The Near Memo, Episode 11

Referenced Articles:

• Facebook: SMB Survey (PDF)
• Near Media Survey: Traveling and eating out are what Americans have been missing
• Substack: Introducing Substack Local, for a new generation of local news
  

Greg: Hey everybody. Welcome to Episode 11 of the Near Memo, where we talk about the intersection of search, social media and commerce and how it ties into local. And joining me as always are David Mihm and Mike Blumenthal. I'm Greg Sterling. And we've got another exciting discussion for you today. Starting with David.

David: I'm not sure which one of us was more surprised that we're on Episode 11, but we have made it this far.

Mike: And as a note for me, it's a highlight of my week to talk with you  guys.

Greg: That is great. And I also enjoy it very much. The highlight of my week is going to sleep on Friday night.

David: Ordinarily I'd say that's true…

Greg: but this is a, this is a very close number two.

David: Okay, very good. So we'll get right into the content. No more messing around. Greg, you highlighted this week, the Facebook small business survey that came out, I believe on Wednesday of this week. Basically a very representative cross section of small businesses in America.

I was surprised it's skewed actually more towards established businesses. Which   you wouldn't necessarily think of as being particularly active on Facebook,  relative to newer startups. but it looked at a very wide range of SMBs and there were a number of data points that were fascinating.

A couple of them that I wanted to highlight: 35% of businesses,  a year ago, reported zero sales online. That number,  in the last 30 days is all the way down to 13%. So that strikes me that, that means 22% of SMBs adopted some form of e-commerce over the last year.

I think it's another independent validation of that general range of SMBs that's adopted e-commerce in the last year. So I thought that was pretty fascinating.

One really fascinating stat:  women led businesses were five times as likely to say that the shift to online tools has helped them survive the pandemic.  Which strikes me that, as an SMB software product guy,  it could be that our best market is actually with women,  who are more likely to adopt these online tools and more likely to get value out of them that actually helps their business.

And then the third data point was sort of less encouraging, less positive:  that the pandemic is clearly hurting businesses, small businesses anyway,  who are more likely to be in minority communities,  at a higher level than in white communities.

I think, figure 10, I'm looking at it on the screen right now,  that the proportion of small businesses that closed or reported that sales fell by more than 50%  was substantially higher in majority minority neighborhoods than in non minority neighborhoods. That's unfortunate.

There's all a whole range of reasons: access to capital,  sophistication and access to online tool sets,.  Historically probably much harder to ramp up if you haven't had exposure, so all of the digital divide, things that you've talked about, Greg,  I think probably come into play there.

Greg: So in the larger community also, I mean, in some of those communities, there was more financial distress than in white communities. So that also plays into demand.

Mike: I would add just anecdotally: My wife and daughter, their friends that exited New York City were yoga instructors, dance instructors, physical training instructors. All those women were able to create their own brand online either with a yoga studio initially, but ultimately by themselves. So there's this unbundling going on of these very talented yoga trainers that my wife now religiously goes to two or three times a week remotely. She never had access to them before.

So it's, it's more than just keeping a business going. It's creating new opportunities and new types of businesses. And where the content is being unbundled from the delivery mechanism to some extent.

Greg: Well, this is a very important and interesting point. I'm going to come back to it, but I want to mention David's observation about the women, women owned businesses.

I mean, I think they also suffered. I think the report also talks about them suffering more, but their propensity or their ability to adopt E-commerce more than the male run businesses. That's very interesting, that's really interesting. And I don't think gender has really been a category that SAS companies have targeted. You know, when they do, when they talk about personas or whatever, it's typically not a female centric business, unless somehow the seller is selling a product for women or something. But just in general, in SAS it is not typical.

So that's pretty interesting. I mean it corresponds to, in a vague sort of way, to consumer purchase decision making, which is driven by women in many, many cases, especially big household purchases,  are very often driven by women.

So a really interesting observation there.  Mike, your point about the influencers; these individual employees, who then became arguably influencers, have created their own brand. I think that's, that's a really interesting phenomenon, also problematic because not everybody can succeed.

Right. I mean, I think it creates freedom for those that are good at it and have success and luck, but not everybody is capable of doing that, you know? And it ties into the SubStack issue that I'll be talking about.

