Despite all of the excitement around location based mobile advertising, the dirty little secret is that it's tempered by the accuracy of the location signal... which is often wildly inaccurate. Following our podcast with ThinNear founder and former CEO Eli…
This post is the latest in a weekly series of excerpts from BIA/Kelsey’s recent report on the Local On-Demand Economy (LODE). The series will lead up to BIA/Kelsey NOW, a conference on LODE that will take place June 12 in San Francisco.
One of the marks of the local on-demand economy (LODE) is compressing the traditional local search process. We see it with companies like Uber: instead of searching, viewing listings, reviews, calling… you simply press a button and a car shows up.
Of course that’s easier said than done: Ceding the decision to Uber of which driver shows up requires a great deal of trust. Consumers are accustomed to the traditional local search process of choosing their individual driver/cleaner/lawyer, etc.
So successful LODE startups will build that trust over time using technology to match buyer and seller more quickly and reliably than local search. Beyond technology chops, it’s all about building balanced two-sided marketplaces, and network effect.
Meanwhile Google, the king of search, is already building its way into this LODE paradigm with tools like Google Now, and its rumored move into on-demand home services. LODE might be the anti-search, but Google will have a part in its future.
A related excerpt from our LODE white paper is below. Consider it a primer for the discussion we’ll have on stage at BIA/Kelsey NOW. Let me know if you’d like to participate (mbolandATbiakelsey.com) and stay tuned for lots more coverage.
Next week’s excerpt: LODE’s Impact on Local Media.
The New Search
LODE threatens traditional “local search” with a user value proposition that is more natural and natively designed for smartphones. It does this by compressing the supply chain. In other words, it eliminates steps of the traditional process of using a search engine to find local services.
The mobile local search process currently goes something like this:
1. Tap (or speak) words into a search box.
2. See results.
3. Click the most attractive one — sometimes leading to directories with additional navigation.
4. Read reviews or other decision criteria.
5. Choose a business that appears to be the most reliable, proficient or inexpensive.
6. Contact that business to inquire about or retain its service.
7. Schedule service.
8. Fulfill and transact.LODE’s comparison is:
1. Launch a LODE app for a designated service.
2. Push a button to indicate an immediate need.
3. Service provider comes to or contacts you (paid automatically once approved).Flipping the Model
LODE’s departure from local search has important ramifications for marketers. Stepping back, consumer behavior has evolved from print directory lookups to search engines and even social networks to find items or services that fulfill specific needs with varying degrees of urgency.
These models have progressed towards more of a user pull and less of an advertiser push. The trend has also moved towards more targeted advertiser placement, to establish positioning in front of consumers at strategic times and places of explicit commercial intent.
In a print directory context, this means physical positioning — through size, color and heading priority — to capture that coveted phone call at a time of consumer need. For search engines, it means formulating the right keywords and ad groups to likewise capture high-intent clicks.
With search came certain efficiencies in reaching high-intent consumers in a more cost-efficient way than traditional media. LODE continues down that evolutionary path by aggregating real time consumer demand in a given service category, allowing nearby providers to respond accordingly.
So instead of a consumer search for a business — requiring a previously devised marketing plan where a message is placed in front of that user — LODE flips the model. User demand is captured and revealed for service providers to react in real time to a marketplace now made transparent.
This post is the latest in a weekly series of excerpts from BIA/Kelsey’s recent report on the Local On-Demand Economy (LODE). The series will lead up to BIA/Kelsey NOW, a conference on LODE that will take place June 12 in San Francisco.
The success of companies in the local on-demand economy (LODE) hinges on creating network effect and balance in two sided marketplaces (supply and demand). These must grow together in unison, and in a step function that usually leads with adequate supply (i.e., enough Uber drivers).
Last week we examined demand, so now it’s time to zero in on these supply-side dynamics. There are many factors including economic (unemployment rates), geographic (urbanization) and generational (millennial work habits). These are all colliding to form the “1099 economy” at the heart of LODE.
A related excerpt from our LODE white paper is below. Consider it a primer for the discussion we’ll have on stage at BIA/Kelsey NOW. Let me know if you’d like to participate (mbolandATbiakelsey.com) and stay tuned for lots more coverage.
Next week’s excerpt: LODE’s Impact on Local Media.
Supply Side: The 1099 Economy
The two-sided marketplaces that define LODE mean that user and service provider growth must happen in approximate balance. There are unique market factors that create that balance and drive growth on each side of the supply/demand equation. The demand drivers were just covered.
