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.

(Click below for full stories)

Does Elon Musk’s Future Include a Place for Uber?
Uber may be the “greatest job creator” in the world right now, adding 50,000 drivers a month since the beginning of the year. But consider Tesla Founder & CEO Elon Musk’s vision of a world without drivers. In an interview at an NVIDIA conference this week, Musk said: “”In the distant future, I think people may outlaw driving cars because it’s too dangerous. You can’t have a person driving a two-ton death machine.” He predicts driving will eventually be illegal.

Bus rides, by contrast, may not be good LODE targets
Leap Transit launched its high-end bus service in San Francisco this week. A roughly 15-minute ride costs $6 and includes coffee, wi-fi and techie luxuries including an onboard concierge of sorts, according to this entertaining article from The Atlantic’s CityLab. This very unLODE model requires a steep capital investment in buses that appear to include reclaimed wood walls and Starbucks-like seating.

FundBox tackles the accounts receivable space
Accounts receivables delays cost small business significant lost opportunity the longer they drag on. If they can get paid faster, the revenue can be redeployed for growth, marketing and other purposes. FundBox, a San Francisco startup announced a $17.5 million round of financing from Khosla Ventures, Ron Conway’s SV Angel and other individual investors, to address this painful business problem.

Meanwhile, is syndication working magic for BuzzFeed?
At South by SouthWest in Austin, Texas, this week BuzzFeed founder Johan Peretti explained that he has effectively outsourced his site hosting to social networks where his company’s content is shared by users. While BuzzFeed.com attracts approximately 200 million users each month, its syndication network, which includes Facebook and Twitter, generates 18.5 billion impressions a month.

FULL STORIES

Does Elon Musk’s Future Include a Place for Uber?

Uber may be the “greatest job creator” in the world right now, adding 50,000 drivers a month since the beginning of the year. But consider Tesla Founder & CEO Elon Musk’s vision of a world without drivers. In an interview at an NVIDIA conference this week, Musk said: “”In the distant future, I think people may outlaw driving cars because it’s too dangerous. You can’t have a person driving a two-ton death machine.” He predicts driving will eventually be illegal.

That would be a problem for Uber, which depends on its growing legion of drivers to volunteer their cars for service. In fact, if the drivers weren’t willing to share their cars, in addition to shouldering the cost of buying and maintaining the vehicles, Uber’s model would collapse. The company doesn’t carry a fleet cost, which has made it possible to share 80 percent of revenue with drivers, who appear to be flocking to the opportunity to make some extra cash. Operating as a market maker in exchange for a 20-percent share of revenue is a diabolically good business model.

Should Musk’s vision come to pass — it strikes us as a challenge to his own company’s driver-centric marketing and just a very bad attitude about what a person should do with a two-ton death machine — would Uber vanish?

It’s a compelling thought problem in Local On-Demand Economics, because the answer may not be a simple “No.” Rather, in the autonomous vehicle era it is possible that a car owner could literally send their car to work for them while they stay home, or just ride along to collect the fees and talk with riders. We don’t predict this will come to pass any time in the foreseeable future, but it does suggest that companies that facilitate demand-aggregation may be immune to some forms of obsolescence. Whether individuals volunteered their cars or another firm stepped up to provide the fleet while Uber continued to provide riders, there is a clearly defensible position for demand aggregators in local markets.

Bus rides, by contrast, may not be good LODE targets

Leap Transit launched its high-end bus service in San Francisco this week. A roughly 15-minute ride costs $6 and includes coffee, wi-fi and techie luxuries including an onboard concierge of sorts, according to this entertaining article from The Atlantic’s CityLab.

This very unLODE model requires a steep capital investment in buses that appear to include reclaimed wood walls and Starbucks-like seating. The Leap bus runs a relatively fixed route rather than responding to demand where it is occurs. Moreover, Leap seems to have added human labor costs to the bus-riding equation, since each bus requires a driver and a staffer who helps people find their seats, connect with the wi-fi network and serve or sell coffee and juice on the 15-minute ride.

What do you think? Is bus service susceptible to demand aggregation? We’ll be polling the audience at BIA/Kelsey’s NOW Conference on the topic. Add your thoughts in comments.

