The Local On-Demand Economy seems to be taking over tech headlines, not to mention VC dollars. We’ve been covering this “Uberfication of Local” for the past couple years and more formally in the past few months.

We’ve been calling it On Demand Local Services (ODLS), but with a new white paper to further plant our stake in the ground, we’re extending its boundaries with the term “Local On Demand Economy” (LODE).

Regardless of what it’s called, it will be a key area to watch in the coming months. This goes for anyone working in local media or selling services to SMBs. Like many disruptive areas, LODE is both opportunity and threat.

The area is rich for analysis, including it’s current state, background and where it’s going next. These will be key discussion points in forming strategies around LODE and extending local media’s addressable opportunity.

The report’s executive summary is below and the full version will be published in the next few weeks. We’ll be covering this closely here, in our newsletter, and in other forums.

More to come on all of the above and in the meantime, here’s the summary:

Executive Summary

You’ve probably seen it throughout tech news coverage: “Uber for XYZ has launched.” It’s a business model first popularized through hailing a ride somewhere, but is now taking over a wide range of local service verticals — everything from house cleaning to car repair to dog walking.

We’re talking about the local on demand economy (LODE). It is defined as services that are summoned on-demand through mobile apps, then promptly fulfilled offline. For users, it brings immediate needs to their fingertips (literally). For providers, it aggregates demand.

This creates marketplace transparency that brings together buyer and seller more efficiently. Individual service providers are afforded customer acquisition capabilities previously reserved for larger companies. Many LODE apps also handle operations like payments and scheduling.

In micro terms, these lowered overhead costs create favorable unit economics that are passed on to consumers — further fueling demand. In macro terms, the rise of LODE could transform the traditional local service models we’ve known for centuries. It’s the new “1099 economy.”

This happens by flipping the traditional local advertising model that requires marketing in advance. Instead, demand is captured and revealed for service providers to react in real time to a marketplace made transparent. Put another way: marketing is replaced with a commerce engine.

This is a fundamental shift in that local service providers don’t have to make their availability known through various forms of marketing in order to generate demand. Demand comes first as consumers make their need known. Supply (local service providers) then adjusts accordingly.

This creates more efficient customer acquisition — a critical factor for local service providers with small or non-existent budget for upfront marketing. Therefore, the addressable market for LODE services could exceed the boundaries of local advertising, and therefore a growth opportunity.

These and other attributes have caused LODE to be the largest area of VC funding of the past year. According to CB Insights, LODE companies raised $2.6 billion in 2014. This happened at a rate of roughly 20 deals per quarter and a series A average of $7.83 million.

Uber — LODE’s most emblematic startup — is one of the most successful companies of the last decade in terms of revenue growth and valuation. It has alone received $2.7 billion in total funding, is now valued at approximately $40 billion and operates in several countries.

That success has compelled several startups that extend this framework to new verticals and feature sets. Other examples are Lyft for ride sharing; Airbnb for hospitality; Homejoy for house cleaning; TaskRabbit for “odd jobs,” and Urgent.ly for roadside assistance.

Meanwhile, the sector’s growth continues to be fueled by several macro factors. These include technology (smartphone penetration and app innovation); culture (acclimation to app based local discovery); the economy (unemployment rates and provider availability); and generational shifts.

This Insight Paper defines LODE, examines its drivers, spotlights best practices and maps its trajectory. It will characterize the next phase of local commerce.

The post Rise of the Local On-Demand Economy: An Insight Paper Preview appeared first on BIA/Kelsey - Local Media Watch.

Local businesses are finding customers in lots of new ways with the expanding reach of social media and transaction capabilities. On the final day at Leading in Local: Interactive Local Media in San Francisco, a panel on “the new world of leads” with executives from Airbnb, Thumbtack and Lucky Oyster explored some of the opportunities.

Airbnb, of course, is one of the real breakouts in the space with ten million “guests” in 192 countries now participating in its apartment — as — hotel rental services. The company’s Joe Zadeh said the key to its “shared economy” service was understanding its clients. “People want to have more experiences, and they want to step away from having so many things,” he said. People don’t necessarily want to be an Uber driver after getting a ride, but they do want to become Airbnb hosts.

