State of Hyperlocal: Report Shows Buyer and Seller Alignment, Attribution Focus

Suppliers of local marketing technologies and services appear fairly well aligned with their customers’ spending, needs, and challenges, although there are a couple of places where they might be missing opportunities. Both buyers and sellers agree that proving marketing ROI and online-to-offline attribution are key industry challenges, and O2O attribution is the top R&D priority for over one third (36%) of vendors in the space.

Those are some of the key findings from Street Fight’s latest State of Hyperlocal 2018 report. We based the report’s analysis on a recent survey of over 75 Street Fight readers and compared their thinking with that of small businesses and enterprise local marketers we had surveyed in 2017.

There are some areas in which customers are increasing spending that our survey respondents may be under-emphasizing, possibly due to the competitive environment or overall industry ecosystem. Social media marketing and paid search represent the former, and online display advertising the latter. Email marketing may just be a forgotten opportunity. The figure below shows where the survey respondents say they’re seeing their customers increasing spending.

Responses confirmed what we saw from the buyer surveys. Both SMBs and multi-location brands listed social media as the top marketing strategy on which they were increasing spending. The majority of both groups said they were maintaining or increasing spending on all of the six digital marketing types we asked about, and both groups listed email as among their most effective tactics.

When we surveyed the vendors last year, they identified mobile marketing as occupying the number-2 spot, but since most social media is consumed on mobile devices, they may feel they’re covered without allocating funds to mobile marketing separately. There is also just a hint of mobile backlash—early buyers of location data often use it less for mobile targeting than for audience analysis and segmentation as well as logistics functions.

As shown below, many vendors listed mobile targeting and location data and analytics as one of their top three near-term R&D priorities. Attribution tops the list, however, as it’s both an opportunity and the top challenge facing the industry. A similar percentage of respondents (37%) listed it among the top 2 industry challenges. They’re in sync with their enterprise customers—40% of them ranked proving ROI and attribution as either their first or second most difficult challenge in implementing local digital marketing and advertising. 

Companies with enterprise customers are strongly prioritizing location data and O2O solutions with their development spending. Those that supply smaller local merchants are focusing R&D more narrowly on their own product solutions. Many rated presence and listings management as their top priority. Some of the technologies that 15% or fewer had in their top three lists included AI for analytics (15%), booking or scheduling platforms (13%), and chatbots (12%). Beacons, mobile wallets, and augmented/virtual reality got single-digit responses. Street Fight maintains that wallets plus location data could be a key part of solving online-to-offline attribution and that over the long term AR and VR will be shopping differentiators.

Other findings from the report include the following:

• One-third of suppliers say location data and analytics will continue to be an R&D priority with longer-term benefits. About one-quarter had geo-targeting and AI analytics on their radar.
• The hyperlocal supplier community may be missing some growth opportunities in email, search, and non-social display ads, especially with enterprise local marketers. Since both SMBs and brands are increasing local spending across many tactics, that also presents opportunities in campaign integration, and in using one tactic to improve the effectiveness of another, e.g., acquiring email addresses through social media promotion.
• Selling local marketing technology and services to multi-location brands continues to be a top challenge facing would-be suppliers. It won’t be easy, but offering tactics and tools to harmonize multiple customer data sources would help address the brands’ digital marketing pain points. And getting them deeper into geo-targeting and re-targeting would likely help them with conversion and increasing sales value.
• With AI the omnipresent acronym these days, we asked our survey takers where they thought applying it and machine learning would be most useful. Customer segmentation and purchase prediction proved the most favored areas. Respondents believe those applications, plus recommendations and content creation, are more practical than things like virtual assistants.

David Card is Street Fight’s director of research.

Click here for a free copy of this year’s State of Hyperlocal report.