Peter Krasilovsky's

Local Onliner

Apr 27
2013

Payments 2013: Opportunities in The Next Wave of Payment Technologies

Will tech companies like Google, Apple, eBay/PayPal, Amazon, Microsoft, Square and Intuit move in on the role traditionally played by banks? It is a distinct possibility in the not-too-distant future, as digitalized transactions, mobile payments and offers, and digital wallets usher in a debit-oriented environment that loosens traditional ties to credit cards and bank branch activity – not to mention merchant advertising.

That’s the message from several panels at NACHA’s Payments 2013 this week in San Diego. Much of the shift will lean on Browser and Web-based purchasing that we associate with the likes of Amazon today, which will account for roughly 60 percent of digital transactions by 2015, or $12.08 Billion per Javelin Strategy & Research. The rest of the $20.7 Billion digital spending pie will come from Browser- only purchasing ($6.4 Billion), App only purchasing ($1.9 Billion), and Mobile POS payments (.4 Billion).

Javelin head James Van Dyke suggests that a lot of it depends on the consumer acceptance of mobile wallets. In June 2012, one-third of mobile users were already receptive to receiving rewards or offers based on location, he said. This will quickly jump with the rise of smart spending tech via bar codes, NFC and mobile proximity tech. And if today’s experience in market leader Europe is any guide, it will lead to “multiplying financial relationships, ” especially among Digital First younger people.

PayPal Head of Financial Innovations Dan Schatt colorfully suggested that the days of consumers as “cattle” are over. They are more like “free range chicken,” he says. But alternative payment companies like PayPal – which is often regarded as a disruptor – actually represents new kinds of growth opportunities for financial institutions and bricks & mortar stores.

Banks, for instance, can take deposits from Coinstar loose change-to-cash machines that hook up with PayPal and are located in thousands of grocery stores. “We generate more interchange revenue, not less,” he says. “So long as you are connected to the Internet, there are so many ways to surface data and five consumers compelling experiences,” says Schatt.

The new environment is also related to loyalty and understanding the consumer. It can level the playing the field for smaller merchants by providing higher quality service. “It is the tech arms dealers versus Amazon,” Schatt says. But he also notes that PayPal is just part of the equation for a company like eBay, whose efforts are oriented towards being “the center of someone’s life.”

Schatt noted that eBay has bought over a dozen companies related not only to banking, but also discovery and engagement uch as Red Laser and Milo in recent years. Payments are just a very small piece of a very compelling reason to spend and frequent retailers.

Visa has similar ambitions. It isn’t just about supporting banking needs anymore. “We power all monetization,” notes Jennifer Schulz, Visa’s head of Global eCommerce. “If we can’t support client needs, we will fall behind.”

That means opening up the Point of Sales to produce highly relevant data beyond the “total consumer profile data, which has been around for quite a while,” says Schulz. “Over the next 15 years, POS won’t be looked at in the same way.”

Today, Schulz notes that POS systems are generally focused on the negative side of revenues – reducing risk from bad payments and fraud. But in the future, they’ll be more oriented towards generating loyalty and revenue generation.

Categories: Conferences, Deals

Apr 23
2013

Payments 2013: New Payment Options Forcing Banks, Others to Change

Disruption happens. In the local space, we’re seeing it happen with Yellow Pages and newspapers. Banks are seeing it happen as well, which will cause a major change in the way that customers keep track of their money, buy goods and services and stay “loyal” to merchants.

At NACHPA’s Payments 2013 in San Diego this week, speakers discussed how the move to digital is impacting banks and their relationships with customers and merchants – and how the payment space is evolving.

Keynoter Brett King, CEO of Moven,, an online bank. suggests the biggest sea change is that customer relationships aren’t determined by anything that goes on at the branch. “Nine of 10 customers can’t remember getting advice at a branch,” he notes. “By 2015, digital interactions with banks will outnumber branch interactions by 300 to 1.” And branches will only be visited once a twice a year.