FundBox tackles the accounts receivable space

Accounts receivables delays cost small business significant lost opportunity the longer they drag on. If they can get paid faster, the revenue can be redeployed for growth, marketing and other purposes. FundBox, a San Francisco startup announced a $17.5 million round of financing from Khosla Ventures, Ron Conway’s SV Angel and other individual investors, to address this painful business problem.

FundBox’s business is a familiar one, to which the company has added some “big data” analysis. Many traditional lenders finance AR balances and new competitors will certainly emerge. The company analyzes SMB creditworthiness by examining census and business data before deciding to provide financing. This reduces FundBox’s risk and increases the likelihood it will collect most or all of the debts acquired. Example fees on FundBox’s site range from five percent to seven percent, roughly 2.5- to four-times credit card fees — Fundbox fees are inclusive of bank transfer fees to the SMB’s account, but do not offset credit card or other fees the merchant may have paid at the time the AR balance was generated by a transaction.

As noted above, taking a 20 percent carry on demand aggregation is a great business. FundBox’s approach bears a stronger resemblance to the short-term consumer loan industry.

BIA/Kelsey believes accounts receivable financing will ultimately become a thing of the past as the “logistical last-mile” is built out over the next decade. Instead of existing as separate services from the transaction processing system supporting an SMB, AR will be optimized out of demand-side businesses with improved processes. In the short-term, however, FundBox will do big business and have the opportunity to build business relationships that allow its financing engine to be integrated into new local, regional and national services.

Meanwhile, is syndication working magic for BuzzFeed?

At South by SouthWest in Austin, Texas, this week BuzzFeed founder Johan Peretti explained that he has effectively outsourced his site hosting to social networks where his company’s content is shared by users. While BuzzFeed.com attracts approximately 200 million users each month, its syndication network, which includes Facebook and Twitter, generates 18.5 billion impressions a month. However, Peretti said, none of that additional traffic is currently monetized. Instead, it provides new traffic to BuzzFeed, where ad impressions yield his company’s revenue.

“Our goal is to be indifferent to how people find our content and where they find it,” Peretti said in a session called “Lessons from BuzzFeed.”

For those of you counting, the traffic converting to BuzzFeed.com from its syndication reach is approximately 1.08 percent of the total impressions the company’s content generates.

The next step, Peretti said, is to incorporate “native advertising” in the content feeds, taking payment for placement in the syndication stream BuzzFeed produces. Reach is critical to spreading messages, which is critical for marketers to understand, but segmentation and engagement at that scale will be controlled by the social networks.

“Native ads” could be screened by social networks in the future, allowing only editorially vetted articles through to users. BuzzFeed’s business model will be judged in the crucible of its business development efforts, in which it has far less leverage than its syndicators. Better filters and personalization tools for consumers may obsolete the reach-at-all-costs model.

The post Will Tesla’s Elon Musk Kill Uber? Thinking Demand-side Economics This Week appeared first on BIA/Kelsey - Local Media Watch.

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.

(Click below for full stories)

Does Elon Musk’s Future Include a Place for Uber?
Uber may be the “greatest job creator” in the world right now, adding 50,000 drivers a month since the beginning of the year. But consider Tesla Founder & CEO Elon Musk’s vision of a world without drivers. In an interview at an NVIDIA conference this week, Musk said: “”In the distant future, I think people may outlaw driving cars because it’s too dangerous. You can’t have a person driving a two-ton death machine.” He predicts driving will eventually be illegal.

Bus rides, by contrast, may not be good LODE targets
Leap Transit launched its high-end bus service in San Francisco this week. A roughly 15-minute ride costs $6 and includes coffee, wi-fi and techie luxuries including an onboard concierge of sorts, according to this entertaining article from The Atlantic’s CityLab. This very unLODE model requires a steep capital investment in buses that appear to include reclaimed wood walls and Starbucks-like seating.

FundBox tackles the accounts receivable space
Accounts receivables delays cost small business significant lost opportunity the longer they drag on. If they can get paid faster, the revenue can be redeployed for growth, marketing and other purposes. FundBox, a San Francisco startup announced a $17.5 million round of financing from Khosla Ventures, Ron Conway’s SV Angel and other individual investors, to address this painful business problem.

