First Data’s Senior VP Dom Morea provided a set of important insights into the next generation of marketing services to small and medium businesses (SMBs) at BIA/Kelsey’s 2013 SMB Digital Marketing conference, saying these may be more about “commerce” than “advertising.” Using payments as an anchor, these “transaction marketing” services include deals, coupons, loyalty services and CRM/analytics. First Data is the giant processor of 55 percent of U.S. transactions, is aggressively pursuing this rapidly exploding space.

Morea stated that their research shows 82% of consumers want to have a seamless online/offline shopping experience. Over half (57%) start their journey to purchase either online or offline but want to finish their journey easily on the other side (i.e., starting online but ending offline for the final purchase). About four-fifths (81%) of consumers carry two or more loyalty cards and 40% want these to be personalized to them by providing tailored ads or offers.

For SMBs this creates quite a challenge. Providing simple, compelling loyalty programs that allow the consumer to seamlessly bridge their online and offline steps in their journey to purchase is not something they can do themselves. Morea provided a compelling case study of one SMB whose challenge it was to move away from costly plastic loyalty cards that had limited success in driving customer engagement to something that would work better. First Data’s solution was their Offerwise card-linked program that enables paperless redemption for offer providers, merchants, and consumers.

The result was that the SMB was able to learn more about the customer by tying in more data in an integrated view and the program drove up to 85% activation rates, much higher than the previous solution. The integrated data view allowed the SMB to leverage consumer analytics to personalize content and complete a multichannel experience.

Morea said the next frontier in transactional marketing involves rethinking mobile; leverage the cloud to integrate disparate parts of the process; and emerging privacy and security standards.

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EBay’s e-commerce prowess is well-established. Now, it is making inroads into the nearly $1 trillion online-search-for-offline-purchase market with the acquisition of Milo, a shopping search engine that catalogs and categorizes real-time inventory at more than 50,000 stores (national retailers such as Best Buy, Nordstrom and Advance Auto Parts participate).

Terms of the deal were not officially disclosed, but reports put the number at $75 million. The acquisition marks just the latest of many recent turns in online product search. Google recently revamped its Blue Dots platform with the full-scale rollout of Product Search, then Wi-Fi mobile ad network JiWire purchased NearbyNow, another Milo competitor.

The move raises several intriguing possibilities for eBay, which stated in the official release that it will implement Milo’s technology into its own Web and mobile offerings. Whether that means the dissolution of Milo.com is yet to be seen. Deep integration with eBay’s Shopping.com is logical. Bringing Milo to ProStores (eBay’s online storefront software company) could enable local shopping search to move down market to smaller businesses, a scale challenge that Milo CEO Jack Abraham recently conveyed to BIA/Kelsey.

Then there is the mobile opportunity. Milo’s product and price comparisons could be stitched into eBay’s Red Laser mobile application, which allows for bar code and QR code scanning.

Projections for the research online, buy offline market are robust, with $917 billion in retail sales pegged for 2010 and nearly half of all in-store purchases being informed and/or motivated by online search.

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Google galvanized a lot of mainstream attention for the online-research-for-offline-purchases market with its recent rollout of Product Search. But with the total sales pie expected to eclipse $1 trillion in 2011, it’s a big enough playground for more than just the big G to stock store inventory online. Milo, which jumped into online-to-offline product search while Google was beta testing Blue Dots (the precursor to Product Search), has added a series of new features and enhanced its partnerships to make it a viable option during the holiday shopping spree.

First, Milo teamed with PriceGrabber to list product inventory at local stores on its site. It has a similar deal with consumer reports, and well as integration with Yellowbook.

Milo currently teams with 150 retailers (Best Buy, Nordstrom, Advance Auto Parts) encompassing more than 50,000 stores to show real-time product availability and price. CEO Jack Abraham not only wants to recruit more retailers, and perhaps move down-market to attract a new breed, but also sees partnerships as vital to expanding Milo’s visibility for those stores. He told BIA/Kelsey that partnerships span four categories: “search, shopping, local and media.”

