Local 1.0

I believe that this local search thing is quite early, and to keep up with the Jones’ I’ve started to refer to it as Local 1.0. Hear me out here, because I’m diving deep.

Web 1.0 was a passive web, about adoption and about moving to an interconnected digital medium, and Web 2.0 is very much about participation, creation, and transforming that interconnected digital medium into a platform. Just as Web 1.0 was static, passive, and largely about adoption, so is local, today, and as we’ve come to know it.

Resourceful Idiot does a pretty decent job of explaining the iterations of the Internet. He starts by saying:

“You can group each of the ‘Web x.x’ as a different movement when it comes to internet usage. Web 1.0 is the movement that took place during the beginning of the internet.”

Web 1.0 was about adoption, and about the movement of media, business, and commerce, to the digital medium that is the World Wide Web. Everyone was moving online to reach a larger audience and achieve better efficiencies. The first to move was big media like newspapers, news stations, music, magazines, etc. Everyday services and resources went online, like the post office, libraries, phone books, the dictionary, the encyclopedia, public transportation services, travel agencies, shipping services, mortgage companies, banks, day trading. Consumer services, business services, B2C, B2B, all of them were moving their data and content to the web. All of this content was mostly static, and that was fine.

Lots of everyday people got online, mostly through dial-up. They got online with their brand spanking new Macs and PCs, they tied up their home phone lines, they even planned their evenings around it. Most people, in mainstream America that is, went to chat rooms, which was about the coolest thing going at the time, before anyone ever heard of “social networking” or “social media.” The web was new and there was so much to be discovered and explored. People struggled with actually getting value though, in their daily lives. What was there to do on the web but conduct research and join chat rooms and maybe pirate some music? I’m oversimplifying it a bit, but to mainstream America, this was the reality.

If you were entrepreneurial and had an idea for a business, like lots of the companies I helped out in the mid-late 90s, meant that you also had to host your own website. To do that meant you had to have a domain name, you had to host the site, hire an HTML programmer, maybe even an application developer to do ASP, a database administrator if you wanted to have dynamic content, hire a graphic designer, even an IT person to make sure you’re site was hosted properly. Want your own server? Pay up and collocate it somewhere. Next thing you know, you’re into this website thing for a budget busting amount, with more overhead than you know how to pay for, and human resources coming out of the woodwork. Moving your business to the Internet seemed like a mad dash to the finish line – either you get there now or you’ll be lost in someone else’s dust and live to regret it. if you didn’t get online, you were going to die. It was simple. Move or die.

So, over time, lots of industries did this. Big companies, small companies, new companies, old companies. But not all companies went the way of the web. Small businesses, mom-and-pops, brick-and-mortars, Main Street USA businesses – they didn’t. They didn’t care and mostly couldn’t afford it. To a lot of them it was a flash-in-the-pan, a fad that would pass like so many other things over the years and decades that supposedly challenged their businesses. Construction on the street is about as bad as it gets, same with recessions. This Internet thing was a joke. And the return on their investments were practically negative too. They’d spend money on these websites, and for what? Just to have a web page? So what.

In those days there was a lot of hype about e-commerce, which was probably the most exciting and radical thing facing consumers and retail cash registers, depending on how you looked at it. E-Commerce was going to destroy mom-and-pops! It was to be the apocalypse of brick-and-mortars, of retail, of traditional commerce, and we’d all be transformed because of it.

Then, along came a company called Sidewalk.com. Started in 1997, Sidewalk was a city guide – the first of its kind. There were a couple of other city guides, notably Digital Cities, owned by AOL, but Sidewalk was different. Microsoft owned Sidewalk and quickly turned into a top destination site. The popular website featured businesses, events, and activities for your city, and they even showed some of the content in a neighborhood context. You could find lots of local businesses on Sidewalk.com too. I remember using Sidewalk regularly in the late 90s, looking for things to do in Boston, shows to catch, clubs to check out, and places to go on a date.

Some argued that Sidewalk was arrogant and attempting to put city weeklies out of business. Some thought that Sidewalk was a glorified database of listings. In 1999 Microsoft sold Sidewalk to Citysearch. In my opinion, this was a mistake. Apparently Microsoft CEO Steve Ballmer agrees, as he recently stated,

“Sidewalk was really aimed at what we now call local search” and “Sidewalk is one we should not have gotten out of.”

