As the Local On-Demand Economy (LODE) evolves, more interaction between merchants, brands and customers will take place in rich media environments where the click is only one step, albeit still important, to improved customer engagement, satisfaction and conversion rates. We’ll be covering this emerging economy at BIA/Kelsey NOW in June (sign up today for the early-registration discount), but the topic is a hot one at our NATIONAL Conference this week.

“You’ve got so much information from just the click [on Google], but we have hundreds of keywords [in each call],” Jeremiah Wilson, founder and president of LogMyCalls, said in an on-stage conversation. That is an important insight that extends beyond marketers to political operatives and all breeds of persuasive messaging will need to embrace in the Local On-Demand Economy. It requires immense listening skills, algorithmic creativity and judicious use of insights to engage the person at the other end of a transaction.

The explosion of data in the enterprise during the last decade will be arriving in local markets through hosted services and resellers, such as media and marketing services companies. Search, which has dominated the past decade will continue to grow, but as we’ve heard repeatedly throughout the BIA/Kelsey NATIONAL Conference, there are many more steps to personalize the engagement with consumers.

The conversation, the basic unit of human communication (tweets, to provide contrast, are fragments of conversations), will be the new locus of analysis as the digital engagement model diversifies and lengthens the customer relationship to include pre-sales to post- and repeat-sales delivered to individual users. People think primarily in terms of their local context when making buying decisions. Can I get it in Tacoma? Will I be able to get support in Cleveland? Is this doctor trusted by people I know? All these questions rise out of the give-and-take of a conversation.

“Markets are conversations,” the authors of the Cluetrain Manifesto famously wrote, and the implications for brands, media and small business are straight-forward: Far more information needs to be wrapped into efforts to understand and engage with the customer. This must happen in an environment respectful of the individual’s sense of privacy and propriety.

That data flood is already relevant in the enterprise, in the form of “big data,” an over-used but telling name for the inevitable increase in analyzable data. In the LODE world, these capabilities will be pushed to the edge of the economy, where SMBs and customers meet in their local market.

Add sensor data from beacons, dumb and autonomous vehicles being tracked by network services, the growth of customer feedback as a key influence of purchases, and the question for every business will become “What do I need to know about this customer, an individual, now?” Simple segmentation will not suffice when products and services can be customized within the supply chain based on the information shared publicly and privately (between buyer and seller) in the digital engagement process.

In the call analysis space, LogMyCalls, CallSource, Century Interactive and others already provide vertical-specific “language sets” to analyze, for example, calls to automotive dealers, medical offices and other specialty conversations. Within a decade, it will be possible to optimize any digital engagement, including phone calls, customer support chats, webinars and, in regulated businesses, enforce the disclosure of information required by law when talking with a customer.

Take for example CrystalKnows, a personality analysis tool for marketers and professionals that promises to “end email miscommunication.” BIA/Kelsey friend-of-the-company Mike Orren of Speakeasy pointed this out over lunch today. A “proprietary personality detection technology” developed in the Harvard Innovation Lab, CrystalKnows crawls and analyzes public sources, such as blogs and social postings, to provide a profile of a person and recommend how to communicate with them effectively. It’s recommendations, when I run a report about myself, are useful tips, but it also rings of the kind of generalities that astrologers and psychics use to convince people they are predicting the future or identifying a dead relative who wants to talk. Nevertheless, it’s an impressive beginning.

In all fairness, one thing CrystalKnows tells me about my own work style is that I give blunt feedback. So, I don’t regret the astrology and psychic comment above. CrystalKnows should not be surprised, but will their algorithm grok the humor here? Given resources and time, it will be possible to automate email targeting individuals, shaping offers based on known consumer traits, and many other proto-creepy engagements that still require human artfulness and, if business hopes to have paying customers in the future, will continue to require human engagement at key moments.

The Local On-Demand world, in which data proliferation raises customer expectations that a brand or company will know, understand and treat them personally, the proliferation of conversational intelligence tools will be a vital area of investment and development.

