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Google bets on location-based mobile coupons as linchpin for success

NEW YORK ? A Google executive at the Netbiscuits Partner Day said that his company?s mobile strategy is focused on location-based services, with local mobile advertising and mobile coupons particular points of emphasis.
It is a given that people want to get on the Internet not just on their desktop computer, but using their mobile devices, and everything we do is increasingly becoming connected to the Internet and becoming more interactive. Google?s business model is designed to thrive in just such an environment, and the company sees many opportunities for advertisers and publishers as well.

?Everyone is going to have a smartphone, a little computer in their pocket that is connected to the Web, which is super exciting,? said Mike Steib, director of emerging platforms at Google, Mountain View, CA. ?That changes the way we think about our consumer products and our advertising products?the way we talk to our advertisers and publishers about opportunities.

?People who switched to smartphones searched 50 times more than when they had a feature phone?a huge spike,? he said. ?We?re riding this huge next wave in query growth and mobile access to users?in some countries there are more people who access our services via mobile than the desktop.

?Device adoption is accelerating, and people have the expectation of new, flashy [mobile devices] that come in a cool box more than ever in the history of the world.?

As an example, he cited the number of days it took various Apple products to reach 1 million units sold: it took the iPod more than a year in 2001, the original iPhone 74 days in 2007, the iPad 28 days this year and the iPhone 4 just three days, also this year.

To demonstrate his point about the ubiquity of the Internet in our lives, Mr. Steib cited a quote from a famous science fiction writer:

?Cyberspace, not so long ago, was a specific elsewhere, one we visited periodically, peering into it from the familiar physical world. Now cyberspace has everted. Turned itself inside out. Colonized the physical.? - William Gibson, New York Times, Aug. 31, 2010.

Mobile opportunities
Given that level of importance of connected devices in people?s lives, savvy brands are going all-in when it comes to dedicating resources to ramp up their mobile strategy.

Google is telling advertisers that when it comes to mobile and other connected devices, one size does not fit all.

Mr. Steib said sites that do not work or render well on all phones are particular pet peeve.

?Brands say ?Well, we have an app??well, that?s not good enough,? Mr. Steib said. ?Consumers? expectation is they can go online with their phone and find your brand?sorry to inconvenience you, but we have multiple form factors, so we have to make different Web sites.

?Something like 56 percent of Fortune 500 hundred actually admitted that they don?t have a mobile strategy, so it?s way worse than that,? he said. ?The monetization strategy needs to be there.

?We need ads and we need subscription fees to make great mobile content available to users.?

Mobile search, mobile social, mobile local, mobile coupons
Google is getting into mobile local advertising in a big way, and it is betting on the growth of location-targeted mobile coupons for both nationwide retailers and local mom-and-pop shops.

The company is seeing impressive growth in users of location-based services.

?Location-based services are seeing huge growth,? Mr. Steib said. ?When we see that a third of the search queries on a mobile device are local in nature, but a smaller percentage of ads that are local in nature, that?s a recipe for an opportunity for advertisers and agencies.

?If there?s a place for higher ROI to be had, they tend to find it, so location-based advertising will continue to grow,? he said. ?What interests us a lot is not just more queries via mobile, but we know who you are and where you are.

?If you go to Google on your handset, we ask would you like to share your location for more relevant results, here?s what?s nearby now,? he said. ?If you search for something and the result is nearby, the click-through rates are astronomically higher.?

While Mr. Steib acknowledged that there are privacy concerns surrounding LBS, he says it is all about transparency and providing consumers with a clear way to opt-out if they so choose.

Perhaps the biggest opportunity for brands and retailers in the mobile space is mobile coupons.

Mobile-coupon spending is projected to reach $1 billion by 2011, per Google.

Mr. Steib said that mobile coupons drive business. To take mobile couponing to the next level, various players must agree on a technology that makes the redemption process work better, whether it is 2D bar codes or near field communication and RFID.

?The Holy Grail for local advertising is location-targeted coupons, and we?re building Google Offers to enable that, as well as click-to-call functionality for nearby businesses,? Mr. Steib said. ?If you have the ability to reach out to consumers nearby and pull them in using mobile, it?s great for consumers and advertisers.?

One challenge facing Google is the fact that it does not currently have many local listings or local businesses advertising on its platforms. However, it is a big priority for the company.

?Mass outreach to local businesses to tap the potential of local mobile advertising and offers at scale?that is the Holy Grail, and I don?t know any company that is doing it really well yet, but we?re making progress,? Mr. Steib said.

Mr. Steib at Nebiscuits Partner Day 2010 at the SoHo House in New York:

Final Take
Nicole Levin, mobile product manager for Elle, Woman?s Day and Elle Girl at Hachette Filipacchi Media, New York