In my opinion, this was the opening salvo of the Local 1.0 era. Everything until that point was irrelevant. Sidewalk made the first real impact and most people who know the local space, know Sidewalk’s story.

The burst of the bubble was in March of 2000 and the American economy entered a recession shortly after. If small businesses ever bought into this whole Internet thing to begin with, they certainly weren’t going to make the plunge now. Too many fortunes had been lost as a result of the crash. Too much hype around e-commerce destroying traditional retail. Too much hype, too much nonsense, not enough value. Business went on as usual for these guys. “Just a fad,” they all told themselves, “just a flash in the pan.”

For the next couple of years no one challenged CitySearch in the city guide space. The phone companies weren’t making much progress either, but they had traffic and they had the brand recognition. Yellowpages.com, Superpages.com, Bigyellow.com, they all had a huge opportunity in front of them. So did the newspapers. They all had a massive opportunity right in front of them and based on branding and market share and clout alone, they should have been able to do make moves. But they didn’t. They all stayed still and thought that print was the medium to stick with. When they did make the right moves, and started selling online ads to small businesses, they mostly sold them as add-ons to their print advertising products, which was their primary revenue stream for previous several decades.

So here you are – Local 1.0 at full steam now. The IYPs had a market to grab, the newspapers had a market to grab, and Citysearch had their piece. Right? No one could stop get in their way! Wrong! Out of left field, like a bat outta hell, came this new company called Google.

Google had been around for a couple of years already but it mostly appealed to techies who were plugged-in. The growth of Google usage was nearly entirely organic, through word-of-mouth. It was simply a better search engine, and soon, even soccer moms were using it.

By 2003, everyone was Googling. If you weren’t using Google, than you really weren’t using the Internet properly. Google simply provided a better experience when you wanted to find information on the Internet. The relevance of the search results was paralleled and the user experience was uncluttered. Suddenly, Google.com was the de facto search engine and if you were using something else you were just behind the curve.

Google then started monetizing by way of Adsense, and almost everyone jumped on board. Now, Google wasn’t the first to do this. Many folks used Overture long before Google was a household name, but through Google’s popularity, and through some differences in their approach, Google simply kicked ass. And ya know what else, they even started to penetrate the SMB advertising market. This meant the war was on!

Google also gave birth to entire industries, or, if those industries were already there, they were now exploding. Notable examples of this are Search Engine Optimization and Search Engine Marketing is another. SEO and SEM businesses are sprouting up all the time, mainly to help business get exposure on Google, lots of them are helping SMBs. Those very same businesses who didn’t want to get online.

Here we are now, in 2004, and we start hearing “Web 2.0” being uttered from the lips of industry gurus, specifically Tim O’Reilly and John Battelle. Web 2.0 is still with us today, in late 2008, and it’s redefined our perceptions of what the Internet is, and shaped our ideas of what it could be. Web 2.0 has certain attributes that we could debate about, but mainly the core characteristics of Web 2.0 are participation, web based applications, community, lighter user interfaces, richer user experiences, openness in technology, and using the Internet as a platform, among other things. All of these things have lent themselves to new verticals on the Internet, like Social Networking (MySpace, Facebook), or the transition from static personal websites to blogs, or Software as a Service (SaaS, Salesforce.com), folksonomy oriented content and data sharing sites like Flickr and del.icio.us, and many more. But where are the small businesses? Everything in Web 1.0 and in Web 2.0 seemed to leave the small businesses behind. Why? Because they weren’t ready for an online identity, and they didn’t see a reason for it.

Like most people, you have some sort of online identity now. This is due mostly to broadband Internet access and affordable computers. The days of dial-up are behind us, and nearly everyone has a computer. To have a computer, to have broadband access, is to be a node on the Internet. Got an email? You’ve got an identity. Email is the linchpin of your online identity. Sign into any websites? You’re on the Internet. You’re only one small step away from joining a larger community, perhaps it’s MySpace, perhaps its Facebook, or Eons, or Jdate. You have an identity online, and more likely than not, you’re connecting with your friends there too, real world and virtual world friends.

