Image via CrunchBase

There’s an interesting thread over at Mike Blumenthal’s blog on the effect of Facebook Places on the local reviews space.

My view is that reviews and updates will coexist, much as blogs and Twitter coexist. People who were less committed to reviews will migrate their activity to Facebook Places updates. But Places could lead toward the ultimate recommendation engine.

In the local space, there’s really only one review site that matters: Yelp. They’ve got a strong set of tools and an active and engaged community. New restaurants and bars, which are often of the most interest, will have a dozen reviews on Yelp a year before they even show up on many Yellow Pages sites.

There are three big challenges with Yelp:

• It’s been too successful. Many restaurants have hundreds of reviews. Although Yelp provides great tools for analyzing the data, it can still feel overwhelming. It also discourages participation from more casual users. In the early days of Yelp, I was an active reviewer. That’s tapered off substantially — what’s the marginal benefit of me writing the 426th review of a place?
• These aren’t my real friends. I don’t know how compatible their tastes are with mine. It also affects the propensity to write reviews. People are more likely to do something that helps their friends than something that helps a generic audience.
• Skewed demographics. Yelp primarily caters to a young, urban demographic. If you’re a mom in the suburbs, its value is more limited.

Facebook Places lowers the bar to participation and ties it into real-life social networks. Instead of writing out a long review, a few clicks is all it takes. Combine that with Facebook’s large user base on mobile devices — its monthly uniques on mobile devices is 4x Yelp’s monthly uniques on the Web — and we’ll see a tsunami of local data. (For more on importance of massive amounts of data, watch Google’s Peter Norvig’s talk.)

While each blip may not be as rich as the data in Yelp, you could build a recommendation engine to infer a lot from that data.

If I see that a place I am considering visiting is regularly frequented by my friends with families, I can infer that it is good for kids. Positive reviews can be inferred by friends going back to a place regularly. There are some friends who I have negative taste relationships with. If I know that they’re regulars somewhere, I know not to go there. Facebook can also make recommendations based on places I’ve visited and the overlaps with places my friends have visited. Facebook also has real demographic information which could be used to tailor recommendations.

Status updates in the social network also prompt discussions. Even if the original poster doesn’t write a review, it may be followed up by “hey, I was thinking of going there. what did you think of it?” Facebook could also close the loop by prompting people to add star ratings, Like or add comments a few days after a check in.

When it comes to restaurant reviews and recommendations, most people are looking for “good enough”. While you could spend hours reading every Yelp review of several restaurants and possibly get a better answer, a recommendation based on your friends’ activity is probably nearly as good. Facebook has done really well with good enough; Facebook Photos dominates online photo sharing, despite many functional weaknesses when compared with flickr.

I built a prototype of this when I was at AOL Search and even with a few users in the system, it worked really well.

More on: Facebook, local search, Yelp

See also:

• Facebook Places is at the beginning of a long road

Offering more deals makes sense for Groupon, for consumers and for businesses. It will lead to higher engagement among consumers, more revenue for Groupon and better results for businesses:

• Higher engagement. As the novelty of the daily deal wears off, email open rates will decline. In my own usage, I’ve found that many businesses featured are outside the area that I’m willing to travel. If I know that deals are more local and more relevant, I’ll be more likely to open the email.
• More revenue. Having multiple deals allows Groupon to capture revenue from more people because deals will be more relevant. The user data collected will also help with getting businesses on board — sales people will be able to say we have X thousand customers within a few miles of your business.
• Better results for businesses. One of the concerns that small businesses have with offering big deals is attracting only deal chasers. The ideal customer is someone who will convert into a regular and pay full price. Someone who is willing to drive 30 miles to save $10 will likely have a low or negative lifetime value.

Mason says the first cut of personalization will be dumb, using limited data such as ZIP code, gender and age. While location is important, it does come with a couple of caveats:

• Location is often directional. People living in Manhattan are much less likely to go to New Jersey for a deal than the reverse.
• Its importance varies by business. People will travel farther to go skydiving than for a restaurant or bakery.

I’m not as convinced on using gender, age or other factors to target deals. Many of the deals have wide appeal and part of the value of products like Groupon is their serendipity.

