Ep 29: FTC takes big swing at FB, Survey: What SMBs really need, Can a Local food delivery co-op compete?

Part 1 Video Starts 00:13 -  FTC says Facebook Resorted to Illegal Buy-or-Bury Scheme to Crush Competition After Failed Attempts to Innovate

Part 2 Video- Starts 8:42 - Clients tell all: What small businesses need from marketing agencies today

Part 3 Video- Starts 18:01 - How to Start a Local Restaurant Delivery Service: An Interview with Clay Seaman of Omaha LoCo

Reference Articles:

1. FTC Alleges Facebook Resorted to Illegal Buy-or-Bury Scheme to Crush Competition After String of Failed Attempts to Innovate
2. 5 Ways to Take Your Small Business Marketing to the Next
3. Clients tell all: What small businesses need from marketing agencies today
4. How to Start a Local Restaurant Delivery Service: An Interview with Clay Seaman of Omaha LoCo

Transcript: EP 29

Greg: All right. Welcome everybody to episode 29 of the near memo. Um, do over addition because we had some technical trouble last time. And so, um, we're doing this again. Uh, I'm Greg Sterling. I'm here with David Mim. Mike Blumenthal has always, we talk about search social income. So top stories of the week, things that struck us and were interesting.

And we've got some interesting things to talk to you about today. Uh, Facebook and the FTC, um, an interesting call rail survey on small business and their attitudes toward digital marketing. And then of course, Mary Melisse wrote a great piece this week, um, on, uh, local foods. Local co-op and we'll be talking about that as well.

But first Mike, you had the, the, our lead story on, uh, Facebook and the FTC.

Mike: So Thursday afternoon, they released a press release and they announced that they had amended their complaint. That details how the monopolist Facebook survived, existential threats by illegally acquiring. Innovative competitors.

The headline is FTC alleges Facebook resorted to illegal by or bury scheme to crush competition after string of failed attempts to innovative innovate. And it was a very in your face, uh, assertive. Statement of Facebook's failings. Uh, this is in light of the court previously finding that they had not proven that Facebook was in fact a monopoly and they obviously you're going to go back and try to prevent, and they're contending both consumer and other business harm with this behavior by or Berry where Google, or excuse me, Facebook in their lack of innovation, uh, in 2000 tens was forced to buy.

Uh, WhatsApp and Instagram in order to maintain their sort of dominating lead in the social space, um, whether they're successful or not depends on whether, I guess the court agrees with how they define the monopoly. I know Greg that you read a little bit of the, of the filing. Maybe you could sort of parse for everybody.

How the FTC is defining the business space that they're operating. Do

Greg: I have to disclaim my comments by saying that I'm not an antitrust lawyer nor do I play one on TV. And, um, but, but you

David: did stay at a holiday Inn express

Greg: once I did. I don't know. I, I'm not getting that joke. What is the contract? An ad campaign from

David: holiday express.

Anyway, so that's fine.

Greg: Go ahead. Well, I hadn't seen the campaign, but, um, I was specifically looking at the complaint too, to see how they were handling YouTube. That was the sort of my specific purpose because YouTube, as we, as we wrote, um, this, uh, this Friday, you know, there's a, there was, uh, a report that sort of talked about time spent with social media and it shows there's.

Seven or eight networks and they get a lot of consumer time and it makes it look like the, uh, the space is pretty, pretty competitive from a certain point of view. YouTube thing I think is a, is a kind of an X, X factor X variable here, because you can define them as a social social network, or you can define them as a video site and the FTC and the complaint tries to define them as a video site.

Then to Facebook and Facebook will want to do the opposite and say, look, YouTube has this massive site. It has all this millions and millions of users. Um, you know, and it's, and it's, it's, we're competing with them. And so I think this is an issue for, for the court to grapple with and how the court comes down, may be impactful in terms of the, the deciding whether there are monopolies.

Um, and as David, do you pointed out that, you know, w we've got Pinterests, we've got tick-tock we've got in, well, Instagram is owned by Facebook, Tik TOK, Pinterest, Snapchat,

David: LinkedIn, Twitter. I mean, I think all of these have substantial installed user basis themselves. And, and I would argue that. You know, Tik TOK AR has evolved social media in a way that everyone else is now sort of playing catch up to with knockoff feature sets, but that there is still, there does still seem to be room for innovation in social media, um, in a way that I don't think that exists in search, uh, with respect to Google, there are plenty of other search engines that are, you know, almost as good as Google, but they're not.