All of this is appealing to some almost primal need that we all have as humans, and that’s a need to connect with each other in meaningful ways. It’s not enough for me to know that you exist, I want to know more about you, I want to learn about your attributes and characteristics that make you distinctly you. What makes Ben, Ben? Where are you? Where do you live? Where do you eat and hang out? All that is conducted locally. You life is conducted where you live, where you work, where you play. Your life is not conducted on the Internet. It’s conducted at home on the couch and at your kitchen table, but also at the subway station, at the local convenience store, at the library, at the farmers market, the bar, the ballpark, your cousin’s house. This is your life, your local life. Your local life is also, and greatly, where you spend your dollars, take your dry cleaning, find your plumber, and so much more.

So you have an online identity. Who’s left? Let’s see, users are online, and have been. Governments are online, newspapers, pornography – all online. More music is purchased online than any other method, thanks to iTunes. Even movies are online now, and if they’re not, you just add add a DVD to your Netflix queue. Enterprises, real estate companies, hospitals, libraries, everyone is online, well, that is, everyone except mom-and-pop.

What’s going on with mom-and-pop? The whole world is moving without them! Even the people who run these businesses, mom and pop, have online identities. You can find them on LinkedIn, on Facebook, but what about their businesses? What’s going on here?!

Here we are in late 2008, and Web 1.0 still feels like yesterday. Web 2.0 is moving fast, so fast that it’s simply leaving most people and most businesses in the dust. It’s hard to keep up with all this stuff unless your in the industry or just have a lot of spare time.

And SMBs are finally, finally starting to move online, but not on their own. They, like so many businesses in the 1990’s, need help, and they know that their customers use Google to find things. They, too, use Google to find things. They don’t have websites for their local businesses, yet 30% of all online searches (or ‘Googles’) are local searches – that is, consumers seeking local goods and services. I’ll say that again: 30% of all online searches are local searches!

This local search thing is very young. It’s still in its first iteration, not even close to a local 2.0. And just like with the early web companies, the early search engines, the early travel sites, there isn’t going to be just one winner. Citysearch has paved the way for folks like CitySquares. So have the traditional yellow pages, and the newspapers. This small business sector is always behind the curve, always behind the changes in the market. And for good reason.  But they’re moving now, they’re adopting the Internet because it makes sense for them now. Their customers are there, all of them. The extent of this today is limited to SEM (through various firms or direct with the search engines), their own website despite that only 55% of SMBs don’t have websites (and those that do are largely brochure sites, built long ago, and not SEO’d), and local search sites, city-guides, and directories.

Greg Sterling says it best,

“One of the most challenging aspects of local search is small business (SMB) advertiser acquisition. Everyone is aware, especially Google, Yahoo and Microsoft, that the US SMB market is where the advertiser volume is: almost 99% of US businesses qualify as small businesses (here defined as < 100 employees).

According to the US Small Business Administration (SBA), more than 20 million firms qualify under the definition above, with almost 19 million of those having no employees at all”

Greg even makes the argument that we’ll soon see the end of SMB websites. And I agree. As I’ve stated, these businesses can’t be bothered. The value does not match the expense. And ROI? Most SMBs don’t even know what that means.

Local search is so young, it’s Local 1.0. The shift to a Local 2.0 will only happen with the help, the encouragement, and the efforts of the IYPs, the city-guides, and local search players. No question the SMBs get it, no doubt about it, they’re just afraid. They understand the value of the Internet, and research is showing a dramatic shift in where they put their ad dollars. And it seems to be happening faster and faster, it’s really picking up  momentum. It only takes a few drips to start melting a glacier, and we’re seeing that drip become a steady stream now.

Circling back to my lengthy take on Web 1.0 and Web 2.0, what we saw then was adoption. That’s all it was about, adoption, and going digital, surfing the Internet, exploring the web. Web 2.0 is about engaging, participating, collaborating, building, platforms. Local 1.0 is no different, it’s about adoption, going digital, getting online in an affordable way, and in a way that provides value. Local 2.0 will be about engaging and participating, and openness, and most importantly, mobile, the next and most inherently natural medium for local.

This is local 1.0. The tectonic plates are moving, and opportunities are opening up. The plates are moving faster now, and giant masses of land are revealing themselves above sea level. CitySquares is positioned to plant our flag. Move or die!

Five years from now I hope to look back on this blog and some of the various entries I’ve made on local search, some of the speculating I’ve done, and some of the research that I point to, and that I subscribe to in RSS daily, and remind myself how wild local 1.0 was. How I was a part of it, how CitySquares was a part of it.

Local 1.0 is here and now.