Interview: Greg Sterling on the Future of Local Search.

von Florian Treiß am 15.September 2014 in Interviews

Greg-Sterling„Local search is evolving into a kind of discovery, a search and discovery capability“, says Greg Sterling, who is a thought leader on how to connect the digital and physical worlds for ten years now. Meeting him in Berlin last week, we spoke to him on how retailers can connect their brick-and-mortar stores to digital services and on what will be the next big things in Location-based Marketing. Greg, who has just joined the Local Search Association as VP of Strategy and Insights, means that Beacons and other indoor location technologies will become quite important for retailers in the future: „I think that this is a profound development that will take years to mature.“ Speaking on wearables, Greg says: „I think notifications will be quite significant for wearables, but notifications that I’ve elected to receive and some of those will be purely content: tell me about this museum or whatever.“

Location Insider: The US is approximately two years ahead to Germany concerning digital trends. So what can we learn from you, concerning especially local search and location based marketing?

Greg Sterling: Google and location have been a big deal for a long time. People use Google maps and people search for things in the real world using Google and other apps or other sites. But the new stuff is all run mobile and the data that mobile can bring to users to personalize, to anticipate. We’re seeing an evolution of the search market in general – driven by mobile – from a kind of query in a box into something that takes in a much broader range of data, location, time of day, past behavior, other inputs in the case of Google Now, like calendar entries and e-mail, and can present you with information. Local discovery idea or contextual information that may be relevant to your location at the time of day. Nearby things to do, things to see. So mobile is really bringing a lot of innovation. Because it connects the digital and physical worlds. There’s a lot more accurate data coming to the phone than a PC – where location was either self-reported as in a: query {Berlin: restaurants} or IP, reversed IP look-up, which can be inaccurate.

So, we’re seeing local search evolving into a kind of discovery, a search and discovery capability. And then there’s that kind of notion of a personal assistant, which emerged first with Siri. And now Google Now is very much following that path. To get you to use it more frequently, to provide answers to questions across a broad range of things, including location.

Location Insider: How important is location for mobile advertising?

Greg Sterling: In mobile advertising location is being used in very interesting ways to help identify audiences. There’s some privacy issues here that will be very contrary to German data protection policies, but at least in Northern America and maybe in other parts of Europe some of these things will happen. People’s behavior in the aggregate or as a group is profiled. And people are categorized: the business traveler, the auto shopper, the mother of children, the Japanese food lover, those kinds of things. And then people are segmented into audience buckets, or divided into different audiences. And location can also be used then to target them just in those terms of those audience categories or when they’re in close proximity to a car dealership. So, I want to buy an auto and I’m near a BMW dealer. So, if I’m the right population, they can show me an ad within 2km of a BMW dealer and maybe that will make it more likely that I come in.

And then there’s the whole analytics and attribution aspect to it. So we can watch people move into stores or into business locations and correlate that with different ad exposures and finally track the online to offline.

So those are all very interesting things that are happening with location as a kind of cookie. Online, you have this cookie which is a repository of information. Offline, you don’t, and in mobile you don’t have cookies. But location can perform that function as I’ve tried to describe. So those are very interesting things. Indoor location, very interesting for many reasons, which we can get into in depth. These are the things that I think are broader than search but involving location that are happening, that are quite interesting.

Location Insider: Do all retailers in the US already connect their brick and mortar stores to digital services?

Greg Sterling: No, far from that. I think that there are some advanced retailers that have done a good job at trying to build a so-called omni-channel experience, which is a kind-of platform-agnostic, allowing a consumer to shop anywhere and buy anywhere. And most retailers, still, don’t have a mobile friendly website. And their apps may be ineffectual or weak. So I think, it depends on the retailers we’re talking about, a few leaders, but most of the industry is still catching up to the consumer behavior. And many of them are testing out beacons or comparable indoor technology. It’s very hard to point anyone and say this is an example of a great market leader. Because they’re all in varied stages of the development and many of them are behind.

Location Insider: Can we talk about some national retailers like Macy’s or Best Buy? Please tell us a little more of what they are already doing, connecting their stores with online and mobile services.

