Street Fight Hyperlocal Analyst Predictions for 2016

With 2015 drawing to a close, it’s time again to look ahead to what we can expect in the hyperlocal space in 2016. This year, we did things a little differently. We invited our regular analyst contributors to 1) weigh in on what they felt would be a “sure thing” in the coming year, 2) offer a prediction on something that might get big (but might not happen), and 3) identify something that may have been hyped, but which hyperlocal marketers and merchants really don’t need to worry about. 

We asked Greg Sterling and Michael Boland, of the Local Search Association and BIA/Kelsey, respectively, to focus on the U.S. market, and Peggy Anne Salz, who runs the Germany-based MobileGroove, to give her perspective on the European market.

This is the first of several predictions pieces we will feature this week. We’ll be running staff and weekly columnist outlooks tomorrow and the day after, followed by an editor’s take on Thursday.

1) Sure things in 2016. Expect a renewed focus on Facebook among local marketers in the year ahead. Both Sterling and Boland believe the social network giant finally will begin to assemble the necessary pieces that make for a better, more coherent, and ultimately more powerful platform for SMBs to connect with their audiences.

Hyperlocal marketers in Europe, Salz suggests, should expect a different set of challenges. The marketing-tech industry’s aggressive push in location-based audience targeting — and the resulting trove of consumer data — will be tempered by pushback from consumers turning to ad blockers in increasing numbers (very different from the situation in the U.S., where Boland called ad blockers the most overblown story of 2015, and which both he and Sterling see as something hyperlocal marketers don’t need to worry about in 2016).

Greg Sterling, vice president of strategy and Insights, Local Search Association
Top of mind there are two “sure things” for 2016. One is a much more aggressive push by Facebook into local search and discovery. With its new Services site, imperfect though it is, we’re starting to see Facebook move into this area in earnest, after a number of less elegant flirtations. I believe that a robust consumer experience is inextricably bound up with success in converting SMB Page owners into advertisers.

My second bet would be the emergence of offline attribution and analytics as a mainstream tool for digital marketers. Select companies today are tracking and measuring offline actions (e.g. store visits). Next year, however, we’re going to see many more advertisers asking for these metrics and they will become more central to how marketers do media buying, planning, and attribution.

Michael Boland, chief analyst and vice president of content, BIA/Kelsey
Facebook’s many orbiting local efforts will come together in a more discernible and dominating strategy. This includes Pages as a substitute for many SMB websites (mobile optimized); Local action buttons (buy, call, schedule, etc.); offline attribution; and Messenger as a commerce and communications engine. Longer term, Oculus will power more immersive local search and discovery. Think test drives, restaurant tours, etc.

Peggy Anne Salz, founder and chief analyst, MobileGroove
Expect the interest in location context (on the rise since the vast majority of marketers are now using location as a proxy for audience) to fuel new demand for third-party data relevant to location. This will open the door for companies with this audience data, ranging from app usage and purchase histories to CRM and household information, to get in on the action. As advertising evolves to bridge the digital and physical worlds, we will see increased demand for cross-platform data (mobile, online, and offline) to build more holistic audiences and fill the gaps in mobile programmatic advertising rocket. Unfortunately, this trend will likely collide head-on with the advance of mobile ad blocking in Europe, where recent research shows Germany leading the pack of countries (which includes France and the U.K.) with higher rates of ad blocking than the U.S.

2) Eventually big but not in 2016. There is less consensus on the “maybes” — the trends that might hit next year, but might not. Sterling sees beacons and mobile payments as falling into the “wait till next year” category, although momentum will continue to build in 2016. Despite the slow start, the U.S. remains ahead of Europe, where Salz categorized mobile payments as an area that local marketers don’t need to worry about in 2016.

Consumer adoption of messaging apps undeniably emerged as one of if not the major trends of 2015, but business use of those platforms remains a wild card. Boland feels that national multi-location brands will be the first-movers, with a limited number of SMBs following suit, but the majority not getting on board until 2017 or later.