For the supply side, LODE is keeping pace as its financial and lifestyle benefits are made known to service providers. This is important because the step function that defines LODE’s supply/demand balance usually starts with the supply side (i.e. enough Uber drivers).
This has been driven (excuse the pun) partly by high unemployment rates that create a larger eligible pool of service providers. For example, Uber had 160,000 drivers at the end of 2014. 40,000 signed up in December alone, and its cumulative total is doubling every six months.
Adequate supply is also driven by larger trends such as the percentage of the population that is concentrated in urban areas. This creates a larger eligible pool of suppliers. It also concentrates demand within a defined area, which provides ROI incentive for suppliers to operate.
Drilling down to more direct and tangible motives, there are often economic benefits for service providers. As mentioned above, reduction in marketing and operational costs enable individuals to sidestep traditional barriers to entrepreneurship. And some LODE services offer quick revenue.
A study by Princeton economist Alan B. Krueger reports that Uber drivers earn $19 per hour on average, and a majority are very satisfied. Drivers were also proven to work fewer hours and earn more than taxi drivers (though they must handle some expenses that taxi drivers don’t).
The Kreuger report also shows that driver growth isn’t receding even as some factors — such as high unemployment — abate. And as Uber lowers rates to the initial detriment of drivers, it argues that increased demand counteracts potential losses (per second order effect outlined earlier).
Punch Out
There is also the matter of flexibility. LODE is causing a cultural shift in the way people think about work. It’s chipping away at a centuries-long societal construct and mindset about working for companies. Ask any Uber driver how much he likes being able to create his own hours.
Though corporations absorb risk and create community — a benefit established as 20th century industrialization and urbanization created the welfare state we now know they also require sizable and sometimes inconvenient commitments from their employees.
And so a key constituency of the emerging 1099 economy has become individuals that require this flexibility out of necessity: students, contract employees, parents, people with multiple jobs. The ability to define one’s hours has been one of the biggest boons for LODE service providers.
For example, most Uber drivers work less than 15 hours per week, according to the Krueger study. According to a driver survey in the report, most are already employed full or part time. Earning additional income was stated as the primary benefit of being an Uber driver.
This flexibility is also perfect for a demographic group examined above in a different context: Millennials. The characteristic flexible hours that several LODE services offer could be form-fitted for a generation that doesn’t want to be told when to come to work.
This post is the latest in a weekly series of excerpts from BIA/Kelsey’s recent report on the Local On-Demand Economy (LODE). The series will lead up to BIA/Kelsey NOW, a conference on LODE that will take place June 12 in San Francisco.
The success of companies in the local on-demand economy (LODE) hinges on creating network effect and balance in two sided marketplaces (supply and demand). These must grow together in unison, and in a step function that usually leads with adequate supply (i.e., enough Uber drivers).
Last week we examined demand, so now it’s time to zero in on these supply-side dynamics. There are many factors including economic (unemployment rates), geographic (urbanization) and generational (millennial work habits). These are all colliding to form the “1099 economy” at the heart of LODE.
A related excerpt from our LODE white paper is below. Consider it a primer for the discussion we’ll have on stage at BIA/Kelsey NOW. Let me know if you’d like to participate (mbolandATbiakelsey.com) and stay tuned for lots more coverage.
Next week’s excerpt: LODE’s Impact on Local Media.
Supply Side: The 1099 Economy
The two-sided marketplaces that define LODE mean that user and service provider growth must happen in approximate balance. There are unique market factors that create that balance and drive growth on each side of the supply/demand equation. The demand drivers were just covered.
For the supply side, LODE is keeping pace as its financial and lifestyle benefits are made known to service providers. This is important because the step function that defines LODE’s supply/demand balance usually starts with the supply side (i.e. enough Uber drivers).
This has been driven (excuse the pun) partly by high unemployment rates that create a larger eligible pool of service providers. For example, Uber had 160,000 drivers at the end of 2014. 40,000 signed up in December alone, and its cumulative total is doubling every six months.
Adequate supply is also driven by larger trends such as the percentage of the population that is concentrated in urban areas. This creates a larger eligible pool of suppliers. It also concentrates demand within a defined area, which provides ROI incentive for suppliers to operate.
Drilling down to more direct and tangible motives, there are often economic benefits for service providers. As mentioned above, reduction in marketing and operational costs enable individuals to sidestep traditional barriers to entrepreneurship. And some LODE services offer quick revenue.
