This is the sixth installment of our Deep Dive Into Local series. For the week ending 10/02/15, David Mihm, Mary Bowling and Mike Blumenthal share their thoughts about the previous week in local. The complete video is posted in the Local U forums (paywall). In the second half of that video, they take a deeper strategic and tactical dive into one interesting area that caught their attention during the week. These deep dive segments, made available publicly, will typically be about seven minutes in length and be posted one to two weeks after being posted in the forum.
David: For our deep dive, we might take a little broader look at the beacon space. Yext obviously announced this week, their Xone or Zone beacon strategy and I think it's clearly a space that's been heating up for the last couple of years. Lot of chatter at sort of Street Fight and LSA and BIA/Kelsey conferences in the last 18 months, and I think it's kind of reaching fever pitch right now so might be a good time to kind of to banter a little bit about who's winning the beacon game in the first inning and what that portends for the longer term.
Mary: So, do either of you, when you think about beacons, is there a place for the small, local business in beacons or do you see this as strictly a brand play?
Mike: So the difficulty in implementing a beacon strategy is that it requires app buy-in plus location buy-in. And so, to be instantly successful, you'd need to have a lot of control over a lot of locations and have an app that is widely used, right? So there aren't very many businesses that meet that criteria: Walmart, Target, and I think Target is doing a lot with beacons, right, so they have widely adopted apps and they have control over their locations so they can play both ends. The excitement to me is going to come when a company -- perhaps Yext, perhaps somebody else -- gets to play in that space. They have the location distribution. They have a lot of people they can communicate with and give free beacons to. What they don't have is the end user app that is required to complete the loop, right? So there's a barrier. It has to be on both sides. Yelp is another interesting one. They recently settled with Blue Calypso and they're apparently looking to use Blue Calypso beacon technology in their app. They have, if they can get the distribution of the beacons, through their advertising network and consumer buy-in, they would have a complete cycle that would affect small businesses.
David: I can't see businesses falling over themselves to install Yelp beacon in their shop.
Mike: Yeah, it's certainly a conflict there, right? And Facebook is rolling out very slowly. They have both sides, I think and they could execute it in favor of the small business. They haven't been running a very -- well, it was a beta in just Brooklyn and they rolled it out where you could get a beacon from them so that if people were in your store and perhaps following you, they might see beacon messages, I think is how it works. I think they have a good shot at it. Clearly, Google hasn't made their play yet. Apple hasn't made their play yet. I think Amazon hasn't made a play yet. There are some companies, I think, that could close the loop in and of themselves but right now, it's mostly large company play.
Mary: So do you think that the opportunity for small businesses to just be on these apps that larger companies are able to promote? Is that kind of what you're saying?
Mike: At this point, yeah. Being in Facebook, whatever.
David: I think it's going to be very hard for a small player, Yext included. I think Yext strategy is interesting, to say the least, in terms of partnering with apps like MapQuest and that sort of thing. I think it's going to be hard for any small player to break into this space just because, Mike, as you said, you need a large consumer audience and a large business location audience. And frankly, the major players that you just rattled off have all the mind share that they need with small businesses, at least the ones that are sort of positively disposed towards them to get those beacons implemented at the small business levels. So I think that the interesting thing to me will be which of these companies, if any, is open with the data that these beacons collect and which of these companies allow for easy third-party integrations that can reach the long tail of SMBs that are necessarily Facebook advertisers or active Google My Business users or whatever. So I actually see potentially a sort of a beacon version of Open Street Maps is an interesting idea that I would -- someone might have a chance to execute if these larger tech entities sort of hold the data in close and don't allow for third party integrations. That would be, I think, something that has a chance to succeed but I don't see a smaller beacon deployer or beacon creator getting much reach at the SMB level. I just think it's too hard to crack that nut.
Mike: Right, it'll be an interesting problem. I see Apple Pay, for example, as being an interesting potential foundation where first they come out with Apple Pay, which incents the business to participate and they come out with a loyalty program, which incents the end user to participate and incents a lot of other companies. They sort of disintermediate some of the dedicated apps and then you have a situation where if they send out free beacons, every business in the world would grab one, particularly from across platform, right? So there is potential there. Yeah, I would agree with you there. I see it as a Facebook, Google or Apple Play at the moment. It's interesting that Google has not really opened the kimono at all on this. Usually, they're the first ones to shoot themselves in the foot. Maybe they're waiting like Apple has always done to wait until the market is ready, which it needs to be. You can't sort of push technology before all of the components in the market are ready, right, and so Apple appears to have a long term strategy in that way. I assume Google does, too, but they haven't made any real announcements about it.
Mike: Well, with that, we have another call to be on. Thank you very much for joining us for This Week in Local. We'll see you again next week.
David: Thanks guys.