Conversational Intelligence will play a role in brand awareness, employee retention in the 1099 economy, word-of-mouth and personalized communication in work and the local market. Scoring and measurement of successful communication, from analyzing voice calls to, potentially, conversations at the point of sale, to provide a full view of attribution in the ever more complex world in which we will live. We’ll be talking about the consequences at NOW this June. Join us for the conversation.

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Leading up to the BIA/Kelsey NOW Conference, which will debut in San Francisco this June, we’re kicking off a regular series of blog postings on the Local On-Demand Economy (see our white paper). Twice per week, we’ll wrap notable news, fundings and executive moves in the LODE world.

Top Fundraiser Ever Leaves Uber

Uber Chief Financial Officer Brent Callinicos, who raised more venture capital than any CFO in history for the on-demand car service, has stepped down to spend more time with his wife and daughter. Having delivered $5.6 billion in funding to the company since he joined in September 2013, Callinicos’ record is unmatched among startup financial executives.

He joined the company shortly after its Series C round, when Uber had a mere $306 million in backing. As of yesterday, when CEO Travis Kalanick announced his departure, Uber with Callinicos had raised an additional $4 billion in capital and $1.6 billion in debt financing, a total of $5.6 billion in cash to achieve a $40+ billion valuation. Uber is widely expected to make an initial public offering this year. Callinicos remains an advisor to the company.

If you are not already dialing Callinicos to see what he is doing next, stop and think about the magnitude of Uber’s growth under his financial guidance. Facebook, by contrast, raised only $2.4 billion prior to its IPO, less than half the amount raised by Uber during the last 18 months (Callinicos joined Sept. 9, 2013). Kalinick wrote on his blog at the time that “Uber has enormous opportunities ahead.” Kalinick is reported to have told employees in email that “Brent has done a wonderful job here at Uber.”

“He will be a legend among startup CFOs,” Erik Gordon, professor at the University of Michigan’s Ross School of Business, told The Wall Street Journal. We will watch with interest for Callinicos’ next business move.

Steve Case Talks of “Third-Wave Disruption” at SXSW

AOL founder Steve Case, speaking at the South By Southwest Conference in Austin Texas this weekend, said the Internet is poised for a “third-wave distuption [that will] account for more than half our economy.” This is the Local On-Demand Economy, which will drive the innovations of the past quarter century at the enterprise level into the local and emerging economies.

According to the Chicago Tribune, Case described the third wave as an environment in which [paraphrasing Case] “Companies that expect to thrive will need to partner with embedded stakeholders such as teachers, doctors and large corporations as well as with government agencies.” He responded to critics of the idea saying, “Engagement with governments may sound unappealing to many of you, but the entrepreneurs who figure out how to operate in this new framework have the potential to reap amazing rewards in this next wave.”

Case described the disruption at the local level as the result of improved access to capital from crowdsourcing, an increasing recognition of the role of strategic partnerships in new and existing companies, the rise of “impact” investing for social good and, the emergence of many more centers of digital innovation beyond Silicon Valley. We see the same forces at work. In particular, the role of strategic partnering will be critical. BIA/Kelsey believes partnering will be carried out through digital channels using APIs (application programming interfaces) that allow businesses to blend and customize their products and services with many partners to deliver exactly what a consumer wants, when they want it, at home, the workplace or in the community.

Case’s point about government is well taken. The disruption of local economics will have vast consequences for local, state and federal tax bases. For one thing, more workers will likely be using incorporation to extend their ability to supply and deliver services locally, changing the tax base in novel ways. Every government service, from street maintenance and education to police protection will be impacted by potentially lower short-term government revenue as 1099 economics takes hold. Health care may become an essential enabling service to ensure social mobility as workers abandon the lifelong career. The need for ongoing adult education will become an industry unto itself, augmenting reduced public spending or, perhaps, a greater focus by government on early-life public education.