A sample daily deal from Living Social.

In recent months, we’ve seen daily deal sites like Groupon and Living Social grow like crazy. Groupon is valued at $1.35 billion. That’s more than 4x the valuation of the McClatchy Company, one of the country’s largest newspaper publishers. It also ekes out The New York Times Company. Others are scrambling to get into the business, including DealPop in Seattle and CrowdCut in Minneapolis. Yelp is also testing its own entry in Sacramento.

A while back, I wrote about why small businesses were reluctant to get online. So what changed?

Well, the daily deal providers addressed most of the challenges I laid out.

• No one was asking them to get online; now they are. Groupon, Living Social and others are rapidly building up local sales forces to approach small businesses.
• It’s a lot simpler. Bidding on keywords is beyond the experience level and time commitment most small businesses can afford. Putting together a special offer is much simpler and the daily deal sites are doing a lot of hand holding. Even Google has realized this, with simplified pricing for its Google Tags product aimed at small businesses.
• There’s no upfront commitment required. Unlike most advertising products, businesses don’t have to spend hundreds or thousands of dollars on an ad and pray that it works. Instead, they get paid for the deals sold before they’re actually redeemed.
• Results are evident and compelling. Businesses can clearly see how many people are buying their deals in real time. They can also see customers as they walk through the door with the coupons. It’s a lot more trackable than other forms of advertising.

On the consumer side, the daily deal sites have turned coupons from something that were looked down on to a fun, social thing. Friends who wouldn’t use coupons in the past are touting the great deals they’ve found online.

A big challenge for providers will be providing enough new businesses to keep the deals interesting. Many of the deals I see these days are too far to drive to; a metro area is too large a geography. As the novelty of the daily deal wears off, deals will have to be more targeted based on location to avoid becoming perceived as spam.

SFO is a hotbed of foursquare activity. Creative Commons image by Håkan Dahlström.

With the increasing use of mobile applications such as Yelp and foursquare, it’s becoming possible to pull ideas from thin air. Users of these apps can leave tips for others to find that are linked to a specific location.

In most places there aren’t enough tips yet to make filtering an issue. San Francisco International Airport, with more than 57,000 checkins on foursquare, is an exception. It offers a glimpse of what we can expect as these services become more popular. The airport is the perfect petri dish for tips: it serves a technically savvy audience and people often find themselves there with plenty of time on their hands.

The SFO tips page contains dozens of notes including places to eat, complaints, ground transportation, wifi and power availability. Mixed in to all of this are ads, other spam and random observations. Some examples:

have a corned beef sandwich at max’s if you’re flying southwest. the best! well, really good

When you enter short term parking do it as far to the right as you can (lvl 2) & then immediately head to lvl 1. There is always parking next to gate and that is the lvl that connects to the terminal

Free wifi at the Continental lounge in Terminal 1- be warned, it’s located outside Security

Smoking hot brunette woman at gate 20. Stop by and smile at her. She is so lovely!

Bart to Millbrae gets you within 1 block of an in n out burger. Great for 3+ hour layover!

Heading to wine country? Take a moment to stop by St. Supery in the heart of Napa on Hwy 29. Mention this to get a 2 for 1 tasting.

Sorting through the volume of tips can be overwhelming. As the volume increases, we’ll need ways to filter them. Among the ways to filter:

• Timeliness. Some of the tips, such as wifi at the Continental lounge, are evergreen. Others, like the smoking hot brunette are very timely. Tipsters should be able to flag their tips to self destruct. As I wrote earlier, being able to identify tips by timeliness would allow for new applications, such as sharing rides. (“Anyone want to split a cab to Moscone?”)
• Social network. Among the tips were tips from people I follow on Twitter, including Danny Sullivan and Adam Lasnik. Being able to surface these would increase relevance.
• Ads vs. not ads. Sometimes people want ads, especially if it can save them money.
• Keyword search.

Places like airports are especially complex because they’re really collections of places, sometimes with other groupings and physical restrictions. Being able to filter tips by terminal would also be useful. But then maybe that’s best left to GateGuru.