“The mobile phone is undoubtedly the next banking platform,” says King, citing a Gartner forecast showing that 70 percent of GenY will be “mobile banking first” by 2015, and that 50 percent of all customers will be using mobile as their primary channel by 2016.

The other part of the equation is the rise of prepaid debit cards, which is growing 25 percent a year, which checks are shrinking 4 percent a year. The prepaid debit cards are evolving into smart accounts for some users that can tally total spending in a category – and even show areas to cut back on.

Smart accounts are about putting context in payments – good spending versus bad spending. It might show, for instance, that the daily $10 Starbucks fix is adding up to $280 a month. “Instead of making it an impulse decision, make it into a planned purchase,” he says.

“It is all about getting rid of friction,” adds King. The correct analogy is Uber, which provides cashless car service. By linking payment accounts and wallets to the cloud, merchants are increasingly positioned to add offers, loyalty programs and other incentives.

Banks, however, haven’t reduced friction with their online products. “We have simply reinforced it online,” says King, in words of warning. “We haven’t seen the industry embrace mobile as the bank account.” Meanwhile, there are “a lot of players coming in to create new infrastructure, with new rails, new pipes.”

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Categories: Deals, Mobile, Shopping/Transactions

Apr 22
2013

SupportLocal: 27 Local Questions, 27 Local Recommendations

Facebook is the undisputed king of social media. The average Facebook user has 124 friends, and 70 percent of its users have “liked” at least one local business. But at this point, how local is Facebook really? And as an open network, it the ideal medium for local recommendations?

This is the soft underbelly to Facebook seen by SupportLocal, a new site that has been designed — it hopes — to capture true word of mouth – and a huge list of recommended local businesses.

SupportLocal has raised $1.7 Million, and is being supported by Punchlime, an accelerator manned by ex-Googlers that is backing 25 “breakout” companies. Its founder is Justin Sanger, who previously founded the LocalLaunch sales network. Its board includes such local luminaries as Home Advisor’s Craig Smith, former Dex exec Sean Greene, and longtime local exec Chad Schott.

Users sign up, create their own list of friends, and answer a set of questions about their favorite service providers and merchants. They start with 27 questions, in theory yielding 27 local recommendation – a highly efficient, 10 minute haul.

Based on factors such as gender and various behavioral algorithms, the question set eventually expands to up to 188 questions (sent in bites). Users can also ask a question to their friend’s list for more obscure subjects (“Can you recommend a Judo instructor?”)

In my experience, I found it tough to remember local business names (“the place next to Texaco” doesn’t suffice). But service provider and merchant names are auto filled in after a few letters based on listings in the surrounding areas. Listings for my location, for instance, included not only those in my town or zipcode (Carlsbad, 92009), but all the neighboring towns that I’m likely to shop at (Encinitas, San Marcos, Vista, Oceanside, Solana Beach and DelMar.) The site is currently using a database from Factual, and will be enhancing it with additional sources.

By grabbing a high number of recommendations from the get-go, and relying on friends, it can be a better solution than a Google search, or taking the one-off advice of strangers from Yelp – who may be more interested in entertaining their public than writing a careful review — or even the carefully callibrated reviews of Angie’s List’s premium users (which take a lot of time to fill out, actually.) IF the site can attract a high volume of users, the end result will be a highly credible list of local recommendations.

Speaking at the Local Search Association meeting last week in Las Vegas, Sanger said that “social and search are converging in a manner that enables us to get better answers for local businesses.” In a dig at Facebook, Sanger said that “a like is not a proxy for recommendation. The two are completely different. Who among you is going to ‘like’ an OBGYN?” he said, noting that Support Local allows users to restrict who gets to see certain recommendations.

Sanger emphasized that the Beta version that is up now will be vastly improved in future versions, with such features as tagging added. There will also be more structure built around the user questions, creating more Yabbly-like discussions (Yabbly is a nice question-based social/lifestyle service started by former Marchex exec Tom Leung.). Sanger expects the real driver, however, to be the mobile app, which will be geo-enabled and released in a few weeks.

