$20 an hour. That’s the price of a HomeJoy housekeeping professional. How big can the market for these services reasonable grow? Will these on-demand companies grow without taking a major bite of the approximately $8.5 billion in revenue from the industries that provide housekeeping services today?

Using the methodology explained in our first Local On-Demand Economy market posting, which examined the market for unpaid household work that is currently performed by the householder, we estimate that the Housekeeping Services vertical represents $57.8 billion in addressable revenue in 2015. The growth of this market depends on increasing homeowners’ and renters’ ability to earn income from some of the labor they do to support their home while spending to have others do household work they want to avoid.

By lowering overhead using digital logistics to match housekeepers and clients, as well as to collect feedback about the customer and worker’s experience, HomeJoy hopes to prosper as less agile companies flounder in employee costs that the San Francisco-based LODE company eschews. This flexibility comes at a cost, as HomeJoy has much more limited control over individual cleaners that contract with it than a firm like Merry Maids, where uniforms and policies are enforced as part of the employment agreement. Regulatory changes at the municipal, state and federal levels will be necessary to resolve the ongoing questions about the legal status of a “1099 worker” with regard to their obligations to uphold corporate standards, but for the sake of this analysis we will simply point out that brand experience will turn on the on-demand company’s ability to engage laborers in delivering a consistent customer experience.

The Housekeeping Services Industry
Housekeeping services are lumped into a variety of labor categories, including janitorial services and traveler accommodations, by the Bureau of Labor Statistics. As of May 2014, more than 70 percent of “maids” worked in hotels, motels and medical facilities. Approximately 260,000 housekeepers work in the home services market and drive approximately $8.5 billion in revenue for themselves, their franchise or housekeeping company. The median hourly wage for a maid in the United States is $9.67 an hour, and the top 10 percent of earners bring in $15.74 an hour.

Existing housekeeping and services companies, such as ServiceMaster’s Merry Maids as well as the Molly Maids franchises, are long-established players who see an emerging fight for their lives as on-demand companies revise the economics of service delivery. The result will likely be the transition of all these companies to on-demand labor models over the next few years, as 86-year-old ServiceMaster has in Europe, where it has launched on-demand home cleaning. However, these on-demand services will compete with their existing franchisees, leading to potentially declining overall revenue. ServiceMaster reported declining revenue in 2014 in its Franchise Services Group, where Merry Maids revenue is reported, of $253 million, down 2.4 percent year-over-year. The trend continued in Q1 2015, when ServiceMaster reported an additional 1.9 percent year-over-year decline in quarterly revenue.

Existing home and commercial services businesses have combined far-flung service businesses to establish their profitable foundations. ServiceMaster, for example, provides home security and insect/pest control services through its American Home Shield and Terminix groups. We anticipate that each of these services can stand on their own in the on-demand market, if the provider masters the infrastructure, marketing and engagement challenges involved.

At $12 to $15 an hour, HomeJoy’s compensation is comparable to the employee-based model of the traditional housekeeping business and slightly higher than the median hourly wage for maids reported by PayScale, $10.73 an hour. These figures suggest HomeJoy runs a topline margin of about 40 percent, higher than the average on-demand company margins at, for example, Uber. This will enable HomeJoy to concentrate on quality experience, which is the keystone to building a competitive offering and growing its market.

Based on our model, the housekeeping industry has converted only 14.7 percent of the addressable market in 2015 — that is, the people who can access and afford on-demand housekeeping services. There is plenty of room for growth, but much of that growth is predicated on the exchange of on-demand labor among household laborers, not simply the existing housekeeping market.

Table stakes
HomeJoy, which has acquired one company, GetMaid, is purportedly in discussions about a merger with Handy. Both companies have anted up to play at the consolidation game, bringing strong logistical and demand-generation tools to potential business relationships. The enduring question for all LODE companies will be “How many services make a minimum viable offering?”

