Is Facebook Local’s Waking Giant? | Street Fight

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Is Facebook Local’s Waking Giant?

3 Comments 26 December 2012 by

I’m constantly asked about who’s winning (or will win) in local. What always surprises me about the ensuing discussion is how short the list of competitors really is.

Google clearly wins in local search, though it’s been challenged in courting SMBs — both directly (self-serve) and through local resellers. Pureplays like Foursquare and Yelp meanwhile aggregate large audiences but face that same fragmented SMB population. Yelp has an edge here, as it brings engineering and product focus together with the practical need for direct sales.

Then there’s yellow pages. They have the opposite problem of Google’s: Thousands of feet on the street to get their arms around the buy side — but not always the same product focus or swiftness to innovate local and mobile products.

But where’s Facebook in all of this? It usually gets my “sleeping giant” designation within local. This isn’t to ignore the fact that the platform is in many ways already wide awake and an 800-pound gorilla in the digital world — it’s designated as such more because its local ad monetization has stalled out for the past few years.

On the user side, Facebook has gone back and forth on Places, check-ins and other location features. This just took a step forward with Nearby, a local discovery feature that’s kind of like Foursquare’s Explore and Radar — fueled by past check-ins and friend activity.

But, panning back, Facebook advertising — native or not — is inherently gated by situational relevance. Put another way, Google’s use case has clear commercial intent to fulfill immediate needs, while Facebook is where I go to see drunk pictures of my friends.

“Google is the best advertising product in the history of the world… because it’s like advertising at a store,” Business Insider CEO Henry Blodget said recently. “Facebook, meanwhile, is like advertising at a party.”

But despite Google’s user-side advantages here, Facebook could have an edge in SMB engagement — which is arguably a larger local challenge. This is starting to materialize through Facebook’s ramp up in SMB Pages, and in different ways to promote them.

Specifically, BIA/Kelsey reports that 52% of U.S. SMBs have Facebook Pages to market themselves. Facebook director of global SMB markets Dan Levy similarly reports 12.8 billion global SMB pages — a number that stood at zero just a few years ago.

I attribute this to Facebook’s simplicity, a vital factor for SMB adoption — this compared to paid search, which doesn’t get your average plumber excited. Here, SMB understanding of Facebook marketing stems from personal use, which is often a leading indicator of ad spend.

“Beyond all the numbers we see for penetration and market share, SMBs at the end of the day are people,” said Levy at this month’s ILM West Conference.

Meanwhile, Promoted Posts — a supplement for Pages — have grown to the tune of 2.5 million from 300,000 pages in just 6 months. This can kickstart SMB messaging throughout the social graph, in parallel with oldest form of SMB advertising: word of mouth.

“The biggest way that SMBs connect with customers is word of mouth,” said Levy. “That’s the same thing happening today on Facebook, but with the scale of the web.”

This will all come together when user-side features like Nearby align with native ad innovations like Promoted Posts. The former creates locally relevant inventory for the latter, thus alleviating some of the social user intent issues mentioned above.

Next steps for Facebook are to infuse customized actions within different local verticals that have varied ways to capture new business. This includes things like appointment scheduling, product inventory, or transactional features to better capture ROI.

“Restaurants or retail work great on Facebook, but what if you’re a plumber?” posed Levy. “If [SMBs] are going to take their hard earned money and spend it on Facebook, it’s got to be doing something for them.”

Mike Boland is senior analyst at BIA/Kelsey, where he heads up the firm’s mobile local coverage. Previously, he was a tech journalist for Forbes, Red Herring, Business 2.0 and others.

  • http://twitter.com/LocalNicky Nicole Lyons

    Thanks for this great analysis … I’d go a step further and suggest that FB should consider categorizing ‘Likes’ and other member endorsements, by member, thereby combining the power of the personal recco with the immediacy of search. ‘At the party last month, so and so was talking about a great plumber they used, what did they say the name was again…? Ah, here it is.’

  • http://www.facebook.com/people/Sam-Taha/1666572074 Sam Taha

    I think this is where native Facebook apps like ShopZooky that focuses 100% on local SMB can step in to drive local advertising and commerce. By native I mean apps that build on FB directly instead of just use FB for authentication (more or less) like Foursquare and Yelp. I think Facebook has won the social race and the local SMB space is theirs to own.

  • matthew tim

    Interesting, very interesting blog, you can do way
    better, keep it up.

    http://www.amazon.com/Red-Kaneda-Akira-Leather-Jacket/dp/B00EV1A6PI

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