This is our Deep Dive Into Local from January 8th, 2018. In our Deep Dive series, we take a closer look at one thing in local that caught our attention and deserves a longer discussion.
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Mike: All right. So welcome to, well, Next Year in Local, our Deep Dive for the week, where David and I put on…take out our crystal balls and put on our tin hats and help look to see where we’ve been, but really where we’re going next year, where we think we’re going. The nice thing about predictions is nobody can be wrong at least today, we won’t know it till the end of the year.
David: That’s right. But I will say, I do try to rate my predictions in December of the year which they were made. So I did okay last year, and you guys will be able to judge these for posterity.
Mike: All right. So why don’t you kick it off and we’ll go from there?
David: Sure. So, I’ll start out with what I think is a very, very, very safe prediction, which is that the local SERP will be increasingly even … an accelerated increase in the number of ads and knowledge graph results in 2018. So I think organic is going to continue to decline. We’re going to see fewer and fewer click-throughs, and Google is going to present more and more information and more and more interactivity with Google products directly on a local SERP. And I know you have a lot of similar thoughts along these lines.
Mike: Right. I mean, clearly their major income is going to be…their increase in income is going to come from increase in pay-to-play in local. And they’ve released a lot of free products over the last year mostly as, I think, a sales funnel to get businesses in; to get them to commit to come into the dashboard regularly so that they can have more opportunity to sell these various ad units cheaply, inexpensively without salespeople.
David: For sure. And, in particular, I think a couple of areas for opportunity for them, one is definitely local service ads. I see these rolling out to many more industries, and I know you’ve got a couple of ideas about what some of those might be.
Mike: Right. So I was speaking to somebody in the vacation rental industry, and she told me that Google was experimenting in her market with vacation rentals. They had been at the time, sometime — it was last summer — were using the Hotel Finder as the interface, which is not well-suited for vacation rentals where there’s issues of availability and inventory, as well as trust. And so I think the local services is the ideal environment for vacation rentals because there’s a whole process to establish trust. Google can say, “Here’s the trustworthy rent landlords in this market, and we guarantee your experience there, and here’s the inventory that’s currently available.” Which ties in and comes down to a scheduling issue also, which ties back to your view on, I think, scheduling.
David: Right. So I definitely see reserve with Google expanding pretty massively this year as well. So this, for those who aren’t familiar with it, is a service where Google has actually partnered with scheduling companies like MINDBODY in the fitness space, to enable direct-from-SERP scheduling. And I think that’s going to happen more and more. I think, again, the website as the central point of interaction and transaction for a lot of local businesses is going to continue to decline as many, many, many more of those interactions and transactions happen directly through the knowledge panel.
And even if it’s not necessarily a booking, some of the things Google is doing around Q&A, some of the things Facebook is doing around Messenger — I think we’re going to start to see more interactivity on these major platforms, and less and less on the websites themselves.
Mike: Yes. Speaking of Q&A, I’ve been doing a lot of research in that arena because we’re going to be bringing out a product in that very shortly this month at GetFiveStars, and it is amazing to me the brand — how Q&A has so quickly given control of the brand conversation to consumers, and most brands don’t even know the risk that they are at. And so I’ve looked at a number of these at scale and I think that brands are going to rise up in outrage once they realize, one, that Google isn’t notifying them of these things, and two, it’s such a freaking free for all.
I mean, I’m seeing some amazing stuff … and some good stuff. I looked in depth at a corpus of comments in the dental industry, 77% of it was good, but 6% was totally unintelligible, 6% was people who thought it was a real-time system and it wasn’t. “I need an appointment today, why aren’t you responding,” kind of things. And 12%, give or take, were reputation-related comments, I mean, some really, really scary stuff going on there totally without moderation. So, I see it as a big area where, I think, brands are going to recognize this risk and engage with Google on it.
David: Yes. And I know Q&A is not explicitly a Google My Business product, it’s not…it’s a different team that built it, but I think that it highlights…we saw GMB release a lot of stuff last year, I said in my predictions roundup, I described it as throwing a lot of pasta against the wall. And so I think they’re going to see what sticks here in the first couple months of…
Mike: Oh David, you’re always so polite, pasta. I would have given it another word. But Aaron has me on a very short rope these days, so I can’t use inappropriate words in this context, but you can all imagine what it would be.