A study by Princeton economist Alan B. Krueger reports that Uber drivers earn $19 per hour on average, and a majority are very satisfied. Drivers were also proven to work fewer hours and earn more than taxi drivers (though they must handle some expenses that taxi drivers don’t).
The Kreuger report also shows that driver growth isn’t receding even as some factors — such as high unemployment — abate. And as Uber lowers rates to the initial detriment of drivers, it argues that increased demand counteracts potential losses (per second order effect outlined earlier).
Punch Out
There is also the matter of flexibility. LODE is causing a cultural shift in the way people think about work. It’s chipping away at a centuries-long societal construct and mindset about working for companies. Ask any Uber driver how much he likes being able to create his own hours.
Though corporations absorb risk and create community — a benefit established as 20th century industrialization and urbanization created the welfare state we now know they also require sizable and sometimes inconvenient commitments from their employees.
And so a key constituency of the emerging 1099 economy has become individuals that require this flexibility out of necessity: students, contract employees, parents, people with multiple jobs. The ability to define one’s hours has been one of the biggest boons for LODE service providers.
For example, most Uber drivers work less than 15 hours per week, according to the Krueger study. According to a driver survey in the report, most are already employed full or part time. Earning additional income was stated as the primary benefit of being an Uber driver.
This flexibility is also perfect for a demographic group examined above in a different context: Millennials. The characteristic flexible hours that several LODE services offer could be form-fitted for a generation that doesn’t want to be told when to come to work.
The local on-demand economy (LODE) was the largest recipient of VC funding in 2014. And you can't throw a stone in the tech blogosphere these days without hitting scores of daily posts about milestones or new funding rounds for LODE…
Video is now available for purchase from the third and most evolved edition of BIA/Kelsey NATIONAL, which took place March 25-27 in Dallas. At the show, we saw that industry leaders were in general agreement that major progress has been…
Video is now available for purchase from the third and most evolved edition of BIA/Kelsey NATIONAL, which took place March 25-27 in Dallas. At the show, we saw that industry leaders were in general agreement that major progress has been…
TaskRabbit, HomeJoy, HomeAdvisor, Handy, ClubLocal, Pro.com, Amazon Home Services and, most recently, Google, to name just a few, have entered the exploding home services market to provide in-home labor and professional workers fast access to their local market. According to a recent The New York Times article, the market is valued between $400 billion and $800 billion annually by the companies chasing this newly accessible revenue.
With that massive revenue target in mind, BIA/Kelsey is in the process of segmenting and understanding the keys to the home services, research we’ll be introducing at our upcoming NOW: The Rise of the Local On-Demand Economy Conference on June 12th in San Francisco. In this posting, we’ll discuss who the primary customer targets for these services may be. In upcoming installments, we’ll look at when potential buyers will be most ready to pay for work that has traditionally been “free.”
Of course, in economics, nothing is free, but many factors are often very poorly measured or simply ignored when talking about the value of labor in the home. With the arrival of logistics systems that aggregate supplies of labor for the home, many new costs and expenses can be included in the economic decision-making of the household. That expansion of measured labor will certainly change the perception of the work that homemakers and home repair enthusiasts have previously treated as “free labor.”
Building a paradise or hell?
Logistics and information technology has dramatically improved productivity in large enterprises. They can transform local services, too, if entrepreneurs take the time to assess their customer’s needs and ability to pay in relation to the value of work that traditionally has been treated as contributions to the family.
What’s the real opportunity, to provide services to wealthy homes or to make home services affordable for many more people than today? Home services are often dismissed as a San Francisco-bred phenomenon brewed from a mix of overpaid Millennials and under-employed local workers who will take the lowest possible wage, because they have no other options. In reality, the emerging home services market is the product of enhanced coordination and logistics made possible by technology.
The arrival of data-driven coordination and management could result in an inhumane system of exploitation in which workers fight for scraps or it can lift more people into work that serves their neighbors, their own goals and those the community values. Only the latter approach can result in a robust local economy.