Here’s a screenshot from 2007:

Embedding location in a tweet the hard way in 2007

and today:

Embedding location in a tweet in 2010

In 2007, I used a third-party application from Where to include my location. Clicking on that link would take you to a map on Where’s site showing the address. (The link in the original post no longer works.)

With the launch of Twitter Places, the search is done within the Web browser (and soon in Twitter’s mobile applications). You can select where you are from a list of nearby places. Clicking on the place name brings up the map above and the option to view tweets about that place.

Although the difference between the two may seem subtle, they are significant:

• Because the place is metadata, it doesn’t count toward the 140 character limit.
• Place names are human readable, unlike addresses and latitude/longitude. Knowing the name of a place makes it much easier to find than just a street address, especially in dense metropolitan areas.
• Places are unique to a specific venue. Doing a pure location-based search would return tweets from surrounding businesses or businesses that have since disappeared.
• Integration in to the main Twitter experience means broad exposure and eventual standardization of place identifiers. That has been a longstanding challenge in the local space.

Twitter’s geo APIs have been available for several months and third parties like bing have created interesting applications like Twitter Maps. With the availability of places across the Twitter platform, we can expect to see more interesting applications including both real-time applications (ride sharing and ticket exchanges) and historical (restaurant reviews, past events).

Once Twitter allows owners to claim their Place and associate it with a Twitter account, we could see official tweets of announcements and offers incorporated into a Place’s search results.

When pictures are tagged to a Place (instead of a lat/long), we’ll have the ability to visually browse a venue in Twitter.

An iPad used in place of a cash register at Sightglass Coffee. Photo courtesy of Tony Conrad.

Most of the discussion around Apple’s iPad has been about what a great consumer device it is. It’s a book reader, movie player, newspaper, photo viewer, RSS reader and more.

But the iPad has a lot to offer businesses as well. Sightglass Coffee in San Francisco is using an iPad, with Square’s payment system as a point-of-sale system. A restaurant in Australia is using iPads in place of printed menus and wine lists. Patrons can drill down on items that interest them for more information. Mercedes Benz is using iPads to allow customers to start their credit application while still intoxicated by the new car smell. The Plaza hotel in NYC will soon use them for concierge services and room service ordering.

As companies like Twitter, Groupon, Living Social, foursquare and Yelp focus on the small business market, it’s easy to see the iPad becoming an essential tool for small businesses.

I cringe every time I go to a business with a Groupon and see the clerk pull out a binder and manually cross out the Groupon on the list. An iPad app would reduce the transaction time and provide the business key metrics such as how many redemptions are outstanding and how much people are spending beyond the Groupon value. It would also reduce mistakes and fraud.

Other possible applications:

• Reputation management with live feeds from Twitter and Yelp, with the ability to quickly respond to applications.
• Check in information from sites like foursquare to show who is visiting right now and keep track of frequent customers. An alert could appear when the mayor/duke/etc. checks in.
• Frequency programs to replace traditional punch cards.
• Real estate agents could use iPads to show off alternative properties and keep track of reactions from buyers.

iPads could also interact with mobile devices such as iPhones to receive payments.

Of course, all of these things can be done with a computer. But the iPad offers a number of advantages:

• It takes less space. All of this power takes less space than a computer monitor, much less a PC.
• It doesn’t create a barrier between you and the customer. The tablet feels more collaborative versus using a laptop.
• Fewer maintenance headaches due to viruses and malware.
• It shows innovation and forward thinking.

See also:

• Twitter and foursquare: the tipping point to getting local business online
• Why don’t local businesses use the Internet?

Bing's Twitter Maps show you what's going on

I’ve been playing with Bing’s Twitter Maps lately and it’s one of the better implementations of Twitter’s geo APIs that were introduced last fall. It shows tweets within the last 7 days plotted on the map. Google Maps recently introduced a similar feature, but it seems to only show items that are fed through Google Buzz (including tweets that people have configured to send to Buzz).