Based on the early M&A activity in the pure-play housekeeping business, which has attracted between $240 million and $290 million in venture investments, it is clear that the appropriate mix of services that will attract both sufficient labor interest and customer attention is still to be discovered. Thumbtack, which also offers cleaning and assistant-like services for the home, reaches far beyond the cleaning category, offering plumbing and yard services, among others may be better prepared to win the share of customer necessary to grow. A combination of HomeJoy and Handy, should it come to pass, would compete more directly with Thumbtack.

But then there is the specter of Amazon Home Services, which promises a wide variety of vetted in-home services and already delivers more goods to directly to American home than any other online source. The bet by Amazon is simple: They can transform consumer attention to products around the house into services revenue related to delivering and using those products, as well as services that were previously found through the paper and online directories. Amazon’s primary competition for labor will likely be the directories and marketing services companies seeking to aggregate services businesses, such as TalkLocal, ReachLocal, as well as individual businesses competing through tools such as BreezeWorks, FreshLime and the recently announced Prompt.ly.

We anticipate intense consolidation by home services companies seeking to find the ideal mix of services and market reach. With the transition to on-demand labor, which we view as a logical and inevitable consequence of network technology, automation and organizational change, existing home services companies will face tremendous margin pressure and a few will certainly die, but none is assured to die from the competition coming from LODE startups. There is ample upside available if the LODE scenario leads to higher incomes for household workers.

The post LODE in 2015: Housekeeping Services Vertical Worth Up to $57B appeared first on BIA/Kelsey - Local Media Watch.

What makes this the all-but-ignored elephant?

• Only 13 percent goes to digital/online media
• Although co-op spending is already about $55 billion, about twice this amount is actually allocated for co-op advertising, but remains unspent (for a variety of reasons)

Google now has a major initiative to move this large budget into the digital era, and get a higher percentage of the allocation actually spent. This was the driving takeaway from a presentation by Jon Sofield, Google’s VP of Business Development, at this week’s Street Fight Summit West in San Francisco.

A key aspect of this initiative are partnerships with service providers, such as marketing automation and programmatic media purchasing. Google now has about 170 such partnerships, many of them focusing on 8 priority verticals. (For example, one of these is B2B high tech, where co-op digital ad spend is much higher than typical, at 50 percent of total co-op ad spend.)

This represents a shift in Google’s traditional framework for reaching the SMB market, which has been focused on partnering with local sales forces and (some) direct merchant relationships. But that was when the world was still focused on the conversion from print to online.

This is now: Most of the action is now is already digital. In fact, it’s moving quickly to mobile. Sofield pointed out that Google searches crossed over into “mobile dominance” about 5 weeks ago. We chronicled that shift as well.

The emphasis has also moved from simple online presence to message-driven conversions. That means an eye towards online content, formats, and marketing initiatives that drive action. Sofield underscores the need for experimentation — and patience — with this transition. Especially with the famously-late adopting SMB set.

The post What’s the State of Co-Op Advertising in the Hyperlocal Era? appeared first on BIA/Kelsey - Local Media Watch.

What’s the $55 billion elephant in the room? That would be the gross spend on co-op advertising annually in the US. For those unfamiliar, co-op dollars are typically funds earmarked by national brands for “market development” — local advertising or marketing campaigns on behalf of that brand (e.g. by local retailers, franchises, etc).

What makes this the all-but-ignored elephant?

• Only 13 percent goes to digital/online media
• Although co-op spending is already about $55 billion, about twice this amount is actually allocated for co-op advertising, but remains unspent (for a variety of reasons)

Google now has a major initiative to move this large budget into the digital era, and get a higher percentage of the allocation actually spent. This was the driving takeaway from a presentation by Jon Sofield, Google’s VP of Business Development, at this week’s Street Fight Summit West in San Francisco.

A key aspect of this initiative are partnerships with service providers, such as marketing automation and programmatic media purchasing. Google now has about 170 such partnerships, many of them focusing on 8 priority verticals. (For example, one of these is B2B high tech, where co-op digital ad spend is much higher than typical, at 50 percent of total co-op ad spend.)