They're not growing user bases at nearly the same rates that, uh, these sort of newer social entrants are. So I think it's, it's a little harder case for the FTC to make that Facebook is a monopoly in social media. Even if you don't include YouTube, uh, Um, I think that the argument would be a little bit easier with, with respect to Google and search.

Mike: That's true. You have a surgical argument though, right? Facebook has 2.9 billion monthly users globally. WhatsApp has 2.1 billion. Instagram has 1.1 billion. I mean, we're talking, you know, a billion here, a billion there as soon as add up to a lot of usage. So it's, it becomes very difficult to define what is monopoly.

David: There's a lot of users that are not, I mean, there's only, there's only four main oil companies. So they all have, they all have the same number of

Greg: users, essentially three wireless. Right. Well,

Mike: from where I sit, you know, those are problematic industries as well. Although, I mean, there's even an argument though, in some industries, particularly around utilities that you do have a monopoly because it's the most efficient way to deliver electricity.

You don't really only want one cable going in front of your house. You don't want three, so you'd need a monopoly to do that. So there is an argument for efficiency in society that relies on that, but I'm not sure there's a need in society. Uh, algorithmic driven interests suck like Facebook.

Greg: Well, I mean, w w what's interesting to me also is sort of the, the, um, the politics.

I mean, one of the points that you made earlier, Mike, uh, in a previous conversation was that the, the amended complaint comes down, uh, on party along party lines, three to two. Democratic FTC commissioners voting to go forward. And the Republican saying no, this, this, this whole antitrust area has been one where there's been.

It's one of the few areas where there's been some agreement between Democrats and Republicans about the need for regulation. Although the, their motivations are quite different. I wonder if Facebook had been more aggressive in managing diff disinformation on its CA on its own platform. You know, preventing all this sort of COVID disinformation, all the, the foreign, uh, sort of attempts to interfere with the election.

If they had done a better, good job, better job of content moderation. Would we be seeing some of this, um, you know, some of this today, I will never know, but I mean, it's an interesting thing to, to sort of speculate.

Mike: Yeah. And then the final thing is that the reason that the Republican, one of the Republicans descended was because these acquisitions have previously been reviewed by the FTC and approved.

And so for the FTC to go back and say, we made a mistake, seems like it's going to have a tough time in the quarter.

Greg: Yeah. I would agree with that. Although it is true that, um, courts themselves. Previous decisions and decide that the role was law was wrongly decided in the past. And so there is, you know, there is some, some precedent for somebody to look at the prior decision and say, that was a mistake in decision.

Now we want to make the right decision. But I agree that that's a, that's a pretty significant hurdle to overcome combined with everything else that we were talking about. Um, here.

Mike: Well, the FTC certainly came out with it. Sort of fists in front of their face and they seem like they're very, they're very anxious to see this move forward.

So we'll see what

Greg: happens. It's almost an ad hominem attack against Zuckerberg. You can't innovate. So you have to buy these other companies, you know, it's, it's got, there's a sort of weird quality of it that in my mind, you know,

Mike: and to think that Google stepped right into that lack of innovation and built Google plus.

Greg: Yeah, well, Google, Google is Google has, has bought tons of companies. Yes. Google has bought tens of companies themselves. I mean, a lot of their core products come out of acquisition.

Mike: So their motto isn't by, in Berry it's by or buried by Andy Berry. Yeah. Right. All right. All right. The

David: next segment on the next segment.

Exactly.

Okay.

Greg: . [00:00:00] Okay. So, um, there were a number of things that were interesting this week to me. Uh, one of which, uh, with I'm not going to talk about is the, is the, uh, the Facebook, um, workrooms metaverse virtual reality thing.

I think that that's worth, uh, some discussion at some point, but, um, not today, what I'm going to talk about instead. Was an interesting survey that called CallRail published pretty recently. I don't know if it's this week, but its recent survey, um, where they pulled 600 us small businesses and they asked them about a bunch of digital marketing questions.