Some future applications of geo-enabled Tweets:

• Events. For last-minute party goers, a real time view of what’s going on around town, complete with pictures and real-time reactions.
• Ticket scalping. Rather than walk around for blocks talking to scalpers about what they have, glance at a list of tickets posted. The information transparency would result in a higher price to sellers and a lower price to buyers than what scalpers typically offer. (In my experience at baseball games, scalpers usually ask at least 3x what they paid.)
• Finding a place to go. When in new cities, it’s often hard to figure out where to go — what are the lively neighborhoods at night. By looking at a map of recent tweets, you could quickly discover where people are still awake.
• Read reviews from friends. Geo-enabled tweets filtered by those you follow would provide socially relevant recommendations.
• Offers from local businesses. These could be persistent or distressed inventory. Slow night? Tweet an offer to draw in customers.
• News. Twitter has long been used for user-generated breaking news. With geo-enabled tweets, breaking news could be aggregated by location in addition to hashtags. The biggest stories could be identified by an increase of tweets from a location (versus normal) and retweet frequency. News from media outlets could also be plotted.
• Construction and accident information. Avoid bottlenecks by seeing tweets from fellow drivers, DOTs and news sites.
• Trip sharing. Find others at the airport headed your way, cutting costs and reducing pollution.

And, of course, there’s friend finding, which is the most talked about use of geo-enabled tweets.

So far, the percentage of tweets I see with geo information is tiny (>1% of those I follow). But as more and more geotagged data is put into Twitter, the key will be applications providing the right tools to filter all of that data. At a minimum, we’ll need the ability to filter by time of tweet, people we’re following, hashtag and application (e.g. foursquare).

Unfortunately, bing’s Twitter Maps doesn’t seem to be available where real-time information would be most useful — on mobile devices.

More on: geotagging, social networking, Twitter

Businesses and landmarks are important because they make maps more in line with the way people think, instead of the way that computers operate. This change also means that businesses won’t have to resort to painting their rooftops to be easily identifiable.

There are two big challenges with what Google is doing:

• Names of businesses and landmarks change over time. The ballpark two blocks from my house has gone through three names following the telecom mergers (start watching at 2:20). Still, these new labels provide a good way to get oriented.
• Deciding which items help the user and which are just clutter. Google Maps shows the relatively obscure Powerset but leaves out Microsoft’s Silicon Valley campus. I haven’t been able to figure out a pattern in what Google decides what to show.

We’ve come a long way from the early days of the Web when maps consisted largely of roads and a clunky user interface. We’ve seen the addition of aerial imagery, building outlines, photos, public transit, Street View, neighborhoods, user-generated content and live traffic. Google has driven much of this innovation, although to be fair MapQuest had aerial imagery first and A9 had a version of street view early on.

There is still a lot of work to do to improve maps:

• College and corporate campuses. Campuses such as Google’s and Microsoft’s buildings have numbers, but these aren’t shown on the map. If you were meeting someone, they’d probably tell you to go to “Building 43″. My friend Adam at Google keeps a custom Google map to show where his building is. (Oddly, Microsoft’s Bing maps show building numbers for the Microsoft campus, but don’t let you search for them.) The same thing applies for airport terminals.
• Controlled-access facilities. Businesses in controlled-access facilities should be hidden by default — few people are going to park and go through security to eat at an airport restaurant. On the other hand, if I’m in the airport, I want to know what businesses are in my terminal.
• Handling nonstandard locations. Databases are organized around cities and states in the United States. This works for most places, but is problematic in areas that don’t follow the convention like Hawaii or Las Vegas. Hawaiians talks about islands, but the local databases don’t know the concept of an island. This is made worse by the fact that the same town name is used on multiple islands — there’s a Waimea on Kauai and Hawaii and a Kailua on Oahu and Hawaii. Local constructs such as “North Shore” and “South Shore” aren’t understood either. Navigating using local search on my recent trips to Hawaii was error filled.
  In Vegas, hotels are a primary navigation construct and many of those hotels have more shops and restaurants than do a lot of American towns.
  Given how popular these destinations are, I’m surprised this problem hasn’t been solved.
• Parking availability. In a big city it’s rare that you can drive up to your destination and park right in front; finding parking can easily add 15-20 minutes to your trip. Companies like Urban Mapping are already collecting this information. I had a book called Park It Here! that showed street parking restrictions for every block in Manhattan. I’d love to see that data online.