The company has been building its solutions based on need. For instance, it has developed a freelance photographer program because hosts need good pictures of their apartments. It is also working on providing “speed matches.” Guests “don’t want to wait six hours to get a response,” he said.

Lucky Oyster’s Matthew Berk, a longtime local industry executive and analyst, said that a key part of the new leads order is to provide a “structured” word of mouth platform about actual experience. It has been a ten year journey to provide digital word of mouth. For a local business, it will never be based on a tremendous volume of leads or reviews, he said. But you want to track it, promote it and bump it. The opportunity for innovation is in the form of discovering the right lead, he said.

Thumbtack’s Marco Zappacosta said leads for services have their own special criteria. The long term goal is to become a transactional marketplace, and the most convenient way for a seller to conduct his or her business. But “a lot of price discovery happens after the point of introduction,” he said, noting that Thumbtack now has a list of 30,000 contractors, and sends $200 million of business their way. His challenge: get more contractors. There is plenty of business, but a supply constraint.

The post At Leading in Local: ILM 2013: The New World of Leads appeared first on BIA/Kelsey - Local Media Watch.

Leading in Local: Interactive Local Media, BIA/Kelsey’s flagship show, is now set for San Francisco Dec. 10-12 and we couldn’t be more excited. This year’s edition hosts a totally fresh, new slate of industry leaders.

The show opens with BIA/Kelsey research and the dynamic duo of Joanne Bradford and Kara Swisher. Bradford, of course, has pushed local into new realms during her tenures with Microsoft, Yahoo and Demand Media. Now she is applying her knowledge as President of Hearst’s San Francisco Chronicle. And Swisher remains the fearless interrogator that has dominated tech journalism for over 20 years – the last eight spent as cofounder of All Things D, along with Walt Mossberg. Nobody cuts through the hype like she does.

Other top speakers represent our idea of real innovation (and real fun, too.) Startup Rising Author and former Washington Post Digital and Health Central leader Chris Schroeder lends a global perspective to what works with startups. In the same light, Intel senior researcher Lama Nachman – yes, Discovery Channel’s “Curiosity Expert” – talks about developing the next generation of mobile technologies.

Other initial speakers include DemandForce CMO Patrick Barry, talking about the next wave of one stop local platforms; Hubspot SVP Mark Roberge, going deep on sales organization effectiveness; Weather.com VP Denise Chudhy, talking why weather is the true model for national local; Five Stars CEO Victor Ho on the emergence of Transaction Marketing and Point of Sale integration; Groupon VP Sean Smyth on how Groupon leverages its millions of users in new directions; Telmetrics CEO Bill Dinan on how the new metrics are changing local; and Thumbtack CEO Marco Zappacosta on new ways to leverage directory models for leads.

Indeed, a lot of things have happened in local in 2013. The rise of collaborative consumption via AirBnB, Uber and other companies combining listings, social media and purchase capabilities might be the biggest thing to have hit the industry. As Interactive Local Media, we’re going deep on collaborative consumption with Airbnb director Joe Zadeh, Lucky Oyster CEO Matthew Berk, and two more great names that we can’t announce yet.

Other superforums will focus on mobile wallets and the rise of digital agencies. In the end, we’ll end up with 40+, hand-picked speakers.

Here’s an initial list:

Joanne Bradford, President, SF Chronicle
Kara Swisher, Co-Executive Editor, AllThingsD
Chris Schroeder, Author, Startup Rising
Victor Ho, CEO, FiveStars
Patrick Barry, CMO, DemandForce (Intuit)
Mark Roberge, SVP, Hubspot
Denise Chudhy, VP, Weather.com
Lama Nachman, Sr. Staff Researcher, Intel
Sean Smyth, VP, Partnerships, Groupon
Marco Zappacosta, CEO, Thumbtack
Joe Zadeh, Director, Airbnb
Matthew Berk, CEO, Lucky Oyster
Bill Dinan, CEO, Telmetrics

We’ve extended our Early DIscount rates through October 2. Please register here to save.

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