Sterling: Beacons (indoor location) and mobile payments fall into this “not quite yet” category. I’m bullish on both developments but 2016 is still a “ramping year.” More people will experience in-app and mobile POS payments. However, it will take time for a broader group of merchants and consumers to adopt and enable mobile payments in the physical world. App-based payments for ecommerce and real-world goods and experiences will happen much faster (e.g. Uber, OpenTable).

In terms of beacons and indoor location, we’re going to see more rollouts and more case studies. But most retailers and others still don’t know how to think strategically about indoor location let alone fully exploit it. In the next 24 to 36 months, we’re going to see more sophistication and some great models and cases emerge. The value of beacons and indoor location goes well beyond coupons and deals; it’s really about loyalty and personalization and creating a better shopping or customer experience.

Boland: Qualifying my “sure thing,” messaging apps will start to be applied towards local commerce and communication, as they have in many overseas markets (WeChat, WhatsApp, et al). But stateside, it will start with national multi-location businesses. SMBs at the front end of the adoption curve will begin to latch onto messaging apps in 2016, but they won’t attract SMBs en masse until 2017 or later.

Salz: 2015 was a year that brands and businesses began to understand and explore the opportunities the Internet of Things (IoT) provides them to deliver real-time, right-time marketing based on individual context and behavior. Predictably, Starbucks was one of the first out of the gate with an app with the Apple Watch that allows customers to pay with Passbook as well as find nearby stores and track rewards.

Awareness of the IoT will no doubt get a boost from the European Union’s ambitious Horizon 2020 Framework Programme for Research and Innovation and the formation of a new Alliance for Internet of Things Innovation, but efforts will aim at advancing smart home and smart health initiatives. These will eclipse opportunities for brands and businesses to close the gap with their U.S. counterparts and cash in on in-store and on-device sensors to encourage and enable friction-free commerce and customer service.

3) Things you don’t need to worry about in 2016. There are things that hyperlocal marketers need to worry about next year, and thing they don’t. Ad blocking falls into this latter category: lots of hype, less demonstrable impact. Both Sterling and Boland point their finger in the direction it needs to go: an industry seemingly determined to subject consumers to poor quality ads.

In Europe, Salz views mobile payments falling victim to not a wait till next year, but “wait until the year after at the earliest” mentality, despite evident interest among retailers in implementing in-store technology. 

Sterling: Despite the coverage and industry hysteria, ad blocking is not a mainstream problem. Right now, it’s still fairly marginal. However, it’s reflective of a larger issue of irrelevant, low quality, or annoying ads. The industry definitely will need to devote time and energy to improving the user experience when it comes to ad formats, creative, and content. If it doesn’t, ad blocking could become a major issue over time.

Boland: Among the topics that got disproportionate attention in 2015, ad blockers take the cake. In mobile at least, they won’t have the impact that sky-is-falling headlines would have you believe, given their narrow applicability (iOS 9, manual activation, Safari-only). Given these limitations, investment bank UBS has estimated that ad blocking will affect 0.5 percent of mobile ad revenues. Grains of salt are required for more aggressive estimates coming from organizations selling ad blockers. The conversation will shift from ad blockers to where it should focus: Making mobile ads stink less.

Salz: Although it may seem that the advance of Apple Pay, which launched in the U.K. this past summer, will go a long way toward convincing skeptics in the rest of Europe to get on the contactless purchasing bandwagon (when it arrives!), there is ample evidence it will take more than the strength of the Apple brand to overcome the confusion and fragmentation that has marked commerce on “the continent” for nearly a decade. Paradoxically, retailers in Europe are lining up to use in-store and indoor location technology to improve customer service and send marketing messages to approaching shoppers.

Noah Elkin is Street Fight’s managing editor.

Have a prediction of your own? Let us know about it in the comments!