Greg Sterling: Well, I think Macy’s is one of the ones that has been more progressive, meaning more experimental. They’re trying to do. You know, there are a number of retailers in the US that have for several years experimented with buy online – pick up in store. And that is one aspect of some of the things they’re doing. There are some retailers that are trying to expose their inventory online, so you can more easily find if things are in stock. I think mobile payments are going to come to retailers. And certainly there has been mobile payments introduced to varied degrees in apps. And Apple just introduced Apple Pay. So I think, mobile payment is coming and that will be a significant thing across retail. And retailers will have their own system that they will be trying to promote. Yeah, so, Macy’s, Best Buy to a degree, Walgreens, the pharmaceutical chain in the US, Kroger, the grocery store in the US, is another one that has done some interesting things, Safeway also.

There are some isolated examples that are more advanced. But most are still in very experimental stages. You know, they have a mobile site, many of them have an app but that’s where it ends really. There’s not a lot of innovation beyond that.

Location Insider: Do you think that local merchants will die when they don’t think digital? Or will they still survive?

Greg Sterling: I think many of them will still survive. Many local merchants really live by word of mouth, by personal recommendations. So if there’s a tradesman who gets a lot of good recommendations, they may not have a website but they will be ok. Somebody who has a strong digital presence is certainly going to do better if they are a good business. You know, all things can be equal but if you have a strong digital presence, than you are going to be in a better position. It’s all about discovery, so people do use the internet. So here is where it breaks down: You have no digital presence, you have no reviews, and then you have a problem unless the recommendation from someone in person is really strong. Because often you hear “Oh I need a painter, oh I need a dentist or something and then you go online to see what other people have said and then if there’s no evidence, there are no reviews there’s no presence whatsoever. That’s where the problem occurs. But many will be able to survive with a limited presence. A local restaurant which is very good doesn’t need a great digital presence to do ok. It’s better if you do, but it’s not always a hundred percent necessary. I would never counsel anyone not to invest in certain basic things but I don’t think it means the absolute end if you don’t have them.

Location Insider: Still, local merchants have small amounts of money to do something online. Are there some things that are not too expensive, that they can do?

Greg Sterling:: They need to set up a page on Facebook if they have not already, many of them already have. They can share information there that has mixed benefit, but it is important to have a presence there. They can encourage their customers to write reviews. Although that carries some challenges, with Yelp, for example. But they can encourage their customers to write reviews and that will help them. They can put their listings information in certain key sites, claim their profiles. Make sure that their contact details and their address and so on are correct, that’s all free. And they can blog, if they have time, which is also free. They need a basic website and a basic mobile site. But many of these things can be done for free. It’s just a question of time. And they don’t have to spend lots of money on experts or paid advertising. They don’t get as much polishes of sophistication if they do it themselves. But it is possible to do a fair amount yourself without paying money.

Location Insider: How big is local shopping information in the US already? Is it just a minor topic?

Greg Sterling: No it’s a major one. See that’s one of the statements I make to people. Often they underestimate the significance or the size of the local market, because they will think exclusively in terms of local service businesses, like the yellow pages advertisers, or quite narrowly, in terms of search only. But if you think about shopping, in general, people buying things for their homes, cars, services. All of these things are influenced by the internet to varying degrees. The majority will do some sort of research if something is above a certain cost threshold. You know, below, some number, you don’t have, to but if there’s any thought or deliberation or consideration about it, people will do that research on mobiles or on a PC. They show up in a store and often look in the store, to check out prices or get product review information.

So, in the US at least, and this is probably true from a consumer behavioral standpoint in Germany and in Europe, people do lots of research and the amount of money then, that is spend, in physical stores, restaurants, businesses, that has been impacted by that is, in the US, trillions of Dollars. Probably hundreds of millions, if not billions, of Euros in Germany and in Europe by the same token. It’s just not been visible to people, because you couldn’t track that activity until mobiles came along. And now, you can start to see that happening. I do a look-up for a restaurant, I go into the restaurant. I look at car brands, I go to the auto dealer, take a test drive and eventually, perhaps, purchase a vehicle.

Location Insider: Are there any other countries really ahead on location based marketing and local search, compared to the US?

