The Praized Blog

On the second day of the Kelsey Drilling Down 2008 Conference, we heard from Rich Barton, Chairman and CEO, Zillow. He exposed us to his thesis that lead to the various projects he’s been involved in in the last 10 years. Before founding Zillow, Barton founded Expedia when he was at Microsoft. His basic thesis is that transparency of information is power. This leads to a consumer revolution in various verticals, releasing things that were locked-up, especially around big financial decisions. He mentioned stockbroking, travel and real estate as three verticals that were forever altered by the arrival of the Web. He also mentioned three other companies he’s involved with in the following verticals: Legal (Avvo.com), Healthcare (Realself.com), and Employment (Glassdoor.com).

(picture: zillow.com)

He finished his presentation with a “Power to the people” manifesto that’s very telling in this user-generated content age:

• Consumer crave information and power
• If it can be known, it will be known by all (the web causes transparency)
• If it can be rated, it will be rated
• If it can be free, it will be free
• Professionals who are active players in the new vertical marketplaces win
• There can be no vertical marketplace without community
• The digital media model rules (local is giant)

The Kelsey Group (TKG) just released their 2008 Local Media trends. They believe 2008 will be a pivotal year for the global Yellow Pages industry. Here are the highlights:

• Print local media: TKG wonders if the directory business will continue to be as recession-proof as it used to be, as more ROI-driven online local ad products are launched. For large US urban areas, they also talk about the creation of print opt-out plans, important market rescoping and the launching of new directory formats. They also expect higher cannibalization of traditional media sales, mostly from search engine click packages.

• Online local media: 2008 is the year where user-generated content becomes a critical aspect of consumers’ decision-making process. Merchants will be widely invited to join that conversation as well. In addition, auto and real estate verticals will continue to develop in the local search context, new devices will lead to new sources of searches and local search inventory will increase drastically.

• Sales: 2008 will continue to see the uphill struggle to build independent local sales channels.

• ROI/Performance-based products: this year, we will see the beginning of the untethering of print and online usage and more use of robust ad reporting. TKG thinks that 2008 is the year where the promise of pay-per-call gets realized as multi-channel management becomes a critical success factor.

• Verticalization: from a seller perspective, high ad spend categories will attract lots of sales competition from many different sources: SEO/SEM firms, newspapers, vertical sites, start-ups, etc. In national sales, we will see more ad localization.

• New products: Video, Mobile and Outdoor, with a mention that “video is where the immediate action is”.

You can find the Praized blog’s 2008 predictions here.

What it means: As a regular attendee of Kelsey Conferences, I am usually well aware of most of the local media trends but there are a couple of surprises in there for me. First, the creation of opt-out programs for print directories in some US markets. I did not realize the pressure was high on US publishers to create these mechanisms. The second one is Outdoor as a new product. I wasn’t aware that local media companies were looking actively to sell “outdoor” products. In my mind, it’s the kind of interesting opportunity that’s always discussed but is never “low-hanging fruit” enough to execute. Will be interesting to follow. I also like the call to disconnect print and online usage. TKG was the first organization to warn directory companies not to couple print and online value for too long (back in 2001-2002). What they’re saying is: there used to be a time where bundling print and online usage was useful to sell but online is now strong enough to sell on its own.

Are user reviews important in local search? Data from the latest Kelsey Group/comScore survey presented today by Brian Jurutka from comScore seems to indicate it is critical from a user point of view as 24% of online consumers have used an online review site prior to buying an offline service in the last 3 months.  In addition, more than 75% of those review-informed purchasers cited online reviews as influential in their purchase decision process.

 

Why are consumer reviews influential?

• They are seen as unbiased 3rd party feedback
• They are efficient
• They provide an opportunity for feedback

Who writes reviews?

• Broadband users, young professionals, 25-49. 46% of review users have contributed a review as well.

Why do consumers write reviews?

• Helps other consumers (62%)
• Gives me “consumer power” (44%)
• It’s a fun activity (33%)
• It helps me “get back” at a provider after experiencing poor service (24%)
• I was compensated to do it. (19%)

Other highlights:

• Better reviews drive higher revenues. Consumers were willing to pay 20% more for services that were rated 5 stars vs. 4 stars.
• In addition, a significant portion of people were not willing to purchase from a 1-star place.
• 97% believed the review was accurate post-sale.

Update: the official press release.

I love that slide coming from Chris Tolles‘ Web 2.0 Summit presentation. Tolles is the CEO of Topix, a well-known hyperlocal news aggregator. It clearly shows why Topix decided to allow user-generated content in their site back in April.

In it, he tries to extrapolate the number of daily local news stories coming out of traditional media outlets (newspapers, radio and local TV) and comes up with a grand total of 22,293. Given that there are about 43,000 zip codes in the US, this means every zip code gets 0.5 stories per day on average. Not much if you’re trying to build zip-code driven news aggregator. Smart move.

