A little over a year and a half ago I published a post proclaiming Google had legitimately cracked the local advertising market for the first time. It came on the back of Google releasing their iPhone application, which returned localised results to users based on GPS coordinates. At the time it seemed a revelation. However, 18 months is a long time on the web. And while the application remains incredibly useful to this day, it hasn't quite translated into the killer local advertising platform I thought it would (predominantly because Google kept it gated within the app rather than making it the default for mobile search… go figure). And while Google has remained stagnant on the matter (for once), others have marched straight past them, to the point that I'm beginning to wonder whether the vast majority of mobile advertising will bypass search completely.
Not surprisingly, Facebook Places was the catalyst for my change of heart. While Foursquare whet our appetite to the world of possibilities of mobile-driven local advertising, it lacked the scale to be a viable option for most businesses. Facebook has changed that in an instant with their new Places product, which has the potential to become the dominant local advertising platform if adoption reaches critical mass. There are a number of reasons Facebook has the potential to be a superior local advertising solution than Google:
The first element working in Facebook's favour is that every member has a distinct User ID. That ID enables Facebook to collate a history of each user's behaviour. Conversely, only a fraction of Google's user base take the time create a personal account. As check-in behaviour becomes more common, Facebook will build a history of personal movements for each user. This will include destinations (shopping centre, cinema, concert, restaurant etc) along with post/zip codes. This type of data will be incredibly appealing to advertisers wanting to target people within a tight geographic boundary (such as small business). I'd imagine that in time advertiser's will be able to target Facebook users by both the type of places they frequent, as well as defined geographic regions (post codes/zip codes). Google's lack of location history for each user will mean this style of behavioural targeting simply isn't possible.
I must admit that I was skeptical that users would ever connect with brands in Facebook when branded pages were first launched. But boy was I wrong. They are now a key fabric of the network, with brand affiliations almost serving as a social statement/stamp. I love this brand! As with User IDs, Google simply can't mimic this feature. The role of the search engine is to help users discover brands. End of story. At that point, the search engine's job is done. Facebook on the other hand, facilitates an ongoing engagement between the brand and user. Google will never do that.
The natural evolution of Facebook Places would seem to be to allow brands to create micro communities for each individual outlet. Users will be able match themselves to a specific branded outlet/store. Which of course opens the door for the greatest opportunity of all… localised push notifications.
I strongly suspect Facebook will implement a permission based model for their location driven advertising product. Users will 'Like' specific stores, thereby enabling the store to deliver push notifications/offers to a user's handset. The push notifications may or may not be triggered by check-in behaviour. In the longer-term, I doubt they will be. Indeed, Shopkick is already pioneering a permission based model that utilises iPhone sensors rather than check-ins to trigger push notifications.
Google has no such mechanism for proactive message delivery from third party brands, as it has no sense of brand affinities. Instead, it has to rely upon a user conducting a mobile search before it can serve localised ads via the iPhone. Once again this limits Google's local advertising capabilities.
The outlook for Google
So does the emergence of Facebook Places mark the end for Google's local advertising ambitions? Hardly. There is still an incredibly lucrative mobile search market growing with strong local advertising opportunities. Google will be a major player. But its role will be limited. Google will help people discover local brands. Which has proven to be a pretty handy business model for their standard search engine.
But I daresay Facebook is also developing its own killer business model, built upon monetisation of localised push notifications!