Meanwhile, is syndication working magic for BuzzFeed?
At South by SouthWest in Austin, Texas, this week BuzzFeed founder Johan Peretti explained that he has effectively outsourced his site hosting to social networks where his company’s content is shared by users. While BuzzFeed.com attracts approximately 200 million users each month, its syndication network, which includes Facebook and Twitter, generates 18.5 billion impressions a month.

FULL STORIES

Does Elon Musk’s Future Include a Place for Uber?

Uber may be the “greatest job creator” in the world right now, adding 50,000 drivers a month since the beginning of the year. But consider Tesla Founder & CEO Elon Musk’s vision of a world without drivers. In an interview at an NVIDIA conference this week, Musk said: “”In the distant future, I think people may outlaw driving cars because it’s too dangerous. You can’t have a person driving a two-ton death machine.” He predicts driving will eventually be illegal.

That would be a problem for Uber, which depends on its growing legion of drivers to volunteer their cars for service. In fact, if the drivers weren’t willing to share their cars, in addition to shouldering the cost of buying and maintaining the vehicles, Uber’s model would collapse. The company doesn’t carry a fleet cost, which has made it possible to share 80 percent of revenue with drivers, who appear to be flocking to the opportunity to make some extra cash. Operating as a market maker in exchange for a 20-percent share of revenue is a diabolically good business model.

Should Musk’s vision come to pass — it strikes us as a challenge to his own company’s driver-centric marketing and just a very bad attitude about what a person should do with a two-ton death machine — would Uber vanish?

It’s a compelling thought problem in Local On-Demand Economics, because the answer may not be a simple “No.” Rather, in the autonomous vehicle era it is possible that a car owner could literally send their car to work for them while they stay home, or just ride along to collect the fees and talk with riders. We don’t predict this will come to pass any time in the foreseeable future, but it does suggest that companies that facilitate demand-aggregation may be immune to some forms of obsolescence. Whether individuals volunteered their cars or another firm stepped up to provide the fleet while Uber continued to provide riders, there is a clearly defensible position for demand aggregators in local markets.

Bus rides, by contrast, may not be good LODE targets

Leap Transit launched its high-end bus service in San Francisco this week. A roughly 15-minute ride costs $6 and includes coffee, wi-fi and techie luxuries including an onboard concierge of sorts, according to this entertaining article from The Atlantic’s CityLab.

This very unLODE model requires a steep capital investment in buses that appear to include reclaimed wood walls and Starbucks-like seating. The Leap bus runs a relatively fixed route rather than responding to demand where it is occurs. Moreover, Leap seems to have added human labor costs to the bus-riding equation, since each bus requires a driver and a staffer who helps people find their seats, connect with the wi-fi network and serve or sell coffee and juice on the 15-minute ride.

What do you think? Is bus service susceptible to demand aggregation? We’ll be polling the audience at BIA/Kelsey’s NOW Conference on the topic. Add your thoughts in comments.

FundBox tackles the accounts receivable space

Accounts receivables delays cost small business significant lost opportunity the longer they drag on. If they can get paid faster, the revenue can be redeployed for growth, marketing and other purposes. FundBox, a San Francisco startup announced a $17.5 million round of financing from Khosla Ventures, Ron Conway’s SV Angel and other individual investors, to address this painful business problem.

FundBox’s business is a familiar one, to which the company has added some “big data” analysis. Many traditional lenders finance AR balances and new competitors will certainly emerge. The company analyzes SMB creditworthiness by examining census and business data before deciding to provide financing. This reduces FundBox’s risk and increases the likelihood it will collect most or all of the debts acquired. Example fees on FundBox’s site range from five percent to seven percent, roughly 2.5- to four-times credit card fees — Fundbox fees are inclusive of bank transfer fees to the SMB’s account, but do not offset credit card or other fees the merchant may have paid at the time the AR balance was generated by a transaction.

As noted above, taking a 20 percent carry on demand aggregation is a great business. FundBox’s approach bears a stronger resemblance to the short-term consumer loan industry.

BIA/Kelsey believes accounts receivable financing will ultimately become a thing of the past as the “logistical last-mile” is built out over the next decade. Instead of existing as separate services from the transaction processing system supporting an SMB, AR will be optimized out of demand-side businesses with improved processes. In the short-term, however, FundBox will do big business and have the opportunity to build business relationships that allow its financing engine to be integrated into new local, regional and national services.

