THE DREAM IN ACTION

Most people know that Google’s precious search algorithm is a secret, sacred, thing that they’ve worked very hard to protect. In fact their behavior around that algorithm has been similar to Golum’s behavior towards his “precious” ring. You know, the one that will ‘rule them all’. This algorithm and others allow Google to provide very focused advertising based on your search terms.

In computing, an algorithm is an effective method for solving a problem using a finite sequence of instructions.

However, the way I see it, their dominance in providing web advertising using the “precious”, all machine, set of instruction won’t last forever. There are human powered systems that can adjust quickly for variables, change over time, and become increasingly “sharp” as they learn. Simply, they can learn better than just a computer. A great example of this type of human powered system is a NYC based startup Hunch. Effectively, they’ve created a system where they can collect an infinite number of decision trees, all generated by humans, and then predict future decisions based on passed decision sequences.

So, what am I getting at? Well, as you know I’ve been working closely in the local advertising space through my work with Foursquare and I can’t stop thinking about how large of an opportunity this is. If a bar or restaurant can advertise directly to the folks driving by as they’re deciding where to eat, that’s better than any billboard, radio spot, newspaper clip, full page magazine add, event sponsorship, Adsense ad in my Gmail or Google search, and I could go on… It’s simply the best possible advert you could get, as an advertiser or a consumer, unless I’m missing something. Here’s an example, when companies spend money on other ‘focused’ internet advertising they pay for say 100 impressions. This means that 100 people saw that ad, and the common click-through rate is about 1/100, even on the ‘focused’ ads. Now, what if you were able to directly reach potential customers who frequent your ‘type’ of establishment, fall within a very specific demographic, and only if they’re walking distance from your location!!! Right now you’re saying, “WTF are you serious…”, and I am.

With the blowing up of location based services like Foursquare, Loopt, Brightkite and a few others, this sort of data is readily available. People are using these services to share their location, their purchase preferences, their unfiltered thoughts about almost everything they do and businesses can learn A LOT from that. Now you see why all these nerds (me) get excited about data; because you can change the world with it. With this data you can turn industries upside down, and the ability to reach consumers in this intimate way is one of those opportunities.

It’s all a matter of who can reach the masses, who can create a product intuitive enough for “Joe the Plumber” to use. Google’s Adsense technology is fairly simple, but still local businesses don’t use it. The potential for human powered mobile, local, advertising is in the words of Austin Powers, “dead sexy”. My mouth is literally watering. I can’t wait to be a part of this movement.

Update: This post is going to be syndicated, and I made some additions/updates for that reason. 1/5/10

In a recent project, I’ve been trying to sign-up venues here in Chicago to be on Foursquare. It’s been a fun experiment in sales and a wake up call to the difficulties of door to door sales pitches. Below I’d like to share some of the findings of the experiment (in the last post) and some of the suggestions that I would make to the Foursquare founders all based on venue feedback. These changes may make those local business partnerships a bit easier and more valuable.

Ideas

1) Simplified measurement – venues don’t have time or resources to read through hundreds of tweets to see what people are thinking or wanting in real time. Maybe after the fact, that night or the next day, they could log in to review customer comments but a rating system may serve Foursquare well. For example, if in my Foursquare shout out that would eventually read:

Getting my marriage license. Now the government knows! (@ Daley Center in Chicago) http://bit.ly/4F696n

What if I really entered:

“Getting my marriage license. Now the government knows! 8“

As in, the experience was an 8/10. Foursquare could begin to have a ranking system for all of the experiences their ‘players’ have. This could be fun for the game players for comparing experiences with friends and getting really solid ranking of venues, and also this would create super valuable data for venues, giving them even more incentive to partner.

2) Tangible rewards, putting customers to work – what if venues could put customers to work for them? Would the game be fun enough and the incentives exciting enough for the customer to consciously bringing 10 people to a venue in order to receive a free round of drinks? Every so often Chipotle will call up someone in my office who just dropped off their business card and say, “bring 15 friends, you get free burritos today”. Foursquare could handle all of that type of outreach for venues. They could collect info on who’s coming in and who they’re bringing with them. The could measure the outreach potential for each person, targeting their best evangelists, and rewarding accordingly.

3) Just like EA, it’s in the game - Create game player incentives for signing up businesses on Foursquare. Because Foursquare has such a loyal group of users they have the ability to open source the recruitment of the businesses job to a special set (or all) of game players. Similar to the way that Foursquare has given certain users the ability to edit the venues, they could also give management rights to recruit venues. This could would increase the number of venues signed up exponentially.

Just like Wikipedia is successful solely because of the millions of people that edit content for free, Foursquare will be successful by using their community to curate it’s collected venue data.

In a recent project, I’ve been trying to sign-up venues here in Chicago to be on Foursquare. It’s been a fun experiment in sales and a wake up call to the difficulties of door to door sales pitches. Below I’d like to share some of the findings of the experiment and some of the suggestions that I would make to the Foursquare founders (in the next post) all based on venue feedback. These changes may make those local business partnerships a bit easier and more valuable. Also, note that I am not really a Foursquare sales rep, they are a 3 person startup and they don’t have sales reps, but if they did, here’s what that person would learn from bars & restaurants…

Realizations

1) It’s tough to get in front of the person that makes the decisions – Over and over I would get deferred to a manager that wasn’t able to make a decision on any kind of promotion. I quickly learned that I need to get the right person before I give my schpeel otherwise the time was usually a bust. However, sometimes I found it really fun to just explain the idea of Foursquare to normal employees. In one situation I found that sharing the idea with an employee lead to a glowing review of the product to the manager, which eventually really helped in that important conversion conversation.

2) Brick and mortar is still confused about how the web will help them – With the blowing up of Twitter and Facebook, the offline crowd is becoming more open to the idea that a web based solution could help them. However, it’s still very new. Even though you and I are “savvy” it doesn’t mean that the value of the internet is understood by all. This will definitely take some hand holding. In order to reach the local business masses there would need to be a ridiculously large sales force, which is why most businesses won’t be able to make the economics work. There has to be a better way to reach these businesses than the tradition cold call method. (proposed solution in the next post)

3) You’ve got to relate the future with the past – These business owners don’t want to try the new things. That’s why they started restaurant/bar businesses and not web businesses, but that doesn’t stop their entrepreneurialism from thriving, they are looking for ways to beat the competition! If you are going to make a case to them, you’ve got to relate what your trying to do with something they already see the value in. Maybe for a restaurant it’s Yelp, or maybe for a bar it’s the economics of a Monday night drink special. Either way, connecting with something they already understand and buy into is mission critical.

During my experience in the shoes of a Foursquare sales rep there were many lessons learned, these are some of the main ones. I’ve really enjoyed this project for a few reasons. I believe in the product. I don’t understand how somebody could take a sales job when they don’t truly buy into the product, it would be a lie the entire time, nightmare. Also, I love convincing people of the webs value. I do think that so many people have not yet taking full advantage of the web and I will always promote it’s use where possible. Yes I’m a nerd. Lastly, I love talking to bar/restaurant people. Their businesses are very basic and they aim to serve. Similar to the game Foursquare, bars aim to help people have a good time, and I’m into that.