Starting with Facebook, brands need a strategy that distributes their brand experience across Facebook and increases reach among their 500 million members.  Activating the Facebook API on your site for login and “Like” purposes, developing a feature-rich Facebook app and developing a strategy to increase your fan base are the three legs of the Facebook stool.   Monitoring social conversations and sentiment about your brand across Facebook, Twitter and YouTube, and delivering relevant messages into these conversations, is another way to improve the network effect.

 

On the mobile experience front, brands need to develop their mobile platform with a keen eye towards the entire user experience.  Mobile optimized web sites are mandatory.  Smart phone apps should be an important part of your arsenal with two important caveats…unique functionality using smart phone apps and a distribution strategy that gets your app into shoppers’ hands.  This second part is often overlooked – but must be given proper attention if you expect mobile experiences to gain traction.  With the Apple AppStore now boasting over 100,000 apps, getting your app noticed in this noise is increasingly difficult..

 

The final step in this network strategy is to build a data, analytics and messaging management platform, supporting each of your digital channels.  Harnessing your customer interactions across these channels and using this data to drive relevant messaging will ensure your network becomes a vibrant and valuable asset.  New tools for multi-channel campaign management, embedded analytics, real-time decisioning and ultra-powerful data warehouse systems using the latest data appliance technology make all this possible.  But it requires investments and commitment at the most senior levels of the company.

 

The network effect is upon us.  That is undeniable.  Marketers need to embrace the change.  Otherwise, consumers will seek out brands that are consistent with how they shop and buy products and services.

The iPad - Skating to Where the Puck is Going to Be

People who know me have heard me use a Wayne Gretzky quote to sum up the challenges of solving marketing and business problems with technology.

"I skate to where the puck is going to be, not where it has been."

Often, we spend too much time documenting current requirements and building technology solutions for these requirements that we lose sight of where the future is heading.  This is annoying when we have to make adjustments to our technology foundation to adapt to new requirements.  This is disastrous when we box ourselves in to rigid solutions and have to start over.

While I realize no piece of automation is forever, there needs to be more emphasis placed on emerging technologies that can alter how marketers use channels in big ways.  That brings me to the (admittedly over-hyped) debut of the iPad.

What I see is a complex multi-channel marketing environment getting even more complex.  Although the iPad is not yet at critical mass, the likelihood of the iPad introducing a new way of personal computing is hard to deny.  It's taking the personal connection we experience with our iPhone or Android phone to another level altogether.  It's the big P (as in paradigm) shift that actually warrants the use of this phrase - not those incremental changes that are often associated with paradigm shifts.

So now is the time, while you still have time, to get the marketing automation tool chest in order.  If you're tinkering around with CRM solutions that still don't connect channels together, you'd better move quickly.  Worse yet, if you still haven't created your 360-degree view of the customer, you're going to be falling far behind your peer group.

Soon the best direct marketers will see all interactions across all channels as they occur.  They'll use real-time decisioning capabilities to rapidly respond to all the inputs across all these channels.  They'll deliver personalized experiences that recognizes the personal nature of the computing experience.  They'll take the current state-of-the-art mobile optimized content, applications, SMS messages and widgets delivered to Smart Phones and re-define these experiences for iPad and other tablet devices that will be flooding the market.  And they'll do this with a centralized (and highly sophisticated...not today's campaign management tools) set of business rules and data that define right message, right person, right time.

Gretzky's wisdom will define winners and losers.  Skating to where the puck is going to be - rather than declaring victory because your email channel is CRM-enabled - will give marketers huge advantages to efficiently acquire new customers and increase lifetime value of existing customers.

Personalizing the Retail Experience

As I recently entered the American Airlines terminal at O'Hare, the standard 15 minute screening process was clearly a thing of the past.  Pat downs were causing delays and the controversy surrounding the imminent installation of full body scans was heating up.

Now comes word from today's Wall Street Journal that body scan technology may eventually be found in the Wal-Mart near you.  Not for security reasons - this technology is being developed to use features such as gender, age and height to personalize marketing messages.  The primary motivation seems to be competing more effectively with online retailers - stating that this capability could help "traditional retailers develop marketing approaches that better counter Web-based competitors".

Indeed, online retailers have (or are building) all the tools and capabilities to personalize their merchandising efforts based on any number of factors - how you got to their web store, whether this is your first or second visit, how you shopped last visit, whether you're a loyal customer, your sensitivity to offers (and even the types of offers), your likely purchase pattern, etc.  This certainly has the potential for creating a better shopping experience and is at least one of the big reasons Amazon has become such a juggernaut - hook the consumer on books, get to know their shopping and buying preferences then expand into other categories by targeting offers to these same consumers.  For today's online retailer, investing in these personalization platforms is becoming more essential to maintaining a competitive edge.

But this us v. them thinking misses an important point.  Multi-channel retailers should be thinking of less intrusive - but sill powerful - ways to personalizing the retail experience.  One step is to fully use mobile technology to get information in the hands of the consumer while they are able to touch, see and feel the product.  Unleashing valuable and authoritative content empowers the consumer with knowledge they need, differentiates the brand and potentially compresses the shopping cycle. 

Using cell phones to look up product details, review personalized offers and read product reviews is low hanging fruit.  Now that smart phone penetration is at critical mass, developing tailored versions of web sites, delivering full video product demonstrations, creating specialized applications for the iPhone and other devices, and exploiting the GPS location capabilities gives multi-channel retailers new ways to drive store traffic and convert this traffic while the consumer is in the aisle.  Surrounding a solid mobile strategy with social media accelerates the content distribution, provides an avenue for user generated content to become part of this ecosystem and gives the marketer a powerful word-of-mouth tool that accelerates payback from any mobile investments.

So let's leave the body scans for the airport.  There's other practical, low-cost and non-controversial ways to level the playing field between multi-channel retailers and online retailers.