Continuing in the same vein as yesterday, eMarketer presents the results of a Deloitte survey that shows that 62% of US internet users read online reviews.

Other highlights:

• “Virtually all shoppers now find them credible” (99%)
• “More than eight in 10 (82 percent) say their purchase decisions have been directly influenced by the reviews, either influencing them to buy a different product than the one they had originally been thinking about purchasing or confirming the original purchase intention.”
• “While the percentages were slightly higher for the younger generations, all age groups are reading and acting on online reviews at significant rates.”
• “The reach of consumer reviews isn’t limited to the online world; seven in 10 (69 percent) consumers who read reviews share them with friends, family or colleagues, thus amplifying their impact.”
• “Deloitte conducted a separate study in August with Sterling Commerce and found that 42% of US online shoppers thought that featuring consumer reviews on Web sites increased consumer trust in the sites—and presumably the products therein.”

What it means: we’ve known for a while now that online word of mouth plays a major role in product/service buying decisions but I like the added data of age groups being all equally active and the fact that online reviews are “sneezed” back into the offline world. This really shows their importance.

(via Research Brief)

According to the Online Publishers Association, Internet users are spending nearly half their online time visiting content, a 37% increase in share of time from four years ago. The Internet Activity Index, conducted by Nielsen//NetRatings, shows that communications accounted for 46% of consumers’ time online in 2003. A dramatic shift has taken place since then, with consumers now spending 47% of their time with content and only 33% with communication.

The OPA found a number of other important factors behind the changes, including:

• A more accessible, and much faster, Internet is driving increased overall time spent online.
• The increased popularity of video is leading to more time being spent with online content.
• The improvement in search allows consumers to more easily and quickly find the exact content they are looking for, increasing the likelihood they will engage more deeply with that content.
• The Web simply offers far more content than it did even four years ago, increasing content’s share of time.
• The rise of instant messaging (IM) as a key communications tool has been a factor in communication’s reduction in share of time. IM is a more efficient communications vehicle than email.

What it means: for anyone who doubted the strength of the content tidal wave (professional and user-generated), these numbers leave no doubt. If you are traditional media, make sure your offline content is ready for the web and published there as well. Create also web-specific content and allow users to comment, tag and contribute additional content. And don’t forget that content can be accessed using non-traditional platforms: mobile, Nintendo Wii, etc.

AdWeek reports on a study called “State of the Media Democracy” that was released by Deloitte & Touche’s Technology, Media and Telecommunications practice.

Highlights from the study:

1) User-generated content

• 51% of all consumers are watching/reading personal content created by others; the number jumps to 71% for Millennials.

• 55% of Millennials and 42% of Xers read blogs, while 62% of Millennials and 41% of Xers watch YouTube or other video streaming sites.

• 40% of all consumers are creating their own entertainment, such as editing movies, music and photos. Millennials may be the majority of the creators at 56%, but Matures are also participating – 25% of them report creating their own entertainment.

2) Traditional Media

• 79% of all consumers discuss their favorite TV shows with friends, family and colleagues, compared with 38% that discuss favorite websites.

• 72% of all consumers enjoy reading print magazines, a proportion that’s consistent across the generations.

• 23% of all consumers expect to spend more time reading books this year. A slightly larger percentage expects to spend more time hanging out with family and friends.

3) Cell Phones

• 46% of Millennials embrace their cell phones as an entertainment device.

• 57% of all consumers text message on their cell phones compared with 84% of Millennials.

• 56% of all consumers take photos with their phones, including 37% of Matures.

4) Advertising Insights

• 76% of all consumers find Internet ads more intrusive than print ads, and 64% pay more attention to print ads than those online.

• 28% of all consumers would pay for online content to avoid seeing ads.

• While offline advertising is effective in driving web traffic, 84% of all consumers visit a website after finding it through a search engine and 82% do so because of a personal recommendation.

What it means: a couple of interesting insights for the Praized blog readers. First, younger generations love user-generated content and mobile access, which means a local/social mobile application could be a killer app. In addition, traditional media is far from dead. It’s just competing in a much more fragmented world.

As an interesting segue to my VoiceStar/Marchex blog post from last week, MediaPost offers an interview with Bill Day, their new Chief Media Officer in which he talks about the importance of local for Marchex. “Kaufman Brothers analyst Sameet Sinha questioned the company’s heavy investment in local search at this moment, after the announcement it would buy pay-per-call ad provider VoiceStar. It happened to be the first official day at work for new Chief Media Officer Bill Day, most recently at WhenU, but also a co-founder of About.com and one of the online pioneers of the ’80s at Prodigy. He was nothing but optimistic about the opportunity for local.”