Meanwhile, is syndication working magic for BuzzFeed?

At South by SouthWest in Austin, Texas, this week BuzzFeed founder Johan Peretti explained that he has effectively outsourced his site hosting to social networks where his company’s content is shared by users. While BuzzFeed.com attracts approximately 200 million users each month, its syndication network, which includes Facebook and Twitter, generates 18.5 billion impressions a month. However, Peretti said, none of that additional traffic is currently monetized. Instead, it provides new traffic to BuzzFeed, where ad impressions yield his company’s revenue.

“Our goal is to be indifferent to how people find our content and where they find it,” Peretti said in a session called “Lessons from BuzzFeed.”

For those of you counting, the traffic converting to BuzzFeed.com from its syndication reach is approximately 1.08 percent of the total impressions the company’s content generates.

The next step, Peretti said, is to incorporate “native advertising” in the content feeds, taking payment for placement in the syndication stream BuzzFeed produces. Reach is critical to spreading messages, which is critical for marketers to understand, but segmentation and engagement at that scale will be controlled by the social networks.

“Native ads” could be screened by social networks in the future, allowing only editorially vetted articles through to users. BuzzFeed’s business model will be judged in the crucible of its business development efforts, in which it has far less leverage than its syndicators. Better filters and personalization tools for consumers may obsolete the reach-at-all-costs model.

The post Will Tesla's Elon Musk Kill Uber? Thinking Demand-side Economics This Week appeared first on BIA/Kelsey - Local Media Watch.

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.

The post Local On-Demand Economy: Bi-weekly News Briefs 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.

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

On Demand Local Services — a.k.a the uberfication of everything — continue to expand into new local service verticals. We’re seeing everything from lawyers to weed delivery (you might need those two together). This is the topic of a report I’m writing, and a discussion point in this week’s analyst roundtable.

In addition to ODLS, there’s a report in the works on closed loop marketing by Abid Chaudhry. He discusses in the roundtable how mobile engagement creates a more cross-screen world, making offline attribution increasingly important. We hit on this theme in our last roundtable.

And Charles Laughlin discusses his report in progress on the state of the art of local ad sales. This is a fast moving topic, and a contentious one. Charles examines all schools of thought in the report, co-written by Stacey Sedbrook, including the division of traditional and digital sales forces. Another key topic.

All of these will be published in the coming weeks among other white papers, such as Peter Krasilovsky’s report on card-linked loyalty offers. Though he wasn’t able to join the roundtable, his paper joins the mix with a unique angle that aggregates data and input from the biggest players in the card-linked offers field.

The roundtable video is below and stay tuned for more video (and white papers).

The post Analyst Roundtable: On Demand Local Services; Closed Loop Marketing; and Local Ad Sales appeared first on BIA/Kelsey - Local Media Watch.

Like we do every year, BIA/Kelsey analysts huddle to formulate predictions for the coming year in respective areas of domain expertise.  Last month, we released a report that highlights picks across these coverage areas.

For more color on the predictions that pertain to mobile, below is the “director’s cut.” These are areas I’ve been watching, and where I think they’re moving. It’s pretty clear from the momentum that it’s going to be an action-packed year for mobile.

1. Apple Pay Won’t Take Over the Universe (Yet)

Apple pay will not “mainstream” mobile proximity payments in 2015. It will however cause a dent in in-app payments for offline fulfillment (a la Uber). The numbers don’t work out given that the iPhone 6 will not reach ubiquity until late 2015. And merchants will not be incentivized to upgrade POS hardware without that critical mass. It’s an issue of compatibility and network effect. Furthering the above points, neither consumer nor merchant will be incentivized to adopt unless there is a more compelling value proposition for Apple Pay. That includes saving time, money, or skipping lines, as opposed to the current value proposition which is the marginally different process of tapping rather than swiping. That’s not enough to alter such an entrenched and comfort-driven consumer behavior.  In the meantime, Apple Pay’s killer app will be with in-app payments for offline services, such as “order ahead” functionality or on demand local services (OLDS) like Uber.