But they were specifically getting at, who's doing your marketing. Is it, is it, is it somebody in house? Is it you, you know, dedicated employee in house versus you? Is it, is it an agency right? Uh, there were some pretty interesting findings. I mean, so much of it will come as no surprise, but some of it was, was worth talking about now, interestingly, um, only 14% of these folks were using any kind of external resource in an [00:00:59] agency or consultant.

Most of them were trying to either most of them either had an in-house dedicated person. Um, 36% and the rest of them were just trying to do marketing on their own spending about 20 hours a week, uh, doing that, what I found. W two things that were, but what's three things that were particularly interesting.

Um, only, only, um, I think it was only 49% of them had a weapon. Uh, it was, it was pretty close to half, but half of these respondent number is in 2007, right? Precisely, precisely. That was what was so striking. And the, and the, and these were not just tiny. These were not just, you know, solo, solo preneurs, or, or small firms.

These were, you know, some of these, they didn't give this the headcount segmentation, but some of these were 200 person businesses, but only half of them said that they had a website, which is kind of an incredible thing. Um, and, and, and really consistent with what you just said, David, that, that this is.

Pretty pretty standard, [00:01:58] you know, over the, over the last year. So suggest that this is never going to change. We're never going to get to 80%, 90% a website adoption. Now some of those people may be using alternative, uh, digital presences, you know, uh, Google my business. Um, Facebook, you know, or some social media site as a, as a web presence or

David: playing out.

For example, I see that happen a lot of times with, uh, you know, salon, someone who has their own salon or whatever might have have their entire presence be, uh, you know, they're they're booking. Uh,

Greg: and I think that that would, that would, if it were, if it were framed in that way, I think we would see a bigger number.

So, so I think the 50% number is, is interesting, but it's not totally reflective of what's going. Out in the world, but, but just a couple of quick other things. Um, uh, the majority, um, the, the number one marketing digital marketing method that was used with social. [00:02:57] And, um, you know, that was, that was in the, in the, um, the sixties.

I think that in terms of the percentage, I don't have the specific number in front of me, but that was the number one method for, for marketing online that people were using incredibly, only 15%, one, 5% were using local SEO or SEO, which, which, which I just find to be, uh, an astounding, astonishing number.

Well, I was going

Mike: to say that those two things are almost the same thing that reflects his tremendous misunderstanding about how to have visibility and Google's reliance almost existential need for businesses to have websites for them to do what they do, which is surface accurate information. And that those two numbers that only 15% of using SEO and only 50%.

Real websites just, just reflects this total misunderstanding about how people are found on the internet. And it also though is a, is a threat to Google. One asks, why wouldn't they, [00:03:56] when you claim your, your business and say, why wouldn't they just create the Google, my business website for you? Just.

Default setting so that they would at least have, I guess, cause they already have access to all that data. Maybe. I don't

Greg: know. I mean every, every, every survey has to be taken with a grain of salt, right? Any individual survey can't be seen as, as a, as a reflection of, of, of truth, but, but they're directional.

But the number, the fact that this number is so low, one, 5% is really astonishing. And what, what did, what it says to me is that people. Are not extrapolating from their own experience, right? Everybody's using Google as a search engine and to look up local information, but yet they're not translating that experience into their own understanding of how to market

Mike: Google has never been good though about communicating how much reliance they put on an independent website to rank.

And for visibility of your business, right? It's only, it's UN it's not known broadly in small businesses. That that's how works.

Greg: Yes. I think [00:04:55] that that's a key point is that they don't expose sort of the ha the, how of all of this. Um, the, the, the, the, the other thing that I would say about this survey that was really interesting is that, um, you know, a lot of, a lot of the small business aggregators website, web hosting platforms, and traditional media companies that have turned into agencies, equivalent of agents, You know, have tried over the years to, to deliver marketing services, to businesses, small businesses at scale, and what this survey indicated.

And I'll just read a couple of these points is that these businesses really just didn't want exclusive focus on, on leads and lead gen. Right. Um, that was sort of lower down the list. What they wanted was the top three things they wanted help with from an external provider, um, helping us improve customer service, recommending new technology to help grow our business, improving workflows between marketing and sales teams, sort of internal operational [00:05:54] improvements.

And, and the number four was helping us refine our value proposition, which is sort of a, you know, a sort of a, a broader brand and messaging, uh, you know, sort of a PR. Uh, traditional communications function. And it's only when you get below that, that you start to get into these, these traditional marketing needs.