Highlights:

Q: Why is the time right now for local? When we did it at About.com, it was too early. The interest area was the place to invest. Things have changed. First of all, many more people use the Internet. If you want to have a pro-sumer model, you need one that scales to be very comprehensive. Marchex is a leader. It already has thousands and thousands and thousands of sites. You also need a model that can get really really deep within those localities. I did a lot of diligence coming in and with the Yellow Pages advertisers now coming on, it suggests it really is a good time to invest in local. You have to invest to reap the rewards.

Q: What is the first thing you’ll do in your new job? The first thing is to focus on the continued rollout of our open list technology populating businesses down to the ZIP code level (editor’s note: e.g. 90210.com). I’m also talking to media companies in the local space. There’s a lot of business development I need to do to get the ball rolling.

Q: Who is doing local right? There are certainly sites that get parts of it right. I can’t point to one network that gets it right consistently. I don’t know anything countrywide. The sites that tend to do that are using very stale and automated generic content that is not good enough to get repeat visitation. I’ve looked at some of the WashingtonPost.com sites, what Sidewalk’s done for Digital Cities. We’re in a pretty open space for starting to do things that haven’t been done so far on the net–to truly create a broad, deep network of sites.

What it means: Marchex believes online revenue action in the future will happen on the local and hyperlocal front. They’ve acquired web real estate (local URLs) and local content. They have solid search engine optimization (SEO) expertise and they now want to introduce user-generated content. Using all of these tools, they’re building a large-scale local ad network. The only thing I would question is the quality of traffic coming from SEO, as not all clicks are born equal. Measuring ROI will become key when evaluating the quality of local search traffic but, as I believe a good chunk of the revenues in local will happen around pay-per-call in the next 5-10 years, the acquisition of VoiceStar makes complete sense strategically. That’s a great way to measure and prove local search ROI.

(via the Google Lat-Long Blog)

Google Maps has offered a collection of reviews assembled from some of the finest sources on the web for some time, but now we’re augmenting those with reviews from an even better source: you — and, we hope, millions of other opinionated Google users. Search for your favorite places and click on the “More Info” link. From there, click on “Write a Review” to start giving your two cents.

What it means: user reviews in a local search site environment are becoming more and more a must-have feature. You should be looking at it if you operate in that space. By the way, this new Google Maps feature means that they are slowly moving from a content aggregation strategy to a content creation strategy in their local search section.

In my daily work, I often use the expression “social media”. I’ve been asked to define it before but I always end up talking about user-generated content and reciprocal, two-way conversation between the user and the media. Wikipedia has a good definition but Joe Marchese from the Mediapost’s Online Spin adds more meat:

“Social media describes the online technologies and practices that people use to share opinions, insights, experiences, perspectives and media itself. Social media can take many different forms, including text, images, audio, and video. These sites typically use technologies such as blogs, message boards, podcasts, wikis, and vlogs to allow users to interact. A few prominent examples of social media applications are Wikipedia (reference), MySpace (social networking), Gather.com (social networking),YouTube (video sharing), Second Life (virtual reality), Digg (news sharing), Flickr (photo sharing) and Miniclip (game sharing).” (source: Wikipedia)

Marchese begins: “first I think one of the biggest myths regarding social media is that it equals user-generated content. (…) Second, there is nothing about social media that demands user creation. The “media” part of social media can be anything from professional content to home videos. Just because “America’s Funniest Home Videos” consisted of user-generated content certainly didn’t make it social media. Conversely, just because “Heroes” is professionally produced doesn’t mean that it can’t be social media.”

He continues: “the real difference between broadcast media and social media is not the media itself, but the system of discovery, distribution, consumption and conversation surrounding the media. (…) What many of us are defining as social media today are actually just technologies specifically architected to facilitate people’s natural tendencies to seek out, share and discuss media content. Think about it. How is MySpace social medium? I would certainly say that MySpace is the largest and most influential social media platform of our time, but it doesn’t create media (at least not for most of it). The media one finds on MySpace is a mix of professional, semi-professional and (I hate using the term) “user- generated” content, and that media is made social by the context of its distribution and its ability to create dialogue between people. ANY TYPE OF MEDIA CAN BE SOCIAL MEDIA — and eventually all media will be social media in the most literal definition. This will have serious implications for media companies and advertisers alike, so it is important that we are not dismissing social media as the user-generated portion of the Internet.”

What it means: so my quasi, minimalistic definition wasn’t too far off. I agree that social media is all about the conversation but I think that, as part of that conversation, there will be some “user-generated content” happening. I agree that all media can be social media. I would even say that all media will have to become social media. Consumers are getting used to contributing to the conversation and that’s not going away. BTW, I like his thoughts regarding America’s Funniest Home Videos.