Over the past decade, Google has controlled the way we find and interact with local businesses with an indomitable grip. We find businesses and providers by searching and consuming information — an asset which no one is better at organizing, and monetizing, than the search giant.
But will Google’s grip finally start to loosen? Venture investment appears to be shifting away from the information-based businesses that ruled the roost in the 2000’s — namely, search and advertising — to more transactional models not aimed at creating a new experience for both consumer and business rather than beating Google at it’s own game.
“Through my lens as an investor, that era has ended,” said Michael Yang, managing director at Comcast Ventures, speaking about the local media and marketing industry at a BIA/Kelsey event in San Francisco Wednesday. “The front door for the consumer in the past was all about search and today it’s mobile-first experiences. It’s very much about transactions, commerce and marketplaces.”
The explosion of the on-demand economy has been well-documented. The astronomical growth of Uber has spawned a bevy of new companies intent on bringing the same marketplace dynamics to new industries. But the thrust of the movement has centered around still-fragmented service industries in the U.S., which for years remained insulated from the disruption caused by the web
What’s disruptive for Google is that the success of an on-demand product relies on the express participation the supply-side of the market. A user cannot book an appointment without express consent of the provider. That means in order to even participate in the market, Google would need to create the infrastructure to manage a much deeper relationship with sellers than ever before — something at which it has been largely unsuccessful thus far.
“There billions of dollars in each of these small business verticals,” said Will Hsu, managing director at Mucker Capital, a Los Angeles-based venture firm. “What used to be small business with a retail location with a few employees, they are becoming a single proprietor using a platform as almost a franchise platform to serve all of the back and front end services.”
To an extent, the proliferation of the Internet could actually threaten it’s biggest champion. As the web plays a larger role in the way we buy and sell goods locally, software companies now can capture a large portion of spending in market — well, beyond the advertising industry. That means it’s quickly becoming economically viable for a software business to focus exclusively on a single vertical.
The question for Google is where the search industry fits into that stack of software. Yelp, for instance, has taken a partnership-driven approach, choosing to integrate with third party business software companies rather than building operations software internally.
At Aol, Mapquest appears to be taking a similar strategy. In November, the long-time runner-up to Google Maps integrated with Urgently, an on-demand roadside assistance service, to allow users to access its functionality through the mapping application’s interface. The Washington D.C.-based startup has built a network that allows drivers to request and pay for a nearby tow truck or automotive technician, and then track the provider as they come to their destination.
“Search, as it has been for the last ten years is a flat — often two, dimensional — experience,” said Chris Spanos, chief executive at Urgently. “The future of search, as it’s being manifested through mobile and on-demand services, is in exposing the other dimensions of where am I, who’s available, what do they sell, and for how much.”
The underlying question is whether the website search and local commerce search products may eventually need to split. The commercial dimensions Spanos mentioned — the ability to know who is selling what, where, and for how much — requires a structure that extends well beyond the web.
Steven Jacobs is Street Fight’s deputy editor.