Greg Sterling: Well, there’s a higher percentage of people in the UK than in the US that rely on their mobiles. I think that the penetration there is somewhat higher. In terms of the marketing piece other than search, the biggest part of mobile advertising is search still, on the display side. And that’s where people are still figuring it out. And I think location, originally was very crude: target the city, target an area within the city, or the province or state, or what have you. And that evolved into geo-fencing where you are narrowly targeting around a landmark or building, or stores. And now, it’s become something more sophisticated with the audience identification, behavioral targeting and retargeting.

So, location becomes or turns into audience, the brand gets interested. The brands and the big retailers become interested because you bring scale to that. And so, on the marketing side it’s really just. Of course we had location based targeting on the PC for years. But, in terms of mobile, it’s really just getting going and it will become a bigger and bigger part of it. But often location will be hidden in the background, because it’s about these audience definitions or targeting and retargeting without necessarily putting location in the ad copy itself.

Location Insider: Let’s have a small outlook on the future of location. What do you think about beacon technology? Is it really a milestone, or the missing link for retailers to connect to the consumers?

Greg Sterling: Beacons are the most well-known, or, well-understood of a series of technologies for indoor location. I think that this is a profound development that will take years to mature. But it does connect online and offline in a new way within a store, within the shopping mall or shopping district. And the ability of retailers to take advantage of that, not just to promote things but also to provide a better customer service experience: Where is the product? Show me the department etc.; personalization. I think it’s quite a profound development that will have lots of implications. I will encourage retailers to test it out right now and figure out what you can do with it. So then later they can refine that and improve upon that. And there’s an analytics component to it: what are people doing in the store? Who is coming into the store? As well as a consumer-facing side of it. Again we have some very significant privacy issues that have to be addressed. But I think it’s quite a profound development for the market.

Location Insider: With connected cars, smartwatches and wearables showing up, what will be the next thing in location based marketing?

Greg Sterling: Well, I think it remains to be seen with the wearables, watches, wrist bands and other wearables, earpieces, whatever shows up. Remains to be seen what kind of content gets developed for those. And what kinds of user experiences are established. I think that it’s very speculative at the moment. And so it’s hard for me to know which business models.

I think notifications will be quite significant for wearables, but notifications that I’ve elected to receive and some of those will be purely content: tell me about this museum or whatever. And some of them will be promotional but that I’ve affirmatively opted in to receive. I think that wearables is the most interesting next interesting category. Connected cars are very interesting, because, the car becomes a hotspot, or you can do all sorts of things in the car. But I think that experience is not so different from what we get on the smartphone. You know, it is just translated onto the screen with voice control, or touch control. So it’s just a different screen but I think wearables is a different form factor.

I also think that augmented or virtual reality is quite interesting. The Oculus Rift goggles and there are some other virtual reality technologies that are being demonstrated in retail stores, actually. Where you can hold a tablet up and can see what furniture looks like in a room. Lowe’s, the home improvement retailer in Canada, has set one of these up. I don’t know how location will play out in a virtual reality world, certainly there will be representations of the real world. So in that sense we will have location, or fantasy worlds, but the place that will be prominent. The question is: Where I am right now? How does that play into these experiences? It’s very early to tell but there will be commercial applications of virtual reality.

Location Insider: One final question: You joined the Local Search Association a few weeks ago. What is your biggest challenge there?

Greg Sterling: Well, first, learning all the things that they’re doing. The Local Search Association is the former Yellow Pages Association, and like the Yellow Pages industry itself it’s trying to transform and serve a broader audience, change its business model a bit. So it’s a mirror, or a micro-cosmos of the larger challenge of traditional media. Same thing is going on in Europe with the EADP (European Association of Directory and Database Publishers) and the EIDQ (Association for the Directory Information and related Search Industry), merging in and becoming SIINDA (Search & Information Industry Association).

My role there is to help them think through this process, to make suggestions about products and services, to do outreach and promote the services that the organization, which are, I was very pleased to see, are quite varied and rich and so depth. To help them develop a number of programs that they already have in some form, as well as do some editorial work. But it’s a creative opportunity because, as I said, like the industry it represents, it’s trying to change and evolve. It’s a time of peril and opportunity, both.

Location Insider: Thank you very much for the interview, Greg!

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