As for business models, Sanger says he is looking to create an annual support package for businesses. The support package will allow businesses to talk about how they support the local community; provide social objects; push questions as alerts, and let them create offers. All of these tools will spur more recommendations, he says.

Categories: Social Media

Apr 22
2013

LA Times Columnist Calls out Yelp for ‘Suppressing’ Reviews

I think Yelp is a fantastic service and a top resource, especially when I am travelling. But it was disturbing to read a column in The Los Angeles Times on Saturday by Sandy Banks, which suggests that Yelp is suppressing good reviews, and implies that there is a linkage between ad sales and allowing good reviews to be posted.

This isn’t the first time that Yelp has been accused of unsavory behavior. Yelp generally says it is all a series of misunderstandings about its business practices and technology. Some reviews get caught up in its algorithmic filters, which are designed to prevent businesses from hyping themselves via “fake” reviews from friends, family or paid agents. The system, unfortunately, favors frequent reviewers, who have essentially been validated.

Yelp also implies that if it has rogue salespeople lying about what they can and cannot do for advertisers, they’d be fired. “There’s no amount of money anyone can pay Yelp to manipulate reviews,” spokeswoman Kristen Whisenand told Banks.

But Banks notes a sign in the window of Bai Thong Thai, a San Francisco eatery, which asks customers to “Stop the Bully. Boycott Yelp.” The sign says that “Our customers repeatedly tell us they have submitted very good reviews. We asked Yelp. We were told ‘perhaps if you paid to do Yelp ads, we could help with this.’ We earn our good reviews. We will not pay bribes to Yelp to post them.”

Banks says the restaurants experience mirrors her own. She has posted positive reviews for her favorite hairdresser — presumably, a non-advertiser — but these reviews have been excluded, along with other acquaintances that she knows have written good reviews. Meanwhile, what is posted is a string of negative reviews.

She also notes that a number of a knitting store’s customers discovered Yelp at the same time, and sent in positive reviews. But “just about all of them were banished to Yelp’s untrusted file – while the negative reviews are all on page one. “ (Personally, I had a limo driver last year tell me that the same thing happened to him.)

I have a hard time believing that Yelp is purposely corrupting its system. The majority of Yelp’s reviews are positive. And the majority of the reviewed businesses on Yelp are not paid advertisers. But it needs to get out front on these issues.

Categories: Social Media

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Apr 17
2013

LSA 2013: Mobile Promotions Show True Value

Ads aren’t just valued for bringing in calls and walk ins. Local businesses increasingly place value on consumers looking up maps and directions, or participating in loyalty efforts, notes SuperMedia Director of Mobile Development Chris Folmer, who was speaking on a panel at The Local Search Association conference April 16 in Las Vegas. “There are lots of ways to drive true value,” he says.

Loyalty programs represent a real growth opportunity. Consumers are already engaged with the client. They need to maintain the relationship,” says Folmer. He notes that SuperMedia is rolling out a number of new loyalty programs. The programs are great acquisition tools. They are “really good to talk to new clients about. They really like it.”

The traditional backbone of loyalty programs have been text messaging, he adds. Texts really deliver results, and are “exploding” for SMBs. The key is to “get people to want to engage in content.” But they can also be tricky because they are so easy to unsubscribe from. “It only takes one bad offer for someone to opt out,” he notes.

Speaking on the same panel, Placecast SVP Blair Swedeen also emphasized strong results from text-based programs. Promotions sent out when consumers are near a store result in a 2.5 x boost in frequency, and a 22 percent purchase rate. There is also a 5 percent increase in average order value, he notes.

Increased smartphone penetration has greatly expanded the universe for smart offers, says Swedeen — smartphone users will also get push offers on their Apps and emails. “Most customers want delivery across all channels,” he says.

Edo Interactive VP Jeff Fagel says that texts in fact have already been surpassed by smartphone emails. Apps are also proving to be very effective. Merchants that have a promotion on a mobile app are seeing a 20 percent boost in their response rate.

