Street Fight’s Predictions for 2016: Part Two

With 2015 drawing to a close, it’s time again to look ahead to what we can expect in the hyperlocal space in 2016. We asked Street Fight staffers and weekly columnists what they thought would be the biggest story (or stories) in local in 2016. We ran the first installment yesterday — now here are the rest.

Our analyst contributors weighed in at the beginning of the week on what they see as key trends for next year. You can also check out our rundown of how some of last year’s predictions turned out.

Local search will continue its evolution, but not without casualties.

David Card, Street Fight research director
Because its impact reaches so far into different components of the connected local economy — marketing, commerce/payments, mobile, user experience — the evolution of local search will be the big story of 2016. No, Google’s not going away, or even losing any significant market share. But the mechanics of search are transforming, as customers increasingly shop and do research with smartphones in addition to — not in place of — home and work computers.

The major players (Google, Apple, Amazon, Facebook) are developing different collections of competing, incompatible core technologies critical to local search: maps, deep linking and app indexing, relevance-ranking algorithms, personalization/collaborative filtering, ratings and reviews, personal assistants/voice recognition, etc. And each has a different walled garden of user data. If local merchants and national brands and retailers thought local marketing was complex before, wait till they try to get their arms around this. It’s a tremendous opportunity for marketing technology and services providers that can stitch these threads together.

Street Fight has described a similar weaving-together hyperlocal opportunity driven by the intersection of three technology trends: new marketing tech, mobile, and next-generation point-of-sales (POS) systems. We hypothesized that businesses could use this upgrade opportunity to better connect back- and front-office operations. In all likelihood, small local merchants’ ability to connect POS info to email, let alone to digital or print display advertising data, is beyond the capabilities and pricing of any 2016 analysis tools or services. It’s a different story for big chains and national brands. The best integration opportunity for SMBs is for local services to connect customer booking systems with payments/accounting and their own staff scheduling.

Finally, a vendor prediction. Since I chickened out of handicapping the local search showdown, I’ll at least take a shot at one of the contestants. In 2016, Facebook is at risk of being left behind in local. Sure, it’s playing around with a personal assistant and a brand-new Professional Services search feature. Many local merchants rate social as their most effective marketing tactic. But Facebook has flailed unsuccessfully with search and storefronts, and far too many local businesses rely on free pages without optimizing them via paid marketing. The company has been bold in making big acquisitions with long-term payoffs. It will make one in local. To date, Facebook hasn’t had the stomach for building a much-needed local sales force. In 2016, it will acquire one — Groupon? A yellow pages player? Yelp? Sorry, my crystal ball’s not that good.

Damian Rollison, Brandify director of product and “Streets Ahead” columnist
Local search continues to revolve around Google, and Google continues to be weird. In the latest example of Google weirdness, the company removed all business profile details from its Plus pages, leaving us with no destination page for a business on any Google property. Business listings in Maps, Knowledge Cards, and so on are the only instances where business information like hours and reviews gets surfaced, but none qualifies as a business profile page. So my probably rather safe prediction is that this state of affairs won’t last. Google is ditching lots of Plus functionality and probably will end up consigning the platform to the same graveyard as Wave and other abandoned products — if not next year, then soon thereafter. But I’d expect much sooner than that, likely in the next few months, we’ll see a new destination page for businesses that allows them to (re)build engagement with consumers and acts as a public face for the Google My Business platform. Hopefully we won’t have to claim our locations all over again.

Disruptors will start to focus on the long-term viability of the business.

Annie Melton, news editor
Uber and Airbnb, two of the world’s top-three most highly valued startups, spent 2015 further cementing their status as household names (and the future of their respective industries) by barreling into new cities — and through state and federal laws. They’re not the only members of the on-demand/sharing economy guard to fight legal battles (witness Postmates, Instacart, and DoorDash, to name a few others), but 2016 could be a year full of drastic operational and structural changes for these startups. The mindset of “act first, settle lawsuits later” is not a viable long-term strategy. Whereas on-demand upstarts likely take pride in breaking the rules from an entrepreneurial standpoint, doing so in a legal sense ultimately will hinder their potential. Uber, Airbnb, and others aren’t going anywhere, and the companies that make sincere attempts to coexist in places that need a little more time to digest the disruption they have wrought will be the ones that stick around for good. Next year that long-term outlook will come into focus.

Location technologies will expand, offering consumers new options and creating more local jobs.

April Nowicki, “Street Culture” columnist
One massive bottleneck for hyperlocal is the IT/OT (information technology/operational technology) convergence, where a disconnect still exists between powerful technological capabilities and on-the-ground operations in local service areas. In Denver, for example, grocery delivery companies are eying tens of thousands of consumers living in the urban sprawl outside of downtown. Lyft offers services in Gloucester, M.A., less than an hour from Boston, but Uber hasn’t quite made it there yet.

In 2016, location services tech will continue expanding, offering new options to consumers and more jobs to local economies. Faster, more often, and with less notice: Location technology enables consumer decisions in a shorter time frame, and that trend promises opportunity to more outside-the-box entrepreneurs. The companies that succeed in the hyperlocal space will be the ones that can utilize their data to anticipate customers’ needs and further personalize relationships with them.

Competition gets more intense.

Geoff Michener, Matchcraft’s head of agency relations and Street Fight “Movers & Shakers” columnist
The local space is competitive. There are publishers, tech giants, and everything in between involved in the fragmented local arena. 2016 will be an interesting year for companies focused on providing on-demand services in particular.

Uber, Amazon, DoorDash, Postmates, Instacart, Seamless, and many more are fighting for customers. Competition is good for the consumer but ultimately there have to be some losers. Falling prices for on-demand services will create a race to the bottom.

Similarly, the strategy to acquire as many users as possible rather than grow revenue and margins will shift in 2016. With the Fed’s recent rate increase, money won’t be as cheap as in the past few years. Additionally, valuations will change and running sound businesses with solid EBITDA will take precedence. Tech giants won’t have to tighten their belts, but up-and-coming startups will have a tough time gaining the traction necessary to raise funding due to terrible margins and the amount of money needed to acquire new users.

Ultimately, emerging on-demand companies will have an uphill battle in 2016 to prove their business model while cash-flushed Uber and Amazon will continue to push prices to the bottom to monopolize and eventually win the market.

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