And so there's a big gap between that wishlist. And what a lot of is what's being provided by a lot of these big sort of firms that are catering to small businesses from a digital marketing perspective

Mike: and a lot of small firms providing service. Yeah,

Greg: yeah, yep, yep.

David: Yeah. Was gonna say, I think it, it, it bodes well for our friend, uh, Aaron Waikiki, new business lead Ferno, uh, that helping, helping with customer service is, uh, you know, kind of.

What lead Fernos bread and butter, uh, could be, uh, for the agencies that adopted it as a solution. Um, so I think that that's kudos to Erin for sort of seeing, seeing this in the market, uh, [00:06:53] before, before these kinds of studies came out. And I think Mike, that the other two points about sort of, you know, recommending new technology and improving workflows, you and I have been talking about these exact topics for several years, whether it was our street fight column.

The cinder conference in Valencia, uh, you know, is just being able to identify technologies that play well with each other and are good long-term investments. Uh, I see as the key value of a, of a consulting firm, a digital consulting firm, and it's hard when you are a, you know, sort of horizontal media player, not to just sell what you're offering is, uh, well, I think it's, it's just.

Difficult business proposition, as opposed to really developing expertise in a domain and recommending the best fit, um, and being that sort of trusted advisor to an SMB, as opposed to just selling, you're selling your hammer for the nails.

Greg: There's an [00:07:52] inherent conflict of interest that you are pointing out between somebody who's essentially become a technology vendor or an aggregator of third-party technologies, you know, which are often exclusive.

Um, and, and being a trusted advisor, you know, everybody wants to position themselves as a trusted advisor, but you can't do that if you're just pushing your own solution to the market and people sort of smell that they get that. And there's a lot of distrust mystery. Of some of these companies that are just sort of coming at small businesses with sales prep position.

I think so.

Mike: I mean, I've dealt with a lot of agencies who gather up where we attempted to take this approach where they could use, gather up to help their businesses improve. That was the fundamental philosophy of Canberra. And most of them just said, how do we get more reviews? It's so it's, it's at the agencies and the owners of these agencies top to bottom, do not take what, you know, John Jane.

Preaches, which is a strategic view of the relationship with your [00:08:51] customer, which is. It's always a better position because it's hard to compete there. It's hard to, you're not going to lose somebody on price. You're going to lose somebody on service and it's a much better position to be, but hard for agencies who do not have a strategic view of the world to take that in their relationships with their customers

Greg: on that point about price.

I think it also in the survey, there was a mention that people were willing to pay more for these, these strategic advisory services that they would be willing to invest more money. But now let's, let's, let's move on to, um, do you, David and, um, uh, Mary Ellis wrote a really nice piece about local food delivery and you wanted to talk about that.

Yeah,

David: fantastic. Uh, interview with, uh, clay seaman of, I think it's called eat Loco, which is the Omaha. It's it's actually a co legitimately as a co-op of local Omaha restaurants who have teamed up to build their own delivery service, their own version of door dash or grub hub or caviar, you know, name the brand.

Um, and it was just a very [00:09:50] interesting, it was just a, it was a great interview. It was a really interesting, uh, sort of blow by blow of, you know, how the service came together. They looked at, uh, uh, sort of Midwestern neighbor in Iowa city. Uh, To use as a model for how they would, how they built this, this concept, the, uh, I think they got 40 restaurants to buy in for 2,500 bucks a piece to kind of get the thing off the ground.

And then, um, there, I believe plays that there are actually no dues, uh, which is a sort of a historic model of farmers' co-ops in Nebraska, which I think is, is kinda neat. Um, some really interesting, um, data points around how they're going to market. He said that the restaurants themselves. Pushing us in signage and in social media and anywhere they can to get their customers to use, uh, eat Loco is kind of their number one, you know, means of acquiring new customers.

Um, they do have, uh, you know, it's an ongoing problem. I think [00:10:49] just like it is for any business right now to hire, uh, at the sort of lower end. Yeah. The wage spectrum. So they're sort of putting out, you know, a driver driver ads everywhere they can. It's, it's kind of a classic, you know, sort of marketplace problem of like, how do you balance the consumer demand with your, with your deliveries, with your service providers?

