Himmelstein on G’s Local Biz Referral Program

Guest columnist Marty Himmelstein is a local search expert who founded Long Hill Consulting. He was with Vicinity Corp. (acquired by Microsoft) and wrote one of the original “local search” patents before that term existed. The sentiments in the article are entirely his own. I have not contributed to or edited the piece.

Google’s recently announced Business Referral Program, where it pays individuals to submit information about local businesses, is important less for what it is than what it will be. It is a signpost not only of Google’s intent, but of their understanding of how the Internet will develop. For while Google doesn’t make trends, they do have a keen eye for discerning them. Their patient execution of a plan based on their reading of the road ahead is nowhere more apparent than in local search. These trends have been remarked upon before, and at least some of Google’s advantage is that while others watch Google, Google’s attention is straight ahead. These trends include:

  • Decentralized collection of business content, from the edges in The infrastructure that gathers blog posts from the far reaches of the web is as well-suited to aggregate content from businesses, wherever they are physically located. Teenagers create YouTube videos because they have free time. Businesses will create YouTube videos because of competitive necessity. Undoubtedly they’ll have teenagers create videos for them, melding free time with usefulness and profit, a prospect which should cause YP Publishers to reach for the smelling salts.The centralized collection of business information was an artifact of the organization of the telephone network. This was fine for YP Publishers but less than ideal for either businesses or consumers. By creating the communication channels that enable businesses to directly control their symbolic representations, the Internet has made the contrivance of centralized content collection unnecessary. In the not too distant future the idea that businesses are responsible for both their digital and physical storefronts will seem entirely unremarkable.
  • The importance of community and neighborhood to local search: The fundamental role of a community in local search is to establish an environment of trust so that users can rely on the information they obtain from the system. Businesses exist in a network of customers, suppliers, municipal agencies, local media, hobbyists, and others with either a professional or avocational interest in establishing the trustworthiness of local information. These community members can contribute unique perspectives to create a rich and accurate depiction of the businesses with which they are involved. The group targeted by Google’s new program, college-aged students who want to earn extra spending money, hardly comprise a community as described. But it is a start. One must assume the current program is a precursor to a more disciplined and organized initiative where Google works with organizations that have more substantial relationships of trust in the local community.

  • Rich and structured content: The program announcement said nothing about structured content. It didn’t have to. The information Google gathers is headed right for Google Base. The initial content Google is requesting is basic, but the sky is the limit for what is to come. For example, Google Base already supports a product type, and there are several ways Google could make it easy to associate information about products and the stores that carry them. And, YouTube as a local search interface sounds pretty intuitive.

  • Completeness is key: One of the fundamental tenets of local search is for it to be useful it must be complete – if there is a shop on Main Street it will be in the database. Completeness is necessary to gain the trust of the two most important local search constituencies – consumers and local businesses. Google states it simply: “Google wants local businesses to be easily discovered by people using our products. And we want their information to be accurate and complete.” Google has built its dominance by layering advertising on top of the best natural search results in the business. They will tenaciously adhere to the same philosophy in local search.

Some Google competitors might take comfort in the apparently haphazard and unfinished feel of various Google offerings. A more appropriate response would be alarm. Google’s fledgling projects are part of an encompassing architecture measured not in a year or two but five or more. (Consider that the results of a typical Internet Yellow Pages search have barely improved in the last ten years.) It is inevitable that the Internet will displace other mediums as the starting point of practically all local advertising – including advertising destined for print, television and radio. It will also take time for Google and others to demonstrate the value of local search in a way that makes sense to Small and Medium Businesses (SMBs), and other actors in the local search community. There’s still a lot of spadework to be done, and combined with the sheer size of the local search market, the extended adolescence of Google Base, Google Coop, the Business Referral Program, and other projects is closer to necessity than profligacy. The current value of the content in Google Base is of no consequence. Its function is to help Google build the next generation of Google Base, when content will matter.