This represents a shift in Google’s traditional framework for reaching the SMB market, which has been focused on partnering with local sales forces and (some) direct merchant relationships. But that was when the world was still focused on the conversion from print to online.

This is now: Most of the action is now is already digital. In fact, it’s moving quickly to mobile. Sofield pointed out that Google searches crossed over into “mobile dominance” about 5 weeks ago. We chronicled that shift as well.

The emphasis has also moved from simple online presence to message-driven conversions. That means an eye towards online content, formats, and marketing initiatives that drive action. Sofield underscores the need for experimentation — and patience — with this transition. Especially with the famously-late adopting SMB set.

The post What's the State of Co-Op Advertising in the Hyperlocal Era? appeared first on BIA/Kelsey - Local Media Watch.

YP has been growing in leaps and bounds since its 2012 launch. The company, formed by the consolidation of the former AT&T Interactive and Advertising Solutions groups by private equity firm Cerberus Capital, unveiled its new corporate signage installation atop its Glendale, CA headquarters on Monday.

“Its about time that Glendale got a pop of color. YP has arrived,” exclaimed YP CMO Allison Checchi to the group of employees and local business community members that had gathered atop a nearby parking structure to watch the unveiling.

YP has been a long-time member of the local Glendale and Los Angeles based technology community, and in the last few years has grown to become one of the largest tech-industry employers in the region.

Company CTO Darren Clark remarked that the executive team has been set on making YP a powerhouse technology brand since its launch, and initiatives like city-wide private employee shuttle services (similar to services Facebook and Google provide in the San Francisco region for employees) and community outreach have helped to make YP a prominent voice in the fast-growing Los Angeles tech scene.

The company’s LA/Glendale-based digital headquarters have been a vital part of YP’s transformation from a traditional print media business to a digital media leader. Over the past 5 years, YP’s digital solutions have grown from 18% of total revenue in 2009 to more than half in 2015 generating more than $1 billion in revenue.

The Glendale headquarters are home to the company’s product, engineering and technical teams of more than 800 people, and it has grown the office by more than 25 percent since 2013, just after it spun out of AT&T.

Due to YP’s growth, it has become the anchor tenet of 611 N. Brand Blvd, occupying 6 floors covering more than 145,000 square feet of office space. With the expansion, YP was granted signage rights on the building, allowing it to prominently showcase its brand in downtown Glendale and to the thousands of commuters traveling on the 134 freeway.

YP CMO Allison Checchi, CTO Darren Clark, and CXO Mark Ploof addressing the audience at the company’s building sign unveiling on Monday

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BIA/Kelsey is partnering again with the Local Media Association to produce this year’s LMA Native Advertising Interactive Summit next July 15-16 in Washington, DC where we’ll share our latest native ad forecast, insights about marketplace dynamics and trend lines of how we’re seeing this sector evolve. (Note early bird discounts offered through June 15th). The plan overall is to offer a mix of data, best practices, hands-on workshops and take-home ideas for getting your native ad business into higher gear.

The program covers a lot of ground in just a day and half. Nancy Lane, LMA president kicks things off with white board session where she’ll be joined by several other speakers to Schurz Communications’ Kerry Oslund, VP of Publishing and Emerging Media, will share a disruptive new approach to native advertising they’re finding to be successful. Of course, Jeff Bezos’ Washington Post has done a lot of innovation around brands and native advertising as we’ll hear from Kelly Andresen, Director of the WP BrandStudio & Planning who will share winning case studies. You’ll hear speakers from Advance, Gatehouse, Desert Digital and Dispath among others discussion pricing and packaging native ad campaigns, content strategies, outsourcing, selling native effectively and since it’s Washington, we’ll also hear from Laura Sullivan, a staff attorney with the Federal Trade Commission who’s following native closely.

The post Native Advertising Interactive Summit Comes to DC appeared first on BIA/Kelsey - Local Media Watch.

