2013: The Revenge of the Merchant

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To date, local merchants have largely been at the mercy of the old advertising mantra. They might say, “I know that half of my hyperlocal promotion efforts work. I just don’t know which half.”

A number of companies have promised to solve that problem for small business owners — with both Groupon and Bloomspot among them. But no major players have yet achieved sufficient traction to realize true critical mass. And the deal purveyors that are offering robust ROI analytics for merchants have largely been hamstrung by their unwillingness to deliver truly comprehensive analysis across multiple product and company offerings.

Further, the boom and crash of mass-market daily deal efforts has clearly resulted in fatigue for both merchants and buyers. I was at a Mobile Monday event in San Francisco where a tech-savvy crowd was asked how many people used Groupon a year ago and how many used it now. Nearly all the hands came down at the second question, a telling show of sentiment that explains precisely why Groupon is aggressively diversifying away from its daily deal reliance. Of course, the vast number of hyperlocal promotional products and platforms has created insane overall market confusion.

The good news? My prediction is that 2013 will mark the date the worm turns and merchants start to gain the upper hand. That gain will come from lessons in the consumer market, where simple UI and UX have become paramount for success and sophisticated filtering has given way to three-click processes. The reality is that most mom-and-pop shops do not have a marketing person or agency and lack the time to really think about marketing. The savvy ones run big social media programs. A handful use geotargeted AdWords on Google or other platforms.

But without a dedicated person or at least a quarter of one to run programs, it’s very difficult for merchants to understand what happened or do any real ROI analysis. Start-ups like Copilot Labs (an innovative supplier of deal ROI analytics for restaurant and whose CEO is a fellow Street Fight contributor) and call-tracking service LogMyCalls make it incredibly easy for start-ups to figure out where they are getting the most value for their dollars.

For the most part, such analysis should be easy to digest in an email or even in a text message. That significantly ups the ante in terms of delivering a highly functional UI but frankly, that’s the same hurdle faced by consumer app companies. And guess what? Local businesses are no different than consumers, except that they spend money on advertising and marketing services, which is why the worm will turn and follow the money and the hyperlocal marketing ecosystem will finally drill down to the extent required to let mom-and-pops maximize ROI to their shops without breaking a sweat.

Alex Salkever is an executive at a cloud computing company and a former technology editor of BusinessWeek.com. The views expressed in his column are his own and not those of his employer. His Personal Fight column appears every second Wednesday on Street Fight.