Hyper-local

The recent rumors around Google acquiring Yelp (which of course have subsequently fallen through) and my recent use of several location based apps like FourSquare and EveryBlock caused me to start thinking about the emerging re-focus on local business. I think that several technologies have finally matured enough to have a real impact for local businesses to effectively reach potential customers in new and compelling ways. Local businesses, or as we like to refer to them, the “long tail”, are plentiful, diverse and difficult to reach. SW companies intuitively know that there’s money in that long tail, but few have successfully managed to extract any of it. I’m specifically talking about the “small” in the small and medium business market. Certainly Microsoft, Sage, Intuit and others have managed to build solid businesses in the medium business space. And I guess Intuit’s QuickBooks product line is the standard in small bookkeeping. Where it gets sticky (and frankly, where the most opportunity lies) is in helping local businesses attract and keep customers…

The recent rumors around Google acquiring Yelp (which of course have subsequently fallen through) and my recent use of several location based apps like FourSquare and EveryBlock caused me to start thinking about the emerging re-focus on local business. I think that several technologies have finally matured enough to have a real impact for local businesses to effectively reach potential customers in new and compelling ways. Local businesses, or as we like to refer to them, the “long tail”, are plentiful, diverse and difficult to reach. SW companies intuitively know that there’s money in that long tail, but few have successfully managed to extract any of it. I’m specifically talking about the “small” in the small and medium business market. Certainly Microsoft, Sage, Intuit and others have managed to build solid businesses in the medium business space. And I guess Intuit’s QuickBooks product line is the standard in small bookkeeping. Where it gets sticky (and frankly, where the most opportunity lies) is in helping local businesses attract and keep customers. Google would love to come up with a way to reach these businesses and get them into the fold. So far, at least from an Internet perspective, Yelp is the only company that has made any progress to speak of (and obviously the reason Google was interested in acquiring Yelp).

Yelp’s approach is interesting as it combines community with crowdsourcing and user generated content to gain influence which it can then leverage to sell ads. The real asset then is the legions of loyal reviewers that regularly generate content on the site. Those reviewers vie for prestige and recognition in the community and the ones that are successful get to attend “exclusive” Yelp events in addition to the recognition of the community. To monetize the site Yelp has put local account reps in place to sell ads. There’s quite a bit of “pounding the pavement” in the model but it is proving effective.

What did people do before Yelp, used the Yellow Pages I guess. At least the Yellow Pages were the last successful business model for reaching and engaging these small, local businesses. There were some attempts to translate the Yellow Pages to the online world, most notably Yahoo and even AT&T but thankfully they really haven’t gained much influence. I suppose there are still people and communities of people that use the print or online yellow pages but it seems like its going the same way as print media. Anyway, where is this all going? Several trends, I think, will start impacting hyper-local this year, mobile, context aware apps (most notably location awareness), and the social web. Yelp leverages social web of course and does have a mobile app that’s location aware already. I wonder though, will apps like FourSquare, with its ability to serve up location specific offers and specials, start to erode some of Yelp’s local clout? The game portion of FourSquare (and Gowalla as well) does seem to be drawing more people into participating and if the momentum continues could offer local businesses a very targeted way to reach prospective customers.

There are other approaches that could help reach into hyper-local that combine context awareness with augmented reality and even user generated content. Apps like Wikitude and cyclopedia, for example could make a run at local advertising and embed them into their AR features. GraffitiGeo could also be a contender in this space, as it adds in user generated location specific “notes” or Graffiti and crowdsourcing votes for or against local businesses. And EveryBlock, which is owned by MSNBC, is another interesting play in the hyper-local online news and information aggregation space. Currently EveryBlock ha Google Ads on the site, but you have to think that they could garner some share if the site continues to attract new users. And what about google, will they make their own play to try and capture some of the new hyper-local ad revenue?