Basic business content doesn’t belong in a walled garden. (Bill Burnham has a great series of posts on the problem with walled gardens, and on Google Base.) The ‘owners’ of business content are business proprietors themselves, and they can do what they wish with their information. They can provide it to Google, Yahoo, their local newspaper, whomever. Nor is Google Base is incompatible with open content. The Google Base data specification (based on RSS/Atom) could even serve as an open or de facto standard for specifying business content – there are just so many ways to express business information in XML. Much of the technology, in the form of RSS, is already in place to enable local search directories (not just Google) to aggregate content directly from businesses or proxies who create content on their behalf. (The college students who participate in the Business Referral Program are a simple form of proxies.)

The danger is that Google, aided by the inaction of the rest of the industry, patiently accumulates a data asset of basic business information. If Google makes it easy enough for SMBs to contribute their content, Google could have its walled garden, by default. It could be that by the time the bulk of SMBs understand the relevance of the web, Google will be their preemptive first and only choice for interacting with it. In this scenario, the criteria for success for the Referral Program is soberingly low. Google needs only enough early adopters to bring along the bulk of more conservative businesses.

The data providers who vigorously defend the current value of their business directories have the most to lose, because if business content remains in a walled garden, it won’t be theirs. If their sales channels are to have future value, it is not in building the next generation data asset, but in providing a migration path onto the Internet for their customers. The value is the relationship, not the data. (But the relationship is just a start, it guarantees nothing.)

Google will build a high quality directory of local business information. This directory and its integration with Google’s other services will give Google a competitive advantage in local search, but the fortress it builds won’t be impregnable. This is because Google’s unassailable strength in corpus-based search is not of primary importance in local search. Whereas the web continues to grow and is beyond the wherewithal of all but Google and few others to manage, local search models a small bit of the physical world, and the bit it models is modest in size and constrained in its rate of growth. Further, local search depends less on algorithmic richness and more on collaborative content creation and social computing, areas in which Google doesn’t have a preemptive advantage.

Any chance at a level playing field in local search disappears if the field isn’t built on open content. The easier it is for businesses and their designees to create, maintain and distribute their content, the harder it will be for any one player, whether Google, Yahoo or Microsoft, to construct a walled garden from that content. Google will be a prominent distribution point of local data, but still just one of many. But if there is going to be any game at all, its basic rule is if Google doesn’t get to build a walled garden, nobody does. Local content is not a defensible asset.

The predicament for Google’s competitors is that the cost of failure of the Business Referral Program for Google is low, but the cost of its success for others is high. There is virtually no scenario in which Google doesn’t play a key role in defining the local search ecosystem – Google Maps alone ensures that. Yet, Google’s ability to monetize local search doesn’t require they “own” business data and keep it behind a walled garden. A proprietary data asset constructed from commodity content is incompatible with the participatory nature of the web. Google isn’t going to waste its time doing what can’t be done. Further, Google could easily decide the effort to build a direct relationship with businesses is more of a burden than an opportunity. They could leave that job to others, opting rather to provide tools and incentives that ensure the road for content between businesses and Google is easy to traverse. On the other hand, Google wants business content as much as anybody else and they will do what is necessary to get it. If in the process of collecting business content they create barriers that make it harder for others to compete, so be it. Google will use the fecklessness of their competitors to their advantage – they will exploit opportunities to be opportunistic. Competitors inadvertently accommodate Google by their failure to provide an infrastructure to specify, collect, and share business content. The infrastructure won’t work if its intent is to be an alternative to the developing Google ecosystem. Rather, it is necessary to ensure that Google doesn’t get to make all the rules.

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9 Responses to “Himmelstein on G’s Local Biz Referral Program”

  1. The importance of community and neighborhood to local search « eNeighbors.com Blog Says:

    [...] of community and neighborhood to local search I wish I had said it first… (via Marty Himmelstein) The fundamental role of a community in local search is to establish an environment of trust so [...]

  2. kc lang Says:

    This is a great article. Very insightful and on points. Google is going after the “last mile” of local content with these human crawlers. Clever.

  3. Himmelstein on Google and Local Search at Ghost of Midnight Says:

    [...] Himmelstein writes today in Screenwerk about Google and local search. I recommend reading the whole piece. Himmelstein appears to be [...]

  4. Understanding Google Maps & Yahoo Local Search » Local Links of Interest Says:

    [...] Himmelstein on G’s Local Biz Referral Program – Guest columnist Marty Himmelstein at Greg Sterling’s blog has great overview of trends in local search and Google’s take on them. [...]

