Both services are out to create a landing page for every local business in the world.
“This event was off the charts”
Gary Vaynerchuk was so impressed with TNW Conference 2016 he paused mid-talk to applaud us.
Both services allow local merchants to “claim” their pages, giving the merchant some editorial control over content on the page.
And both services no doubt expect to grab a chunk of what is projected to be a $32B digital, local advertising market by 2013 by claiming the middleman position between the merchant and the end user.
But where the two services break from each other – and in a non-trivial way – is in their respective distribution strategies.
And this is where things start to get interesting.
Search vs. Social
Whichever service is able to attract the most consumers will likely attract the most local merchant ad dollars. The merchants will follow the users.
Let’s take a look at how consumers are exposed to merchant pages on Google Places and Facebook Places respectively.
On Google, it’s via the Google Search box. If I search for something with a geographic component, say “San Francisco Taquerias,” Google shows me a massive seven pack of their own Google Places results, before showing any organic results.
As queries with local intent are estimated to make up roughly 20% of all queries, and almost everybody clicks on one of the top three results, this aggressive placement of their own Places pages on top of the search results is no doubt driving massive traffic to merchant pages.
Some back of the envelope analysis tells me this:
6,500,000,000 total queries per month * 20% (local intent) * 90% (to seven pack) = 1.17B local merchant referrals per month.
Now, let’s look at Facebook Places.
Facebook users are exposed to Facebook Places pages via one of three ways; A) Search; B) When a friend’s checkin shows up in their newsfeed; or C) Via the Facebook Places feature on the Facebook iPhone app or touch.facebook.com.
Put another way, Facebook Places is a delivery engine for person to person local merchant recommendations. Every check in represents an opportunity for a local business to go rocketing through Facebook’s interconnected social graphs via comments and likes.
If this service takes off, it could result in an awful lot of exposure – via trusted sources – for local businesses.
While Facebook hasn’t yet shared specific numbers around adoption of the Facebook Features, we do know this: social networking is overtaking search in terms of usage in some markets.
The Value of a Click
From a local merchant’s perspective, not all referrals are created equal. In order from most valuable to least is:
– A first time customer who discovers your business and becomes a repeat customer
– A long time customer who is reminded of your business, and re-engages
– A person who is exposed to your business but never comes
– A freeloading customer who comes only for a loss leader deal, with no intention of coming back
Search traffic has proven to be highly actionable and highly valuable. If I am searching on Google for a “San Francisco Taquerias,” I am likely quite ready to go eat some tacos.
Social’s correlation with intention is less clear. If I am browsing my Facebook feed and see that my friend just want to El Farolito Taqueria, it is less likely that I am actively looking for a Taqueria recommendation. However, depending on the friend, it is possible that I might make a mental note to check the place out at some point.
Let’s take a deeper dive into some of the use cases around consumer behavior and local search.
The Use Cases
Here are some sample local search use cases from the consumer’s perspective along with our thoughts as to who has the edge as of today.
Any way you measure it, Google is pretty far ahead at the moment. Their venue pages are robust. Merchants can add coupons on a self serve basis, and users can read and write reviews. In terms of structured data lookup, it’s hard to imagine anyone will ever choose Facebook over Google. Google’s mobile apps do a nice job of providing “near me now” categories, whereas Facebook place just shows you a list of nearby venue titles.
But the wild card here is the lucrative discovery / recommendation use case. At the end of the day, this is what matters most to local merchants – finding first time customers, and turning them into lifetime repeat customers. And if Facebook can prove that local merchant recommendations delivered friend to friend via social check-in can beat search based research, they have a fighting chance to win the dominant share of local merchant ad dollars.
Social and Mobile are Rising Tides
When two companies are competing head to head with similar products and similar strategies – e.g. Foursquare vs Gowalla – whoever executes better will likely win.
But when two companies are betting on entirely different distribution channels… well, this would seem to portend larger industry ramifications.
Facebook has plenty of question marks ahead of it as it enters the local search market. Are people going to check in at all given privacy and social graph issues? Do friend to friend recommendations beat expert recommendations? Are check-ins worthy of showing up in the newsfeed or will they be considered just noise?
But we do know this. Traffic to social networking sites is growing more quickly than traffic to search engines. And mobile is emerging as a significant point of control.
Facebook owns social, and is doing a strong job with mobile. Google exerts influence over the fastest growing mobile operating system (Android), and also has one of the largest mobile app (Maps).
And what about Yelp? My personal opinion is that the Google / Yelp showdown that we’ve all been following recently may soon become a Google / Facebook showdown. And that whoever snags Yelp might have a big leg up (those new Facebook venue pages would look awfully strong with some Yelp reviews on them and would help them rank nicely in Google).
There are lots of moving parts at play in the face off between Google Places and Facebook Places. Some are feature specific, some are company specific, and some are occurring at a macro, industry level.
It will be fascinating to see how things play out.