Redemption rates are also soaring. A program that Edo ran with Subway, for instance, achieved a 15 percent redemption rate across the board. It drove the value of purchases up 30 percent. Moreover, 40 percent of those customers who redeemed offers came back at least once or twice in the next 90 days.

The key is driving “the right offer to the right customer,” and keeping it simple, adds Fagel. “There is nothing as impactful as ‘thumbs in faces,’” he says, noting that mobile offers will see 10-15x redemption rates of traditional coupons.

Categories: Conferences, Deals, Mobile

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Apr 17
2013

LSA 2013: Facebook’s Dan Levy on Importance of Local

“Local search is really important for Facebook,” with a major boom in local business adoption, and the synonymous nature of mobile usage and local search, notes Facebook’s Dan Levy, who spoke April 16 at The Local Search Association conference in Las Vegas. Levy says there are 15 million SMBs on Facebook now, and 680 million monthly mobile users.

“The best way to judge Facebook is to look at where we are spending our efforts,” adds Levy. While Levy concedes that Facebook’s changing lineup of ad products may be hard to keep track of, the current lineup of ”Promoted Posts,” “Nearby” and “Graph Search” are “a real testament” to Facebook’s commitment to local, he says.

What Facebook is ultimately shooting for are products that best leverage Word of Mouth, says Levy. “Getting a recommendation via word of mouth is very important. We are building that into our ad products.” It also doesn’t mean reinventing the wheel. “Social advertising isn’t a new industry,” he suggests. “It is just advertising that is social.”

Promoted Posts are seen as a success for Facebook because it has been picked up so quickly. A million businesses have used a promoted post in less than half a year, and they have kept using it. The product has a 75 percent retention rate.

What doesn’t work for Facebook is when value isn’t being added. Deals didn’t work so well because they didn’t provide many unique values. But a new product, Offers are a homegrown success story, with “70 percent of users connected to at least one local business,” says Levy. More importantly, offers quickly go viral. Most offers aren’t being claimed by the original audience, but by friends of fans, says Levy.

Categories: Conferences, Deals, Social Media

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Apr 17
2013

LSA 2013: CityGrid’s Finger Bets on Vertical Revival

Seven years ago, in 2006, we began evangelizing a vision of local media driven by vertical specialties. These would drive high value leads with better, more relevant searches. In this light, Google was seen as a “perpetual vertical machine,” driving every query higher and higher up the food chain.

The vertical revolution never happened — at least to the extent that we envisioned it. There have been many successful vertical breakouts, but a lot of the vertical vision has been preempted by horizontal media that have incorporated verticalization. In recent years, many cross-the-board platforms have diminished the need to verticalize.

Going forward, CityGrid Media CEO Jason Finger thinks that’s wrong-headed. Speaking with Greg Sterling at The Local Search Association meeting in Las Vegas April 16, Finger said the local community has given up too soon on the vertical vision.

“People are taking a broad approach, but the world is evolving towards specialization,” says Finger, who had a major vertical success earlier in his career with Seamless, the online food ordering company, and ZocDoc, the doctor scheduling service. Local sites such as CityGrid have fallen into this as well. They have “tried to be all things to all people,” but the key is to “lean into leads very aggressively.”

Finger says the next generation of local leads will be ruled by “connection types” that “provide high quality ROI, and then get deeper.” They might schedule an appointment, manage as a CRM tool, provide transactional services or rely on call management, he says. “Merchants will demand that service providers get more sophisticated and adapt this kind of pricing,” he suggests.

This means a fundamental shift away from eyeballs to utility. Tools that provide good utility will prove more sustainable than generalized information, even if they are not the highest traffic drivers. A third ranked source of traffic might be more important to the sustainability of a site than the number one source.

It also means a shift in sales strategies. The historical approach of being a comprehensive directory required “a very large sales effort,” says Finger. Newer efforts may be better off with mid-sized or smaller sales team that can build out their capabilities in specific verticals.

Categories: Conferences, Verticals

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