2. The Uberification of Local

Mobile payments, search and discovery will culminate in the area of on-demand local services (ODLS). The segment is exploding in use and investment, a la Uber. This is real world products and services summoned by mobile and fulfilled offline. This outweighs M-commerce (i.e. ordering things on your phone for shipment a la Amazone) because more than 93 percent of U.S. retail spending (and near 100 percent of service transactions) happen offline. The factors that will drive ODLS and make it a more predominant area of attention and investment in 2015 include:

— ODLSs create liquidity, transparency, and supply/demand balance in traditionally opaque two-sided marketplaces (like finding a cab)
— ODLSs will be the killer app for near term adoption of mobile payments like Apple Pay (see above).
— ODLSs will create a long missing analytics “bridge” to the offline world, given that the mobile device is with you throughout. That trackability will bring more data to offline commerce,  opening the door to better analytics, user targeting and next gen functions like dynamic demand-pricing for local services.

3. Swipe Left

Given escalating share of location based search and discovery happening via mobile, content formats will evolve in ways more native to that use case. Currently most content delivery formats are inherited from the desktop, such as list views or “ten blue links” SERPS. We’ll see a revolution in design standards for mobile local search and discovery products. These will be more visually oriented and card based. Scrolling and tapping will give way to swiping, a la Tinder. This is not only more conducive to mobile, but it will naturally enable more user inputs in order to algorithmically determine user sentiment and refine content delivery accordingly (a la Pandora). Content delivery will be much more algorithmic and push based, accelerating the discovery trend that has been underway for years, replacing active search queries.  Google now will be a model for this, and companies like Weotta are doing cool things.  Meanwhile, the visually oriented nature of these interfaces will also result from better hardware such as camera optics and larger screens to view striking imagery. Some of that multimedia will be pushed from advertisers and publishers, while some will structure and organize user generated content, a la social sharing.

4. Becoming Selfie-Aware

The social sharing trend — capturing and sharing moments via instagram, vine, stapchat etc. — has been driven by better smartphone optics and larger screens (i.e. iPhone6). That has begun to reach the local level as consumers likewise share their experiences in transactional contexts such as dining out. This phenomenon will accelerate in 2015, specific to certain visual and sharable local verticals such as arts & entertainment. We’ll see most local media players embrace this trend by launching products that support the use case (i.e. Yelp’s video capture feature). This will be the foundation for clear monetization that aligns with existing models. For example, visual content shared by users aides in content marketing, SEO, and SMB landing page development. Paid tiers of merchant offerings will include things such as highlighting user generated multimedia through slideshows. Mobile will be a big user touch point to not only capture and share that media, but to also consume it via larger screens.

5. U.S. Mobile Ad Market Reaches $19B

The U.S. mobile ad market (excluding tablets) will reach nearly $20 billion in 2015. And the location targeted portion of that ad spend will be about one third. This counts all mobile ad formats including developing areas like social native ads (i.e. FB mobile news feed ads). Our figures also take into account the growth of search ads (currently the largest share of mobile ad revenue) and Google’s Enhanced Campaigns which will continue to accelerate mobile advertiser adoption. More populated search bid marketplaces that result will also raise bid pressure and increase cost per click rates. Higher CPCs will in turn boost mobile ad revenue further for Google and mobile publishers and developers. The longstanding imbalance in mobile ad rates will also begin to reverse as sources of premium ad rates continue to be found. That includes native social ads on places like Instagram, better attribution metrics, and higher performing location targeted ads from companies like xAd, Verve, and YP.

The post 2015 Mobile Predictions: The Director’s Cut appeared first on BIA/Kelsey - Local Media Watch.

Like we do every year, BIA/Kelsey analysts huddle to formulate predictions for the coming year in respective areas of domain expertise.  Last month, we released a report that highlights picks across these coverage areas.

For more color on the predictions that pertain to mobile, below is the “director’s cut.” These are areas I’ve been watching, and where I think they’re moving. It’s pretty clear from the momentum that it’s going to be an action-packed year for mobile.