David: Right. So I think they’re going to see what sticks, choose your noun or object I guess yourself, but they’re going to see what sticks in the first few months anyway, and I think they’re going to work more on integrating a lot of these products they’ve released, that they did release in 2017 — like websites, like posts, those sorts of things, rather than continuing to release new ones because I think it is going to create both confusion among their own customers and potentially a little bit of pushback from some other larger AdWords accounts, as well.
Mike: Right. It’s absolutely true. Yes. And just the other day at a conference I spoke at, I ran through all of their developments. And as I was looking at them in relationship to the audience I was speaking to, which was Jacuzzi retailers, I realized that of these nine, only three were relevant to them today. So, I think your point’s well made, and I think for example, why isn’t posts integrated with websites?
David: Right. I think they’ve just gotta ties these — I think many of them are great products, they could use a little bit better integration on the backend. One area that I think Google has actually not monetized very heavily so far, and I think is ripe for increased monetization is Google Maps. And we actually saw Andy Taylor from Merkle publish…I’m not sure if it was this week or last week, an article on Search Engine Land, about just how many consumers were interested in visiting a location during the holiday season via AdWords. And so I think that speaks to the potential for native ads within Google Maps taking a much larger role, particularly as Google gets better about identifying in-store inventory and these sorts of things, serving those ads dynamically in Maps I think is a good area for them to explore.
Mike: Yes, I agree with you.
David: Yes. My next…go ahead.
Mike: I was just going to say, it reminds me of those benches that came into urban areas a couple of years ago, that they would put on the street corners, and they’d have an ad on it. So really it wasn’t a bench for humans, it was a place for an ad. And I think Google’s sort of going to get in that sort of depth of ads everywhere.
David: Well, as you said, I think that a lot of their revenue growth is a little bit saturated just by virtue of, lack of real estate and generic, organic queries to advertise on, and so I think Maps and Local are both two areas for increased revenue growth which they’re going to need just to keep Wall Street happy.
Mike: Well, and not just to keep Wall Street happy, but to keep funding Alphabet. Which is where they’re betting their future is. So I think that’s a critical thing, is they got to keep their growth going. And it also keeps their employees happy because the stock options stay worth something.
David: Exactly. One prediction which I’m not as confident in is that Google will actually fight back against fake reviews. I think that you, in particular, have identified some very obvious filters that Google could put in place to combat a lot of the fake review spam, and I think, as knowledge panels become more prominent, reviews become more prominent by default, and so I think they’re going to have to do something to tackle this. We haven’t seen much yet, but I remain optimistic that 2018 will be the year for that.
Mike: As a note, there was a lot of complaining about takedowns in the forum over the last three or four weeks. So, whether this is just their episodic running of the algorithm, or whether it’s a fundamental change in what the algorithm picks out, or whether it’s potentially a great use case for AI and machine learning, I don’t know. I mean, you would think that they’d be able to apply machine learning to this, but the problem historically has been with Google and reviews is for every 90 they take down, they take down bad ones, they take down 10 or…or maybe it’s 80-20. It hasn’t been refined enough, and that’s a problem. Because if you’re punishing legitimate businesses and legitimate reviews because your algorithm isn’t precise enough, and I think a lot of these big data algorithms are not, that’s an equal problem,
David: Right. Well, and I guess on that front … public enemy number one, or SMB enemy number one, Yelp, has had this problem for years with the number of false-positives among their filtered reviews primarily from users that don’t have an active Yelp profile, so they just put them out and trust it by default.
Mike: Although, when I saw somebody looking for and posted an example where this business had four reviews at Yelp, two were negative, two were positive. The two negative ones — all four were from single review posters. The two negative ones showed, and the two positive ones were suppressed. And so, it speaks to the fact that their algorithm has an intrinsic bias.
David: Bias towards complaints, that’s right.
Mike: Yes, bias toward complaints. And there’s extensive research that shows once you have a negative social context, the crowd typically turns negative. And so that to me explains a lot of the anger that floats around Yelp, and then you layer on their hard sales tactics. I had somebody the other day say to me that they had been pitched four times in one week by four different Yelp salespeople. I mean, that creates a lot of tension.
