The Real World Is on the Verge of Its Own Data Revolution | Street Fight

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The Real World Is on the Verge of Its Own Data Revolution

0 Comments 14 January 2014 by

Data digital flowOver the past decade, physical markets have ceded trillions of dollars — and at times entire industries — to the online economy. Among the many factors that have contributed to the success of Internet-based businesses, online’s most stark advantage over the physical world is the lush layer of data that users, business and other participants leave behind.

As the expression goes, you can only manage what you can measure. And online everything is measured.

However, with nearly 9 billion devices connecting to the web today, the malls and main streets where consumers still spend 90% of their expendable income are on the verge of their own data revolution. A world of connected devices — from smartphones and tablets to wi-fi routers and bluetooth beacons — are measuring the comings and goings of buyers and sellers locally, creating a new dataset that businesses, consumers and technology companies can use to create a better, more efficient local marketplace.

Companies have built large businesses around local information for decades. The Yellow Pages industry swelled in the second half of the twentieth century, sourcing and publishing basic business information in local markets across the world. The industry peaked at $15.34 billion in revenue in 2007 — just as Internet companies disrupted the business  —  and has since fallen to $7.49 billion, according to BIA/Kelsey.

For the most part, the shift to the web was the same story in a different place. Firms like Infogroup, Localeze, and Acxiom built substantive businesses as data brokers, organizing and selling business information as a third-party to a host of listing, search and discovery companies. But search was still the killer application for the dataset, with companies like Google and Yelp building multi-billion dollar business around search and discovery systems.

Esri, Google, Navteq (now-Nokia Here) and others also found success building consumer- and enterprise-facing mapping and navigation tools. Maps have traditionally been among the most difficult and resource-intensive datasets to build, butstartups like Waze, which Google acquired in 2013 for $1.1 billion, have developed new techniques in recent years to crowd-source data from mobile devices, building massive navigation datasets for a fraction of the cost.

In addition to search, navigation and mapping, the advertising industry has become an increasingly fertile market for local information. Direct mail businesses have used demographic and psychographic data to target mailers for years, but the growth of mobile advertising — and particularly programmatic buying — has dramatically accelerated demand for local data among advertising technology firms and brand marketers.

The strategies and frameworks which have traditionally governed the way local data is collected and sold are set to change dramatically over the next few years. As sensors become ubiquitous, the sheer scale of local information will push the local data industry into new markets, and break some of the most basic frameworks established over the past decade. What is emerging is a community of technology companies organized around the idea of measuring real-world markets, quantifying the three key components of commerce: sellers, buyers, and transactions.

Sellers
Imagine a world in which every question which you might have as a consumer can be answered instantly. Who sells x product or service? Is x a quality product or service? How do I find x product or services? Thanks to Google and Amazon, consumers can increasingly answer these questions in minutes — if not seconds — online, making shopping for goods (particularly, in verticals like electronics) on the web a far better experience than at say, a Best Buy.

However, within a decade shopping locally will offer similar capabilities. The local data industry, which began with basic business information — the names, addresses and phone numbers of the 25 million business in the U.S. — is quickly moving to create a more rounded record of the sellers in the local marketplace. That means measuring not only who the sellers are, but what they sell (availability) and whether that product or service is good or bad (verification) — all in real-time.

Buyers
In 2012, Foursquare CEO Dennis Crowley started to talk about a vision for his company in which the service would serve as a “Marauder’s map” of sorts — an ambient social network that could reveal the invisible footsteps of friends as they moved across the city. Crowley’s vision remains in limbo, but there’s a broader effort in the technology community to chart consumer behavior in the real world, using mobile devices to measure movement throughout the world in the same way that marketers use cookies trace users as the browse the web

The “human layer,” so to speak, is just emerging. Mapping applications like Waze use data collected passively from a user’s smartphone to track traffic patterns in real time. Advertising technology startups use the device identifiers and bits of location data which publishers include in ad requests to build profiles on users, labeling them as “travelers” if they frequent airports or sports fans if they go stadiums. Then, there’s the pure-plays — so-called offline analytics firms that use everything from wi-fi data and surveillance videos to count, measure, and analyze how people move in, and between, stores.

Transactions
If exchange is the purpose of a marketplace, transaction data — information about who bought what from whom, and for how much — is its pulse. Payment data serves as the linchpin between acquiring and retaining consumers, providing business, marketers, consumers and the like with a baseline against which, they can measure every other decision.

The bulk of payments in the U.S. are already electronic. According to Javelin research, debit and credit cards accounted for two-thirds of all point-of-sale transactions in 2012 — a figure that’s expected to jump to nearly three quarters by 2017. But the big challenge today is creating the necessary frameworks through which that data can be made available to developers and other third-parties in a safe, secure, and efficient manner.

For the next three weeks, Street Fight will take a deep dive into each part of the local data ecosystem, detailing the dynamics and key companies that are measuring the real-world. The series is aimed at educating industry players new and old on the inner workings of the industry, and helping companies outside the industry — from marketers to retailers — understand how they can use local data to make their operations more efficient.

Steven Jacobs is Street Fight’s deputy editor.

Find out more about how big data can be used in local context at Street Fight’s Local Data Summit, taking place on February 25th, in Denver. Learn from and network with some of the top local data experts in the country. Tickets just $399 until January 23rd. Buy now!

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