“The government spends more on health and learning than anybody,” Case told the SXSW audience. “So successful third-wave entrepreneurs will need to engage more, not only with governments as their principal regulator, but also as their potentially largest customer.” We also anticipate that in the “1099 Economy” demand-side aggregators such as Uber, TaskRabbit and others will find that helping their contract employees engage with their community will be a key to independent employee retention.

Case is currently chairman and CEO of Revolution LLC, a Washington-based venture firm with a broad portfolio in consumer-facing startups.

Stay tuned for much more on LODE in the coming weeks.

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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 is available for BIA/Kelsey Client Portal Subscribers, and for purchase. Otherwise, we’ll be covering the topic here, in our our newsletter, and a conference in early June.

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 buyer and seller together more efficiently. Individual service providers are afforded customer acquisition capabilities previously reserved for large marketing budgets. 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 themselves 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 budgets for upfront marketing. Therefore, the addressable market for LODE services could exceed the boundaries of local advertising, which makes it 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.

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.

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What is the hardest stage of growth for SMBs? After examining census and business data for the past decade, BIA/Kelsey has identified the “troubled teens” transition from blossoming small companies (one to nine employees) to medium-sized firms (20 to 49 employees) as the critical stage where tool complexity and pricing, as well as local business models, are misaligned with the needs of growing companies.

Take a moment now to get the free download of our new Sponsored White Paper, Optimizing Local Marketing: SMB Marketing Needs “Do-It-With-Me” Models.” Produced courtesy of Vendasta, which asked BIA/Kelsey to explore the opportunities for aggregated marketing services in local SMB markets, the paper examines the pressing need for consultative marketing services that blend easy-to-use digital presence management tools with hands-on marketing expertise for companies that are too large to continue to market on an ad hoc basis and too small to hire and retain full-time marketers while paying for expensive enterprise tools that are often overkill, and over-priced, relative to the SMB’s needs.”

Specifically, it’s the “troubled teens,” when a company is between 10 and 19 employees, that represent the greatest opportunity for local marketing services players to step into a startling gap in success. Even as smaller and larger firms continue to grow, albeit with very high failure rates among the smallest businesses, it is the teen companies that fail at a rate more than an order of magnitude greater than other businesses of any size.

The U.S. Census has been tracking business birth and death rates on a five-year cycle. During the last cycle, between 2010 and 2011, SMBs of between 10 and 19 employees failed 14 times more often than the next largest group (20 t0 49 employees) and accounted for the only net loss of jobs among all businesses of any size in the United States.

Vendasta talked about its DIWM approach at BIA/Kelsey Interactive Local Media Conference in December and also dug into the idea with Michael Boland during a video interview last fall. We’ve been increasingly struck by the emerging complexity of small business, which we believe is evolving into a “Local On-Demand Economy” (LODE). This takes the aggregation of demand further than Uber, blending new forms of local services with novel employment or contractor arrangements with service providers.

Tools to participate in the LODE economy will need to bridge the gap between limited human, technical and financial resources within growing SMBs and the requirements for digital presence management at a price that supports increasing growth. Too often, teen firms take on high upfront costs to integrate enterprise tools into their workflows, failing to get results because ongoing coaching is needed to build a robust marketing experience. The DIWM model provides expertise and explanations along with technology, helping business to grow organically, building their presence instead of exhausting their budgets upfront and leaving entrepreneurs on their own to use enterprise software designed for teams of marketers when the SMB has only begun to embrace marketing as a practice.

This misalignment in tool complexity, price and service model is a market opportunity for companies such as Vendasta, which provides a digital presence dashboard through resellers, including the Miami Herald, that deliver marketing advice along with the Vedasta’s 10X platform.

Yet we also see Google, Facebook and LODE exemplar Uber, to be expanding into these markets, across many locally delivered services. There is a race on to crack the local logistical and marketing challenges of on-demand goods and service.

______

We’ll be discussing DIWM in depth at BIA/Kelsey’s National Conference, March 24-27 in Dallas.

The post New BIA/Kelsey White Paper: DIWM Unlocks Local Marketing Success appeared first on BIA/Kelsey - Local Media Watch.

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.

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