1. Apple Pay Won’t Take Over the Universe (Yet)

Apple pay will not “mainstream” mobile proximity payments in 2015. It will however cause a dent in in-app payments for offline fulfillment (a la Uber). The numbers don?t work out given that the iPhone 6 will not reach ubiquity until late 2015. And merchants will not be incentivized to upgrade POS hardware without that critical mass. It’s an issue of compatibility and network effect. Furthering the above points, neither consumer nor merchant will be incentivized to adopt unless there is a more compelling value proposition for Apple Pay. That includes saving time, money, or skipping lines, as opposed to the current value proposition which is the marginally different process of tapping rather than swiping. That’s not enough to alter such an entrenched and comfort-driven consumer behavior.  In the meantime, Apple Pay’s killer app will be with in-app payments for offline services, such as “order ahead” functionality or on demand local services (OLDS) like Uber.

2. The Uberification of Local

Mobile payments, search and discovery will culminate in the area of on-demand local services (ODLS). The segment is exploding in use and investment, a la Uber. This is real world products and services summoned by mobile and fulfilled offline. This outweighs M-commerce (i.e. ordering things on your phone for shipment a la Amazone) because more than 93 percent of U.S. retail spending (and near 100 percent of service transactions) happen offline. The factors that will drive ODLS and make it a more predominant area of attention and investment in 2015 include:

— ODLSs create liquidity, transparency, and supply/demand balance in traditionally opaque two-sided marketplaces (like finding a cab)
— ODLSs will be the killer app for near term adoption of mobile payments like Apple Pay (see above).
— ODLSs will create a long missing analytics “bridge” to the offline world, given that the mobile device is with you throughout. That trackability will bring more data to offline commerce,  opening the door to better analytics, user targeting and next gen functions like dynamic demand-pricing for local services.

3. Swipe Left

Given escalating share of location based search and discovery happening via mobile, content formats will evolve in ways more native to that use case. Currently most content delivery formats are inherited from the desktop, such as list views or “ten blue links” SERPS. We’ll see a revolution in design standards for mobile local search and discovery products. These will be more visually oriented and card based. Scrolling and tapping will give way to swiping, a la Tinder. This is not only more conducive to mobile, but it will naturally enable more user inputs in order to algorithmically determine user sentiment and refine content delivery accordingly (a la Pandora). Content delivery will be much more algorithmic and push based, accelerating the discovery trend that has been underway for years, replacing active search queries.  Google now will be a model for this, and companies like Weotta are doing cool things.  Meanwhile, the visually oriented nature of these interfaces will also result from better hardware such as camera optics and larger screens to view striking imagery. Some of that multimedia will be pushed from advertisers and publishers, while some will structure and organize user generated content, a la social sharing.

4. Becoming Selfie-Aware

The social sharing trend — capturing and sharing moments via instagram, vine, stapchat etc. — has been driven by better smartphone optics and larger screens (i.e. iPhone6). That has begun to reach the local level as consumers likewise share their experiences in transactional contexts such as dining out. This phenomenon will accelerate in 2015, specific to certain visual and sharable local verticals such as arts & entertainment. We?ll see most local media players embrace this trend by launching products that support the use case (i.e. Yelp’s video capture feature). This will be the foundation for clear monetization that aligns with existing models. For example, visual content shared by users aides in content marketing, SEO, and SMB landing page development. Paid tiers of merchant offerings will include things such as highlighting user generated multimedia through slideshows. Mobile will be a big user touch point to not only capture and share that media, but to also consume it via larger screens.

5. U.S. Mobile Ad Market Reaches $19B

The U.S. mobile ad market (excluding tablets) will reach nearly $20 billion in 2015. And the location targeted portion of that ad spend will be about one third. This counts all mobile ad formats including developing areas like social native ads (i.e. FB mobile news feed ads). Our figures also take into account the growth of search ads (currently the largest share of mobile ad revenue) and Google?s Enhanced Campaigns which will continue to accelerate mobile advertiser adoption. More populated search bid marketplaces that result will also raise bid pressure and increase cost per click rates. Higher CPCs will in turn boost mobile ad revenue further for Google and mobile publishers and developers. The longstanding imbalance in mobile ad rates will also begin to reverse as sources of premium ad rates continue to be found. That includes native social ads on places like Instagram, better attribution metrics, and higher performing location targeted ads from companies like xAd, Verve, and YP.

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