David: Yes. Well, as you and I have said for years, it’s going to be hard for them to succeed when their own customers hate them. They made some progress on the NPS front this year — so Alignable’s quarterly survey of business owners, they’re now the second lowest-rated company on the NPS, but it’s still a huge mountain for them to climb with customer sentiment, their customer sentiment, SMBs. So unless they start monetizing their iPhone-wielding hipsters, I find it hard to imagine that they’re going to succeed. In particular, the increased pressure that I think they’re going to be under this year from Amazon Alexa, from Facebook, and from Google, I think this could be the beginning of the end, 2018 could be the beginning of the end for Yelp, where their stock either takes a massive hit or they end up having to sell to somebody like Amazon potentially.
Mike: Right. When you and I were in Spain, we saw that Yelp had no presence in Europe. They basically got creamed in Europe. And in some review research I’ve been doing like at GetFiveStars, what we’re seeing is Yelp reviews per location per month are relatively flat … whereas Facebook reviews per location are slow increase, like if Yelp was 1, Facebook went from 1 to 1.2. TripAdvisor had moved from two to three per location per month. We know OpenTable is killing Yelp on the review front, and Google moved from two per location a month to almost five.
So when it comes to the ability to gather reviews at scale…like even if you assume 20% of the Google reviews are fake, which I don’t think the number is that high, but if you do that, it still means they have four per month, per location, versus legitimate reviews, versus Yelp’s one per month. And Yelp is flat, and Google is growing. And so, I see a problem on that side as well.
In fact my daughter said to me the other day, “Dad, since I came back from Spain, I have been using Google more in terms of my restaurant searches. I used to only use Yelp, but now I do a sort of even-steven, I look one place, look the other, and then I’ll make my decision.” So, she’s a millennial, 25, and the behaviors are starting to change there…and she’s been a long-term Yelp devotee.
David: Well, and I’ll make a segue here, which was one of the discussions I got into on Twitter last week was around voice and restaurants in particular. So, we placed a couple of takeout orders last week, which are actually quite painful on the phone to perform searches and to scroll through menus and all of that stuff. And so I think restaurants are actually a major area for voice to be a really…a big improvement in the user interface, and Amazon’s doing great on that front. I think they’re going to maintain at least a 40-point lead in device usage, in sales of devices over Google this year.
So, I think their strategy of using a cheap piece of hardware just to get into the home and start to get people using it, I think is going to be really smart, and I think again that’s going to be one of the major potential displacers of Yelp. Like your daughter is already not using it on mobile, I don’t think there’s any way people are going to search for Yelp on voice. They’re going to say, “Alexa, I want barbecue, what can get here in 15 minutes?” And Alexa is going to do all that.
Mike: Yes. A couple of gaps there, one is that Siri has a much bigger market share and utilization, and whether it’s more effective, less effective, let’s leave that. So there’s that, and there’s this fragmentation — Google clearly is not going to let Amazon take this market without a strong battle. Now whether it’s strategic to Google or whether they’re just doing it to slow Amazon down, we don’t know. But they typically will bring out a product — like they did with AMP against Facebook’s product — and they keep pounding at it, and makes it hard for anybody to gain…it’s going to delay the market dominance for a couple of years. It’s going to be split. And that’s going to make it hard in local, I think, to pick a marketing tactic for a small business.
David: But I guess I would say I’m not necessarily saying that Amazon is going to be…that there’s only going to be one winner in voice. I’m not saying that by any stretch. But if you think that Google releasing Home will have the same sort of trajectory of Amazon passing the…or excuse me, of Android passing iOS, that is not going to be the same pattern here. I think Amazon is a serious long-term threat to Google by virtue of their hardware win…or sort of first move, and I don’t think Google is going to make much of a dent this year. I do agree with you they’re going to continue to fight this battle, but I think it’s going to be a huge advantage for Amazon for the next several years.
Mike: So I have a prediction for 2018: I’m going to buy an Apple HomePod or whatever they call it.
David: Okay. The one that didn’t ship in time for Christmas.
Mike: Yes, not a big deal for me, I just want better sound for my freaking TV.
Mike: So what else have you got there?
David: Well, let’s try to stay on track here a little bit.
Mike: Okay. Yes, that’s what I was trying to do.
David: The other Amazon note that I would make is, back to this Alignable NPS study, Amazon is consistently a top-rated vendor for small businesses, and I think that there’s a lot of discussion in the press obviously about Amazon killing brick and mortar stores. Well, you and I agree on this, that that’s true for sort of large, big box commodity-type stores…
Mike: Although I would add a bit of nuance that a lot of these big box commodity stores that are most hurt by it are the ones that took on massive debt due to private buyouts by these investment firms. Sears is a good example, massively loaded up with debt. And so when there’s this need for change, Target can handle it, Walmart can handle it because they’re not burdened by investor debt, whereas companies like Kmart and Sears are.