But let's go to you first.

Mike: Sure. So this week, at Near Memo, we published some survey data that we generated,  titled: Traveling and eating out are what Americans have been missing most.

We created an open-ended survey and we surveyed 500 adults. And they could answer whatever they wanted to the question: When you feel safe and the economy opens up, what are three things you plan on doing?

And not surprisingly, the top three things were travel, dining (indoor dining) and visiting with friends and family.  Dining and travel were far ahead (in terms of frequency mentioned) of even the third one, [visiting friends and families].

But the way the survey was structured, which was open-ended, allowed them to express desires more than what they actually do. I am an example of this. I certainly have this deeply strong desire to visit friends and family, not just physically visit but give them hugs. And the first thing I did was went and got a haircut.

So obviously there's a difference in what people say they want to do and what they actually end up doing, but I think it's the indicator that there will be a rebound.

Now, likewise though, I'm doing a similar survey where they're grading on a scale of one to seven,  answering the question: Once we reach herd immunity how comfortable will you be doing everything you did before the pandemic?

And as I expected, on the order of 23, 24% of respondents, or even 30% are still not fully comfortable even after what is perceived to be the end. So there are going to be headwinds in many of these areas that people want to do.

There's still going to be some percentage of people that aren't going to feel comfortable going back and as such, even industries like restaurants, if the 10% of their client base doesn't return, even if there's a boom, it's still going to be a struggle, I guess is the way I take that.

Greg: Well, I think it illustrates the need for a kind of hybrid approach, right?

I mean, you need to maintain delivery. You need to maintain all the things you were doing. And then also prepare for people to come back,

Mike: , Which is going to be hard. It's like, you gotta be good at so many things, right? I think the skill set needed in a restaurant to do one thing is dramatically different than the other.

but certainly companies like Target and those guys are getting good at all three.  I agree.

David: There was also a that, Greg you covered this in one of our bullets as well in the semi daily newsletter,  that consumers intended, or not intended, actually did spend a huge chunk of their stimulus checks in March,  on some of these retail and other other services.

So I think that not only is their desire to do this in the future, but we're already seeing the rebound happening. So.

Greg: The thing that's really fascinating to me that is a complete paradox, (And this was also surfaced in the Facebook study where they did a companion consumer survey) is this buying more online, but more interested in local at the same time.

I mean, this seems to exist in almost two parallel universes. Because they've always been talked about as historical zero sum. You know, it's like I'm buying more online and buying less locally, but I've heard this again and again, and again, people are more and more focused on local, but they still are buying more online.

And it's just, it's kind of breaking my brain a little bit, you know?  I don't think it's attitude and behavior exactly. But I do think there's an interesting thing that we need to explore some more. All right.

And speaking of local, Substack local, which is a Substack, the subscription newsletter platform, announced this week that they were going to give a million dollars away to up to 30 people,  in the form of cash advances to create local news newsletters.

And they cited several examples on their platform that were apparently doing pretty well. And,  they're soliciting applications that run through the end of this month, essentially. And then they're going to have a panel of judges assess who to give the money to.

And then in addition to the money you get access to journalists, mentors, and,  health insurance and design services and some other stuff.

And they're going to take 85% of your money the first year, and then you get to keep most of it, any subscription revenue that you generate after that. So they're going to give you 15%. They'll keep 85%, but they'll give you up to a hundred thousand dollars.

I don't know how that math works out. Cause they're saying 30, a million divided by 30 is like 33,000, but they're going to give up to a hundred thousand to people. So I don't know how that's going to exactly work.

But nonetheless, the idea is: is this going to make any kind of dent or be reparative, restorative of local news?

And I think it's great that they're doing this. And I think it'll be interesting to see what comes out of it, but, you know, there've been so many efforts, Patch most notably,  in the past that have tried to crowdsource local news or create a local news model and it's been very unsuccessful because I just think structurally at this point, there's nothing to support local local news from an advertiser standpoint.

Mike: It's a similar problem to the women creating their own yoga studios online. How do you get visibility and expand beyond that? The people that know you, I think it'd be very difficult in most markets, even big markets to achieve the scale you need to succeed.