The Palo Alto, California, start-up also went mobile for the first time, unveiling an Android app (and soon an iPhone counterpart). The early success sent Abraham a strong message about the fundamental value of mobile shopping and the importance of fostering a seamless mobile experience. “I was skeptical from a user standpoint initially,” he conceded. “But it’s been huge for us. The direct relationship through the mobile platform allows you to truly own your users.” Now, ensuring that their retailers are automatically optimized for mobile is an important next step in Milo’s evolution onto the new platform.

With Google already allowing businesses with registered listings on Places to offer coupons and Facebook having recently rolled out Deals, it was inevitable that Milo would counter with a similar option. Indeed it has, offering both printed and buy-online, redeem in-store coupons that pop up automatically based on a user’s location and specific product search.

Coupons are also equipped for mobile, so consumers can simply call them up on phones and have them scanned in-store. And unlike Facebook, Abraham stressed, no check-ins are required for special offers to activate. Instead, they appear when consumers — potentially new customers — are already deep in the purchase funnel, searching for specific goods and already primed to buy.

Abraham is serious about moving down-market to target smaller businesses, even local SMBs. But can this be accomplished with any measure of efficient scale? Abraham acknowledged that “it’s a hard problem to crack,” but one that Milo is working on.

The company recently conducted a trial with inventory from 100 pilot stores and found the local merchants, generally speaking, to be engaged. Among many challenges, the greatest may be adapting the technology for smaller businesses, which have different inventory systems and product data than the national brands that Milo is accustomed to servicing. A turnkey solution that SMBs can easily install will be necessary.

The scale challenge extends to merchant recruitment as well. That’s where media companies with embedded local sales forces such as Yellow Pages companies could be natural partners. Abraham said that Milo has been approached about this idea, and though nothing is active yet, it is in the company’s consideration set.

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Google has been telling anyone that will listen just how bullish it is on local/mobile commerce, and it has backed the bombast with a series of initiatives (Places, Place Search and Tags just to name three recent, relevant examples) to aggressively court SMBs and better connect with consumers at a neighborhood level. The latest is the formal rollout of Google Product Search, which will provide searchable and categorizable online product inventory for local branches of more than 70 retailers.

Product Search extends what began in March with the beta trial of Blue Dots, which charted product stock at selected retailers. Now several additional sellers are joining the program, including Best Buy and Williams-Sonoma.

Google joins a host of companies trying to connect online product search to offline purchase, including Milo, Krillion, ShopLocal and NearbyNow. But the Mountain View, California, search giant isn’t worried about the numbers game. Its focus lies on two other numbers:

1) The U.S. online-research-to-offline-buying market is estimated at $917 billion in 2010, swelling to $1 trillion next year. It accounts for the lion’s share of spending, with online e-commerce spending commanding only 7 percent of total U.S. sales.

2) Of the 93 percent of retail purchases occurring in-store, almost half are driven by online research.

Google Product Search does more than simply list inventory by product and store. Consumers will be able to tailor searches to only those brands that are currently available at nearby locales. It is also introducing a “popular products” feature, which shows most-viewed items within a particular search category. “Aisles” enables searchers to organize targeted queries into subcategories.

Google is complementing its release of Product Search with a mobile component. Its Google Shopper application for Android allows on-the-go shoppers to use “brand” and “price” search filters for more efficient discovery. Barcode scanning functionality will remain, too.

With nearly $1 trillion in sales, the pool looks deep enough for multiple competitors. In fact, Milo CEO Jack Abraham recently told BIA/Kelsey that it’s big enough that one company won’t dominate, and that Google’s serious foray is “helping to develop the market.” 

Of course, Google can play zero-sum games (just ask its online search counterparts). A crucial next step for the big G, or any other company seeking growth and differentiation, is to extend online-inventory-to-offline-purchase to SMBs. And that is no easy proposition considering that there is not a clear-cut, frictionless roadmap for how to capture that opportunity at scale.

Courtesy: Google

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