  5. Local - Two sides to every coin. - Tech Soapbox Says:

    [...] read Himmelstein on G’s Local Biz Referral Program with interest. I find Marty’s musings very thought-provoking and much more deeper than 99% of [...]

  6. Russell Perkins Says:

    I thought my recent post below on Google’s Business Referral Program might add to the conversation. I think I am in general agreement with Marty that this is significant and implications for commercial data publishers could be huge. My take is that Google is going to stumble badly in this initial compilation effort, but if they stick with it, no reason to think they won’t ultimately work out the kinks.

    Google Crosses the Rubicon
    It’s no secret that Google and its brethren have been feverishly working for several years now to crack the local business advertising market, historically the province of yellow pages publishers. However, despite endless resources and top programming talent, Google has apparently concluded that you can’t organize information that doesn’t exist. There’s just not enough information available online on most of these small, locally-focused businesses.

    Of course if you’ve got boundless self-confidence (and billions in the bank), no problem seems insurmountable. That’s the genesis of Google’s new “Local Business Referral Program.” While there’s a sales element to this program, the bottom line is that Google is beginning to compile a proprietary national database of local businesses.

    Google’s vision is to have a fleet of independent contractors running around the country, collecting information on local businesses and snapping pictures of them. Bounty: $10 per listing if the company verifies the collected data.

    Job requirement are minimal: love of the Internet, access to a digital camera, and ability to fill out a W-9 that won’t get kicked back by the feds. Forgive me for chuckling at the visual picture of the workforce this program is likely to attract.

    There’s some indication that Google expects this supremely qualified force to “talk up” the benefits of advertising with Google, but this seems secondary to what is clearly a major data compilation exercise.

    What particularly intrigues me is that Google does not appear to be assigning companies to its contractors to interview. If they should all decide to visit only pizza parlors and drug stores, that’s apparently okay to Google. Even more surprising is that Google won’t pay a contractor if some other contractor got to the company first. How many times will you have your work rejected before you give up in disgust? Similarly, after being hit up by multiple Google contractors for the same information, how many local businesses will conclude Google is not cutting edge, but out of control?

    Of course, those of us in the business know that gathering data is nothing compared to maintaining it. I presume that Google expects all these businesses to self-maintain their data using a handy web page. If only the information business was that easy.

    Though Google’s foray into the data business — at least in its early stage — seems a bit amateurish, it has now crossed the Rubicon. It has moved from organizing data to building proprietary databases, and seems willing to do so on a massive scale. While most of us have chosen to view Google as a “frenemy” to date, this is a profound move, perhaps more profound than even Google realizes.

  7. Mike Says:

    What particularly intrigues me is that Google does not appear to be assigning companies to its contractors to interview. If they should all decide to visit only pizza parlors and drug stores, that’s apparently okay to Google. Even more surprising is that Google won’t pay a contractor if some other contractor got to the company first. How many times will you have your work rejected before you give up in disgust? Similarly, after being hit up by multiple Google contractors for the same information, how many local businesses will conclude Google is not cutting edge, but out of control?

    I was accepted and have been participating in Google’s LBR program for a couple of weeks. There is a blogger who has posted screenshots of our acocunt page but unfortunately I can’t find it at the moment. Anyways, we have a “Find a Business” tab where we can put an intersection, zip code, etc. and on a map it will show us which business I have already been to, which are available and which have been visited by another LBR contractor. Hopefully, they won’t be adding anyone else near me so I can hit up the city, state, region, etc.

  8. Green Thumb » Guest Column: Google’s Local Biz Referral Program Says:

    [...] lcqixicqkg wrote an interesting post today onHere’s a quick excerptThe easier it is for businesses and their designees to create, maintain and distribute their content, the harder it will be for any one player, whether Google, Yahoo or Microsoft, to construct a walled garden from that content. … [...]

  9. Why We Still Don’t Have Good Local Business Content? « Screenwerk Says:

    [...] Unfortunately, the quality of local business content lags well behind the Internet’s technical capabilities to create, aggregate and distribute it. An important reason for this quality deficiency is that we have relied almost exclusively on the technology that enables the next generation of local search, while underestimating the need to create online representations of the real neighborhoods and relationships within which businesses exist. As I noted in a previous post: [...]

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