Winning in Local Commerce Means Solving the Data Issues in Discovery

This is the second in a six-part series on “The Local Stack” in local commerce that will appear on Mondays. This piece covers the first layer, focused on consumers’ initial “find” stage. Read last week’s overview of the full stack, and check back next Monday for the second layer in the local stack. The full series is being underwritten by Yext.

It has been six years since the iPhone was introduced, and finally mobile is on the verge of overtaking desktop in local search. Of the 116.8 billion local searches that consumers are expected to make in 2013, 46.6 billion, or 39%, will come from mobile devices. And within two years, that number will reach 85.9 billion, exceeding the 80.4 billion that consumers are projected to make on desktop in 2015.

For consumers, it’s just a natural way of life, now. Such a rapid adoption of smartphones has changed our behavior, altering the way in which we find and evaluate products and services in the local marketplace. For marketers, this new behavior has fundamentally impacted the longstanding belief that there is a linear path to purchase, evangelized for over a century as the “purchase funnel.” The concept is fading quickly and the cycle from finding products to buying them is accelerating dramatically in this new paradigm. A recent study from Google, for instance, found that more than half of all mobile searchers who visited a store did so within an hour of that search.

The acceleration in the local consumer’s purchase cycle means that each layer of the the Local Stack of online-to-offline local commerce — find, buy, retrieve and engage — must fuse together and work to create a seamless local commerce experience. In the find layer, local search properties have expanded beyond point-of-interest data, investing in the rich content needed to help consumers make purchase decisions before leaving businesses’ sites. Meanwhile, new models have emerged to help businesses synchronize information across a number of properties.

With this mobile consumer intent on discovering and deciding on a single page, consumer-facing services have opened up, bringing in data and content from other providers as well. That opening has spawned a host of data and content services, who play beneath the surface to help to play traffic cop, directing information across the local web.

The Data Warehouse Powering Results

Whether online or on mobile, location data is a complex issue. Place databases, which store basic information about businesses such as their name, location, and phone number, contain massive amounts of data that require constant upkeep. They must adapt to, say, a coffee shop in Troy, New York, moving down the street, or a pizza place in Idaho Falls updating its phone number. Factual, a venture-funded data startup focused on aggregating massive databases of location information, has over 25 million points-of-interest in its dataset.

In addition to Factual, companies like Axiom and Localeze also play in this space. For our intents and purposes, these firms use advanced data science techniques to make sense of a deluge of raw data harvested from third-party licensing agreements and publicly available sources; as well as through web scraping and other proprietary techniques. Like a shipment from a warehouse, those data are then typically delivered to clients in weekly or monthly batches, leaving room for intermittent delays and outdated information.

The model, however, is built for data that stays put. Business do not often move or change their name, but when they do, a week or so delay doesn’t break the bank. The question for these data warehouses, however, is how to handle more perishable information — content like photos, specials, event listings and others — that loses its value in matter of days, not years.

Publisher Networks and the Business of ‘Perishable’ of Content

It’s a problem that’s becoming more acute as mobile search gains steam. As consumers increasingly seek information that helps them evaluate new products and services nearby, they expect more than merely a business’s phone number or address. In addition to third-party content like reviews and recommendations from friends, merchant-generated-content such as photos, day-of specials, detailed menus and inventory information has started to play a bigger role in search and discovery.

In this context, the data warehouse model, which is built on scale and coverage, is ill-equipped. The speed at which ‘perishable’ content needs to move from a merchant’s counter to a consumer’s device in order to retain its value requires a different infrastructure, one that is deeply integrated into the day-to-day lives of merchants, who share the information, as well as publishers that bring that information to consumers.

What has resulted is a publisher network model built around a type-once-publish-everywhere value proposition, then sold to merchants on a subscription basis. These publisher networks have integrated with Yelp, Facebook, Foursquare, and other local publishers to allow their clients to add and edit content across these sites in real-time. Meanwhile, companies have challenged Google’s dominance by building large, discovery-focused products on top of self-sustaining, and user-generated data sets. Both companies take data from providers like Yext, while opening up their own datasets to developers through widely used APIs.

Google Dominates Search, but There is Innovation in Discovery

But for the average consumer looking for local business information, Google still dominates. A recent Comscore study found that 65% of mobile-local searchers identified Google as either their primary or secondary source for local information, compared to a little under half for local listings and internet yellow pages sites, and between 10% and 20% for consumer reviews and social networks properties.

The opportunity to innovate in local search and discovery, however, is less about stealing users from Google and more about capturing the growing and diversifying needs of newly-mobile consumers. Between March and December of 2012, the total number of U.S. local searchers using mobile devices grew 26%, increasing from 90.1 million to a little over 113 million in ten months.

For local discovery firms like Yelp, emerging players like Foursquare, and latent powerhouses like Facebook, winning the “find” game in the Local Stack is about diversifying content and improving the experience after the selection. The more quality, timely, and accurate content they can provide, the better the discovery experience. The more seamlessly they can help consumers make the transition from find to buy, the better the experience will be for the user.

Over the next five weeks, Street Fight will take a deep dive into each layer of the local stack, detailing the dynamics and key companies that will help to build the future of local commerce. This series, which is underwritten by Yext, is aimed at educating industry players new and old on the inner workings and ecosystem of the new local stack. Next week, discover new insights and the inner workings of the “Buy” level of the stack.

Steven Jacobs is Street Fight’s deputy editor.