David: But unlike yoga, where your audience can be global, the audience for news about a small town in rural Oregon is really pretty limited to just that small town. So I think, to the extent that this succeeds it will probably do so in markets that are already reasonably well-served by alt newsweeklies or existing quasi, nonprofit,  journalism outlets.

I just don't see that the subscriber base is going to be high enough and a lot of smaller towns that are the true news deserts, which are creating all these problems for society as a result of the collapse of the newsroom.

Mike: Anecdotally in our town, which fits your description of a news desert, amongst other things here being a desert, all of the journalists that were at the local paper have long gone on to careers as government PR people or PR people in industry and are no longer in the field. So what remains is a very,  limited core of what was there before.

Greg: Well, this is, this is the challenge with everybody being an independent contractor, trying to be an influencer is that in some cases you need some sort of structure behind you and a foundation to do the kinds of things that you're not good at.

Not everybody's a born marketer, right? I mean, somebody may be a good writer, a great investigative journalist, but they're not necessarily going to be capable of doing the wide range of things that you need to do in order to succeed as an individual. You know: Making Tik TOK videos, soliciting and building email lists and all the stuff that people have to do these days.

It's, it's pretty challenging.

David: It is something where Substack could play an outsized role in. I don't know if they're gonna run ads to potential subscribers in a given market, and it could and should be in a position to do that if they really want to make a go of this,

Greg: ironically you're right.

That they become this sort of alternative to the publisher that maybe they can provide some of that infrastructure that the individual influencer doesn't have. But I mean, we're now sort of in this kind of influencer society. They've been poaching these big name journalists and paying them huge amounts of money and also niche celebrities to publish on Substack.

It's been sort of a semi controversial,  but people that can, are trying to maximize their value in the market and trade on their sort of existing celebrity and everybody else's. I think, you know, It's more going to be much more challenging for them if you're not a known commodity.

David: And, you know, I think there are fewer known commodities in smaller local news and all our local news markets. And there are fewer subscribers to those known commodities.

Greg: So I also pay for too many subscriptions. I was telling you guys beforehand; I've got like six straight streaming subscriptions.

I've got multiple; LA times, Washington Post, Wall Street Journal. Bloomberg,  New York Times. and there's subscription fatigue, you know, I mean, this is everybody's. We talked about re Reuters now moving to a subscription model. All these, all these journalistic publications are migrating away from the advertising model into subscriptions for obvious reasons, because they don't get a lot of great ad revenue.

And there's the consumer who can only pay for so many subscriptions and everybody else's Although I'm the one who proves that there's never too many subscriptions that you are willing to pay for. I don't even know how many subscriptions I'm paying for.

Mike: I think that would be that you would fall into the category of the exception that proves the rule.

Greg: Yeah, exactly. I just got to reign all this stuff in,  So any other things that you want to talk about before we say goodbye? I mean, there's a ton of interesting stuff going on, I'm sort of overwhelmed by all the news.

David: I thought that the story on CNBC this week about the spike in Google trends for when is the real estate market crash?

I mean, that's just fascinating the amount of consumer data that is coming out of Google Trends these days  that can be used for all sorts of purposes. I think it's a good reminder for all of us as marketers to start there with our market research.

Greg: Well and people have been saying that for years with search data, right?

Search data is predictive of future demand. It's also, you know, indicative of present thinking. I mean it's an evergreen source of feedback from the market. What was fascinating to me about that story is like, is that wishful thinking or is it predictive?

Is it that people are hoping the market is going to crash so they can buy a house? Or is it really, you know, reflective of a bubble that is in fact going to come to pass in the next, you know, six months or three months or whatever? T

All right. Now it's time to say goodbye.

David: Thank you for listening to another episode.

Be sure to sign up for the Streetfight Summit session,  with Greg and myself and Amanda, Jordan and Mike, I think you're also speaking,  in a different session.

Mike: Yep. Reputation. Reviews. And don't forget to sign up for the three times a week at nearmemo.co

Greg: And be sure to give us feedback. We're really taking it seriously. It's very, very, very helpful to us.

And once again, thanks for listening. Have a good, have a good whenever, you know, fill in the fill in the next day. Next couple of days after you've listened to this weekend, Thursday, Friday, afternoon, whatever it is. Okay. All right.