Does my mobile location say that I'm in a Target store? Or am I in the parking lot? Or in the Starbucks within the Target? Or am I driving by at 60 mph? These details matter for contextual relevance in…
This post is the latest in a weekly series of excerpts from BIA/Kelsey's recent report on the Local On-Demand Economy (LODE). The series will lead up to BIA/Kelsey NOW, a conference on LODE that will take place June 12 in…
This post is the latest in a weekly series of excerpts from BIA/Kelsey's recent report on the Local On-Demand Economy (LODE). The series will lead up to BIA/Kelsey NOW, a conference on LODE that will take place June 12 in…
This post is the latest in a weekly series of excerpts from BIA/Kelsey's recent report on the Local On-Demand Economy (LODE). The series will lead up to BIA/Kelsey NOW, a conference on LODE that will take place June 12 in San Francisco. In…
This post is the latest in a weekly series of excerpts from BIA/Kelsey's recent report on the Local On-Demand Economy (LODE). The series will lead up to BIA/Kelsey NOW, a conference on LODE that will take place June 12 in San Francisco. In…
Local On-Demand Economy (LODE) apps were the largest recipient of VC funding in 2014. And it makes sense given the favorable unit economics that LODE services can accomplish, along with several other metrics that VCs tend to like. This was…
The Local On-Demand Economy (LODE) -- also known as the "uberfication of everything" -- is among the hottest topics in tech & media news. More important, and quantifiable, is that it's the greatest recipient of VC funding of the past…
This post is the first of a weekly series of excerpts from BIA/Kelsey's recent report on the Local On-Demand Economy (LODE). The series will lead up to BIA/Kelsey NOW, a conference on LODE that will take place June 12 in San Francisco. …
Location based mobile advertising accounts for about one third of overall U.S. mobile ad revenues, and quickly growing. In addition to the topic emerging in nearly every session at last week's BIA/Kelsey NATIONAL, we held two dedicated sessions to drill…
BIA/Kelsey announced the winners of the 2015 GOLOCAL Awards on Friday morning, the closing day of BIA/Kelsey NATIONAL. The awards recognize successful local marketing initiatives deployed by national brands. Sightly, PowerChord and G/O Digital captured the wins with their respective projects:
“Congratulations to our GOLOCAL winners, who have demonstrated strategic, innovative and results-driven approaches to national-local marketing,” said MacKenzie Lovings, VP of marketing, BIA/Kelsey. “The campaigns showcase how to make national spending on local marketing efficient and targeted. We learned so much from all the companies who entered and shared their case studies. We also thank our esteemed panel of judges for their time and expertise.”
The criteria judges applied in making the selections were the ability to make national spending on local more efficient and targeted, campaigns that drove national-local messages with innovative technologies and services, and projects that delivered national-local sales success for the client.
G/O Digital Lead Generation and Social Audience Engagement. Welding and HVAC repair students were recruited for StrataTech, a trade learning company in G/O Digital’s campaign. “The key goal in social is making the connection,” said Marty McDonald, director of strategic accounts at G/O, a Gannett Company. “We immersed ourselves in their business and understanding what that student looks like at each stage of the process.”
The third version of BIA/Kelsey NATIONAL just wrapped last week in Dallas, following our 2014 NATIONAL event in Atlanta and our 2013 event in Boston. Taking twists and turns as it develops, the topic of "national marketing, local targeting" is…
Chief Marketing Officers are in “an exclusive club that drinks a lot and makes bad decisions,” Dave Walker, Chairman, BizHive, told BIA/Kelsey NATIONAL.
His tongue-in-cheek opening statement set the stage for a rapid-fire dissection of the disconnect that afflicts the national/local conversation. An accomplished marketer who has led go-to-market strategies for Walmart, Microsoft, Toys R Us, and Home Depot, among others, he recently launched BizHive, an SMB advertising and marketing services marketplace.
Walker kicked off his session explaining the results of the CMO Council’s survey of CMO satisfaction with their local marketing:
* Only eight percent of CMOs reported being satisfied with their current local marketing.
* This despite the fact that 57 percent of national brand marketers say local is critical to success.
* 63 percent had “nothing in place for their local measurements.”
* Only seven percent of CMOs say they currently have a successful local marketing program in place.
Walker suggested that today’s CMO lives by The Three C’s: Capture, Captivate, Convert, which are intimately linked to their compensation, but can interfere with addressing the customer on their terms. A sea change in thinking is necessary for a transformation of local marketing, which currently lives on a leash held by national marketers who discount the importance of individual preferences.
A language barrier
“We are seeing that there are so many ways to describe “local” that this is part of the problem,” Walker said. “Everyone has a different definition. So, who is defining ‘local?’ Is it a service, a technology, a map?” In 1980, when he started his CMO career, Walker said, CMOs defined local with lines on maps.
