Street Fight’s Predictions for 2018: Part One

Practical AI Replaces Some of the Hype

David Card, research director, Street Fight

During 2017, it was hard to find a press release or local marketing technology (re-)positioning that didn’t feature the acronym AI. I suppose that’s almost legit, if you call anything that uses math-driven pattern matching “artificial intelligence.” But relatively few local marketing and commerce technologies apply real machine learning or predictive personalized offers. The big story in 2018 will be practical applications of AI in the local ecosystem:

• Customer segmentation analysis. That will require harmonizing CRM and purchase records with third-party data before the matching algorithm can start to learn from results and re-configure the segments as new information comes in.
• Language and voice recognition is getting good, but Siri isn’t passing any Turing tests yet. Look for more use of AI in sentiment analysis rather than in chatbots.
• Email and direct mail are still vital tactics in local marketing. I’m not sure it would qualify as real AI, but better content customization and audience targeting will be a good investment.

Share your own opinions on where AI fits best in the connected local economy by taking Street Fight’s short State of Hyperlocal survey.

In 2017, I correctly predicted that local data and analytics would be the story. Going into 2018, I wouldn’t be surprised to see real-time location targeting regain its momentum. That was its original promise, and after gaining only modest traction, 2017 saw location data providers increasingly sell data for other functions like customer analysis, online-to-offline attribution, and logistics. According to Street Fight executive surveys, mobile push advertising and location data are the top two new technologies on the radar for both enterprise local marketers and SMBs.

Not gonna happen

Last year I said that bots were decidedly not the new apps, and as noted I’m still pretty bearish on AI-driven conversations. So I’ll double down on shorting virtual assistants, at least for another year. Voice input for local search is a totally different story. Already, local marketers have to start dealing with different suppliers’ requirements for handling its impact on key words, structuring data, and supporting snippets or their equivalent in results.

Obligatory company prediction

I always get this one wrong. Facebook didn’t buy a local salesforce two years ago and Mike Bloomberg didn’t buy the New York Times in 2017. “Domination by a handful of big companies” is creeping up the list of biggest challenges facing the industry, according to early results from the State of Hyperlocal survey. So I’ll say we’ll add a new mega-player with its walled garden of customer data to the existing list of Google, Apple, Amazon, and Facebook. Add a V to the GAAF collection, as Verizon goes big in local. Where the GAAF gang doesn’t like local feet on the street, Verizon might get them through one more acquisition.

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Consolidation of Our Hyperlocal Industry

Charity Huff, managing partner, Maroon Ventures

The reseller media channels that our industry has long partnered with to reach local brands and businesses are consolidating at a more rapid pace than the SaaS companies that serve those channels. Leaning into 2018, I expect to see the consolidation that we’ve long predicted within local-tech to occur. With less channel access to the market, growing market share from the Big 4, and the near evaporation of early stage funding, only the strongest business models will survive.

This is not a dooms-day prediction. Rather I see several good things coming out of this consolidation. First the emerging companies, with their strong business fundamentals, will benefit from a less crowded marketplace.  Second, there will be less noise. Businesses will be able to wade through the best-of-breed choices that provide real value to their business. And, some of the companies swept up in consolidation will find a new home.  Some will find it within a larger, more dominant player. Others with the consolidation-driving companies looking to round out their SMB offering.   

2018 will be a great year for profitable business models, who have a clear value proposition for their customers, and enough cash to weather the approaching winter.

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IoT Is Set To Re-invent Retail

Asif Khan, president, Location Based Marketing Association

Just as smart devices are being increasingly adopted in homes, so will IoT technology make more of a mark in retail. The use of sensors and tags on every item will mean that retailers can more accurately monitor the movement of goods and improve inventory management and achieve efficiencies rarely seen before. Nearly 50% of retailers worldwide have adopted Internet of Things technology to some extent, according to a new report from Aruba Networks. Devices that communicate with each other in the store will also bring about a wealth of additional insights into consumer behaviour and preferences for particular product combinations, or flag ‘tried-on, but rarely bought’ articles. Consumers´ requests for more personalised offers will also be supported by the use of IoT in retail by bringing together location and transaction data.

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Search Will Evolve to Accommodate Voice

Damian Rollison, Brandify director of product & “Streets Ahead” columnist

I’ve been contributing to these things for a few years now, and at one point I stopped doing it, believing that local was developing too erratically for predictions to be meaningful. Looking towards 2018, though, I think we have the opposite problem. The forward trajectory of current developments should be pretty obvious to most observers. For instance, with voice search, we’ve now entered the phase I remember during the growth of mobile, where every year we wonder if this is the Year of Voice. The answer is yes; 2018 will very likely see growth in the ubiquity of voice interfaces, and I’d be surprised if by the end of next year we weren’t all used to talking with Alexa or Google in our cars and while out and about. This means voice search will need to accommodate an ever growing number of use cases and search contexts.

Whether the voice industry will innovate in local remains to be seen, but the aggressive data gathering activity and feature release schedule on Google’s part in 2017 surely augurs some kind of expansion in that company’s range of local services. We should definitely expect more releases of the GMB API, probably to make available some of the new features of 2017 in a more scalable fashion, such as Posts and Messaging. It’s commonly assumed that Google is pouring all this energy into local as a way to eventually capture more ad revenue, so look for developments on that front as well.

As for the reputation space, the controversy surrounding review solicitation is a hot topic right now, and I’d expect the practice to receive more scrutiny in the coming months. Yelp’s strong stance that any solicitation skews the objectivity of reviews has made industry waves, and companies are already having to decide which side they’re on. Brandify is a Yelp Knowledge partner, and as such we’ve opted to support Yelp’s position. Others have made a different choice, but one wonders whether any local reputation product that excludes Yelp can remain viable for long.

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VR and AR Will Become More Formidable for Local

Michael Boland, analyst-in-residence, Street Fight

After a disappointing 2017 (following an exuberant 2016), VR and AR sectors will settle into a market correction in 2018. This will involve some opportunity and real revenue, but 2018 will mostly involve getting the technology right for consumer adoption, and paving the way for a sizable market opportunity (AR more than VR) after 2020.

For VR that means prices coming down and “standalone” (no PC required) headsets beginning to release in mid-2018, such as the $199 Oculus Go. For AR — larger and more relevant to local commerce — glasses are still far away (2020 Apple glasses). So 2018 will be all about mobile AR.

This will build on the 500 million AR-compatible smartphones already in the market, and the app development kits introduced by Apple (ARkit) and Google (ARCore). There will be a learning curve for AR app best practices, just like we saw with mobile apps circa 2008.

Put another way, we’ll see lots of low quality and novelty apps that go nowhere in 2018. There will be one or two success stories that start to push mobile AR forward and condition user behavior and demand. Those will apply native thinking to build apps that are “AR-first” or “AR-only” (again, historical lessons) to bring us the Foursquare or Uber of the AR era.

Local commerce will be a big AR category including navigation, discovery and AR-assisted retail shopping (in-store navigation, product details, etc.). Location-based gaming will also accelerate, building on the success — and in-app purchase model — of Pokemon Go. This will start in 2018 with Niantic’s follow up to Pokemon Go: a game with similar mechanics and architecture, but re-skinned with a Harry Potter theme.

Bottom line: AR will be formidable, especially for local. But it will take longer to arrive than many expected. It will be similar to eCommerce market sizing circa 2000. It wasn’t too high… it was too low. But it was early by about five years. VR and AR’s slow build will commence in 2018 with a few notable milestones and inflection points. Meanwhile, there will be blood: we’ll see a market shakeout and funding crunch. Timing will be everything.

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