Retail SMBs are more poised than their counterparts in other verticals to adopt sophisticated digital advertising and marketing. This is clearly shown by BIA/Kelsey’s Local Commerce Monitor ™ (Wave 18) survey of small businesses.

Retail SMBs are already highly oriented to digital media, with plans to spend 43 percent of their total ad budget on digital media in the next 12 months*. They rank social media marketing, SEM/SEO and email marketing as their top priorities for advertising and promotion in the next 12 months*.

There are multiple signals in the LCM data that we think point to big expansion into digital by Retail SMBs:

— They’re experienced in maintaining customer lists, with 71 percent having maintained a customer list for over a year. With 61 percent of their customer lists  in digital form, they’re well positioned to move into marketing automation services like CRM (where they’re still at a low utilization level of 21 percent).

— They’re big users of ecommerce, with 90 percent reporting ecommerce sales.

— They’re highly satisfied with the mobile advertising they’ve done so far, reporting high ROIs — although usage of mobile advertising and marketing is still modest.

— They’re big on customer loyalty programs, which are used by 43 percent of SMB retailers. Since only 30 percent of these programs have been digitized, we believe this too represents another growth opportunity.

— They’ve registered an interest in many advertising and marketing services, particularly ecommerce services, online satisfaction surveys, email marketing, and online leads management.

In sum, we believe local retailers will be upping their digital game on multiple fronts in the near term. Since they’re such a staple of their communities, this shift will reinforce the broad and rapid digitization of daily life.

*The 12 month period following the Local Commerce Monitor Wave 18 survey, conduced in Q3, 2014.

These were a few of the top-level findings of the latest cut of LCM 18, focusing on SMBs in the Retail vertical. Clients of BIA/Kelsey can access this report through our client portal. The report is also available for purchase, and more information on the LCM survey is here.

The post Local Retail Poised for Digital Expansion appeared first on BIA/Kelsey - Local Media Watch.

Ad attribution is one of the most challenging analytic problems in marketing today. Who saw which ads, and what purchases resulted? It’s a sticky challenge, especially in an increasingly multi-screen world. As a result, many advertisers use simplified models for attributing customer response. For example, the last click model attributes conversions to the last message a consumer saw.

But smartphone penetration and the age of big data are coming together to create an environment where deeper ad attribution is attainable. This includes the traditionally elusive area of offline ad attribution — connecting the dots between digital engagement and real world (read: local) conversions. The mobile device now provides that link (see our white paper on this topic).

The discussion surfaced again at ad:tech last week. Microsoft data scientist Lin Huang outlined the company’s keyword assist model wherein “the data drives the attribution.” In other words, there’s no pre-existing template about how attribution is assigned. Instead, Bing data (not to be confused with Big Data) determines what search terms naturally cluster together, and what activities they drive.

If a Hyatt property in Hawaii runs a display campaign, impressions resulting from a search cluster could include terms like “Hawaii vacation” or “Hawaii trips.” The attribution weighing of those terms can be measured against a subsequent search for “scuba Hawaii” that directly resulted in a click to book at the Hyatt property. So the earlier — and sometimes more influential — search can get its due credit.

Google and several others have their own flavors of full-funnel attribution. Lin Huang believes the Microsoft’s keyword assist model is “beyond parity” with Google’s latest approach, but of course his inherent bias should be noted. And his examples are mostly around e-commerce transactions, which are of course notable. But offline attribution is where it gets interesting… and very local.

This is important for any advertiser targeting local markets, given that offline is where 93 percent of U.S. commerce happens. Connecting the dots between digital and analog worlds will be the holy grail of local advertising (cue: John Wannamaker quote). And mobile is the key to unlocking that famously illusive challenge, given that it physically goes to the store with you.

So what do these offline attribution models look like? Many extrapolate by creating ad-exposed control groups and measure geographic sales lifts among those groups. There are also ways to measure ad effectiveness by linking social identity to purchase method (see Facebook/Datalogix partnership). Mobile payments will ultimately clarify the path to purchase, but we’re still very early there.