More on: google, maps, local search

Mount Rainier looks an awful lot like an office tower to me. That'll be one steep climb!

In reality it’s a 2 1/2 hour drive.

This error is the result of a fundamental challenge in how data is collected for online navigation and local search products: all of the major services use data that weren’t originally collected for navigation. The typical source is phone books listings, which were originally compiled by companies like InfoUSA to sell mailing lists. In this particular case, the national park likely has a business office in Downtown Seattle.

The data have a distinct bias: toward places with phone numbers. While you can get exact driving directions to a local ball bearing distributor, look for a park, landmark or trailhead and you’ll often get erroneous data or no results at all. Occasionally, you’ll luck out and there will be business names nearby that incorporate the place name.

Just for fun, try finding the Albert Einstein statue in Washington, DC using an online mapping service. (If you can’t find it, click on the image to see the answer.)

On Sunday, I was looking for Hippie Hill in Golden Gate Park. Yahoo! Maps struck out entirely. Mapquest delivered a bunch of unrelated results.

An answer lies in another Yahoo! property: flickr’s database of geotagged photos. Although flickr’s search tools aren’t optimized for local search, it’s content is a great data source. The first search result in Google Maps for Hippie Hill is spot on; it came from Google indexing flickr’s geodata. The commercial results on the same map (the red markers) are mostly garbage.

Flickr is just one tool. As more people adopt GPS-enabled phones like the iPhone, we’ll see more and more user generated data. Enabling mobile data collection is reason enough to build an iPhone app.

Developing countries have the potential to leapfrog the developed world in data quality. Google’s Map Maker allows anyone to populate data in countries without large commercial data providers. You can pull up a satellite view and trace roads. Zoom into buildings and add local businesses. Find a park and add in key features. Because the content is user generated, the places that people look for the most will be added first, as opposed to the local ball bearing distributor. Places with colloquial names will become findable.

User-generated content has its challenges, of course. In the initial stages, tools like Map Maker will attract the community organizers who are passionate about their neighborhoods. Once the data start getting even modest usage, spammers will attack. But many of the standard spam fighting techniques can be used to deter them.

OpenStreetMap and Wikimapia offer similar functionality. OpenStreetMap is focused on creating and editing roads; Wikimapia is focused on places of interest.

Google Map Maker’s user interface is more intuitive than OpenStreetMap and Wikimapia. Unfortunately, Google is being hypocritical in how it treats the data. While Google Maps combines data from other sources, such as indexing geodata from flickr,  it is keeping content generated by Map Maker users locked up. Users can’t even download the data they create.

More on: geotagging, local search, maps

A number of large companies, including Zappos, Comcast and jetBlue are already using Twitter to engage with their customers. As Twitter’s popularity grows, it will cease to be a tenable channel for customer service.

But for local businesses, it’ll be a great opportunity. Witness this exchange between Twitter developer Alex Payne and 21st Amendment Brewery.

Twitter exchange between Alex Payne and 21st Amendment brewery

Three of the big challenges in getting local business online are that it’s too expensive, too complicated and too hard to prove the return. A Twitter presence can address all three:

• It’s free.
• It’s easy. You don’t have to create a Web site to reach your customers. If you don’t have one, your Web presence can be your Twitter page. Not ideal, but better than nothing — at least it’ll get you into search engines. If you do have one, you can autoflow Twitter updates to your Web page making it easy to keep your Web presence fresh.
• It’s easier to prove return on investment. Twitter can improve both the “R” and the “I”. You can see who’s following your business, showing return. Because there is no cost and the effort is lower, the investment is lower.

There are a number of ways businesses can use Twitter:

• Specials of the day. “Soup of the day: tomato basil”
• Special events. “Windsor Cooley book signing Friday night” “Closed for private party”
• New products. “Transcontinental IPA on tap at the 21A”
• Problems. “Closed due to broken water pipe”
  

The immediacy of Twitter also offers a way to do real-time inventory management. Have an especially slow night and food going to waste? Send out a tweet with a special discount.

More on: Twitter