Um, but I just saw as a really, really interesting interview. It's certainly, um, it gives me hope anyway, that there is a, a sort of small tech, uh, uh, counterpoint to some of these more predators. Uh, larger services. Um, I do it, but also to sort of segue back to, I think it was last week's near memo. It might've been two weeks ago.

Um, there is the problem of, you know, Google only working with players at scale and the default links for order online on a GMB profile point to door dash and grub hub and whatever the major players are. So it really, you know, these guys are, are definitely up against a little bit of a [00:11:48] competitive wall, but one hope.

You know, if there's one of these in Iowa city and Omaha, and maybe this can spread to Austin and Portland and San Diego, maybe there's enough scale with these sort of smaller providers that Google is sort of forced to open up a program to bring in their services into, into GMB. So, um, I just thought it was a really inspiring interview.

Uh, you know, seems like a really well-run organization and kudos to Miriam for doing such a great job of.

Mike: There was a reference in the article to leveraging the technology that Iowa city used with the hope that they could roll it out nationally so that they could use a single platform despite the co-op nature of the ownership on a per city basis, where you as somebody from Portland, traveling to rapid city, wherever Omaha could then use it or.

Use it in Portland as well. So I think their, their ambitions are national, but the impediment that Google puts in place because of their [00:12:47] need for scale, you know, would prevent them from becoming a choice. I mean, you can list them in your GMB as though the link, but it doesn't

David: get high, but it's not the blue order online or online

Greg: button, right?

Yeah. I mean, this, this also tests the sort of, you know, Affinity to buy local, to shop small, that that everybody says in surveys that they have, right? So there's, there's this sort of tension between that heart felt desire to support local business and what's right for the community and the sort of default mode, the Amazon impulse, which is to just go with what's easy.

What the, the well-worn path, that's the path of least resistance. You know, these guys really it's having the local restaurants promote, this is really, uh, uh, critical for them, but they have to, they have to somehow build some, a local brand that people know, you know, they can't rely on SEO or they can't rely on being [00:13:46] found.

They have to affirmatively build a brand. I think that everybody knows about it. All right. And

Mike: they also had the lucky, or I think was lucky that they got some PPP money to deliver food to the, under the government, to people that were in need sorta got them going. So gave him enough, a little bit extra money to build out their apps.

Now that they're really, now they're really rolling and it'd be interesting to stay in touch with it and see how it works out several years and whether it can achieve any scale across the states. And they could be in the top 50 markets.

Greg: This is part of a larger problem, not just with food delivery, you know, about, about supporting local business in an ethical way with technology, doing things that people have become accustomed to doing online.

You know, whether it's shopping. I mean, you know, um, uh, the, the I'm blanking on the name that the, um, April Underwood's. A company that's [00:14:45] trying to sort of e-commerce enable local business. You know, there's, there's a lot of these kinds of initiatives in pockets, but the fundamental challenge is just the, the, the gravitational power of these giant brands.

And the, and the lack of access to capital, you know, is, is a big, these are major obstacles for these companies, but it's, you know, hopefully there'll be some successes because, I mean, I think this is really what we need to counteract. These, these enormous, you know, the, the, the consolidation of power and these giant companies.

Right? Well, part

Mike: of it too, is the eraser of history from our memories. It's like, we don't remember what a Nebraska farm co-op ran. Like I w I experienced them when I joined my father in business in the early eighties, but that was the last of them. They've gone by the wayside. And it's an unfortunate sort of trend in society, uh, that I think speaks to every level of education.

And now. As well as attitude and well, and these, and

Greg: these, these [00:15:44] co-ops are not going to get the kind of VC investor investment. There's no 10 X return here, you know? Right.

Mike: So, and there's massive amounts of money in the VC and PE world. I mean, it's a whole, these are alternative banking systems with more capital than they absolutely know what to do with.

David: Well, we tried to sell on a hopeful

note,

Greg: but, uh, my, the, the, the F the fact that the fact that this business exists and that there, they seem to be making a go of it. That's a good

Mike: model. If they have a good model, leveraging the restaurants to do the marketing, I think that's great.

Greg: And the, and that it can be it's replicable, right.

I mean, and they can be supportive of one another because they represent certain defined geographic markets, and they're not competing with one another. So that's all, that's all hopeful. Yeah, absolutely. All right. There you go.

David: Thanks for listening to another NIR memo and we'll see you next week for episode 30.