And so some of that closure is like these guys extracting too much profit from the companies and not giving enough cash to be flexible. So, I do agree that Amazon plays a role here, so…
David: Right. I’m not speaking specifically about individuals, so I think just conceptually anybody who’s selling a commodity is at risk from Prime Now, whereas anybody who’s selling specialized goods with a little bit of service, which is primarily brick and mortar small businesses, they actually still view Amazon favorably as a vendor, and I think Amazon may try to make some headway in terms of bringing those customers…bringing those small business customers on board as resellers or advertisers or something. I think that it’s a big sort of customer segment for Amazon that they haven’t done much with in terms of monetizing.
Mike: And one path along that line might be like what they did with Kohls, which is Kohls can now accept Amazon returns. That’s one path. The other sort of further out idea is the small business OS. I mean, in terms of engaging them in both a supply chain and perhaps other services that become integral to their existence, I think they’re in a good position to do that.
David: Yep. We’ve talked about voice, let’s switch to Messenger a little bit. So Facebook Messenger, obviously hugely popular, and I think increasingly will be used by consumers and businesses to interact with each other. One thing I do not think Messenger is well-suited for is broadcast advertising. And so I think Facebook…my prediction is that Facebook will discontinue broadcast Messenger ads really before they even start, because I think the consumer backlash is going to be pretty substantial. I think instead they’ll monetize Instagram more heavily, which is still I think, generally the best organic social media channel for almost every small business.
Mike: Yes, messaging I think is going to be interesting. I think Google is going to be pushing integration of their messaging product off the Knowledge Panel. Apple is going to be releasing a B2C product. We know they announced it last year at the Developers Conference, and Apple is obviously going to make sure it’s right. They don’t want a big disaster on their hands like Apple Maps. So, when they do it will be a fairly polished product.
I think that many businesses…and I think we will see a growth in sort of backend single place for businesses to process these many client inputs from whatever channel, text, Facebook, Google, Apple, and I see this as both small and large business as a significant uptake this year. But I think you’re right, messaging is a very intimate thing. It’s not ideal for an advertising channel. It’s like who wants to be advertised on the channel you speak to your wife on?
David: Right, exactly.
Mike: It’s just not appropriate.
David: Exactly. And so, I’ll kind of end at least my set of predictions with one that’s also about social media advertising. Twitter released Promote Mode at the end of 2017, and I predict it will be a massive failure, which is unfortunate because I’m a huge Twitter fan, and I especially would like to see an alternative to Google and Facebook emerge in the advertising space. But Promote Mode is really terrible. There’s very little targeting available. It’s a fairly high cost, fixed cost product at 99 bucks a month for the lack of targeting that it gives. And so I don’t see it…and its only goal is to get more Twitter followers, which is not something that many SMBs are really looking for. So, I think Promote Mode will be bye-bye mode by the end of the year.
Mike: Hopefully Twitter will stick with us and get back on growth mode and so that we can continue enjoying. I mean, I see LinkedIn as having made huge strides as the alternative social network these days at least amongst marketers and…
David: I think amongst marketers that’s true, and amongst a lot of the B2B SMBs. I think that LinkedIn still has a lot of potential, and they’ve made some nice improvements this year.
Mike: Well, any closing words of wisdom?
David: No, just that I…primarily, I still see, and we saw in the BrightLocal industry survey that you and I talked about in a recent Last Week in Local, the number of agencies who are still optimistic about the SEO industry remains incredibly high, and I think that you and I would both agree, we don’t think SEO is dying, but it’s going to be a really challenging time here for SEOs as fragmentation increases through voice and other platforms. The number of winners in these other platforms declines just by virtue of lack of real estate, and all of these players try to monetize more heavily. So, I don’t think it’s going to be a great year for organic marketing generally, and I think it’s time to, if you are an agency that exclusively specializes in organic marketing, I think it’s time to take a hard look at the overall landscape.
Mike: I think that’s a great suggestion. So with that, we will wrap up Next Year in Local this year, and say goodbye.
David: Sounds good. Thanks, Mike.
Mike: Thanks for joining me, David. Bye-bye.