As with most new technologies, initial adoption for all of the above will be with national and brand advertisers. SMBs will adopt through agencies, media companies, and other intermediaries. We expect that SMBs with the greatest economic incentive will move first to sophisticated attribution. Think: high-consideration / high-value purchases like legal, financial, medical and automotive.

__________

Steve Marshall contributed original reporting and insights to this post

The post Local Advertising: It's all About Full-Funnel Attribution appeared first on BIA/Kelsey - Local Media Watch.

But there’s still a gap: most SMBs’ email marketing tactics are fairly basic. They typically send the same promotions to everyone on their list. Or, if they segment the audience, it’s a very basic segmentation. This unrefined approach is sometimes called “batch and blast”, or “spray and pray.”

At a workshop at last week’s ad:tech San Francisco, several speakers discussed how email sophistication is evolving quickly. Although much of the discussion focused on brand advertisers, the lessons are just as useful to SMBs. This is especially true for SMBs using an agency or third party service provider.

Here are the top takeaways from the workshop:

— There’s a “unique customer journey” for each customer. Try to understand what that is: understand how each customer got to the website (or other online property). The journey will say a lot about that customer’s interests and motivations.

— The advertiser needs to speak to each customer individually, with a tailored message. This is especially true for the best customers, or power users.

— Typically, over 50 percent of the audience for a given marketing email is seeing it on a mobile device. This favors simple, bold visuals, short lead-ins, and buttons big enough for fingers (40 pixel diameter, minimum).

— Social media and email should be used together, in a complementary way. Advertisers should try to use one to leverage the other — which also means advertisers need to have the capability to associate a customer’s activity on social media with email they receive from the SMB.

The post Email Marketing for SMBs: No More "Batch and Blast" appeared first on BIA/Kelsey - Local Media Watch.

How is Facebook reinforcing its position in local? What are the business opportunities still left to come in the Local on-Demand Economy (LODE)? And what were the best things we saw at ad:tech? These are a few topics we tackled over the last week, aggregated into the Local Media Watch newsletter.

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Click below for the latest issue and subscribe (free) to get it in your inbox during its regular Thursday circulation.

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This was one of the first points in today’s workshop on Omnichannel advertising at ad:tech San Francisco, led by Sean Shoffstall, VP Innovation & Strategy, Teradata Interactive.

True omnichannel advertising, therefore, requires the advertiser to have an empirical understanding of the customer, and where he or she is exposed to a given campaign. And — wouldn’t you know it — this understanding requires a huge amount of data. Oh yes, and it helps if the data is real-time (or close to it).

Bottom line: Omnichannel advertising is the ultimate in CUSTOMER-focused analysis. It is NOT about media performance. It’s about customer experience. One can readily see how this requires many systems to tie together at the back-end, in order to assemble an accurate picture of the experience of the individual customer.  Very few brands or national advertisers, let alone SMBs are equipped to do this today.

And… to come full circle, this also explains why a company like Teradata is focusing on the digital advertising industry.

This is one of more and more examples of how Big Data will be leveraged by businesses of all sizes, including SMBs — usually through agencies or other intermediaries. (In fact, I’ll be moderating a panel at BIA/Kelsey SMB in September on this subject.)

Sidebar: Teradata Interactive started life as Ozone Online, a San Francisco digital ad agency that was purchased a year ago by Teradata. Teradata — the huge data storage hardware, data warehousing and analytics provider. So among other things, Teradata is now operating an innovative digital ad agency.

In fact, you can see the entire arc of the IT industry just in the history of the Teradata company. It started as the data division of NCR, the old “big iron” cash register and mainframe company. It was spun out of NCR in 2007 as a standalone data warehousing and analytics company. And with the acquisition of Ozone Online in 2014, it has become a Big Data online services provider. The whole evolutionary path of IT — in a single company.

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