NearbyNow: Part Deux

Last week we previewed local product and inventory search provider NearbyNow. The company has since announced a key partnership that will form the basis of its local search model going forward. Its partner is the Eastridge mall in San Jose, California. The company's "white-labeled" software platform will integrate inventory and product data within Eastridge's existing Web site. It will also power the search features of the touch-screen directory kiosks found throughout the mall, which will include comprehensive product and inventory data as well as contextual advertising. This represents the first of many mall partnerships the company hopes to form.

NearbyNow's angle here is interesting because one of the challenges of local online advertising is that a majority of commerce takes place offline in physical store locations. TKG research indicates that among purchases of more than US$500 in which the Internet is the starting point, more than 90 percent of transactions finish offline. Likewise, e-commerce represents only 2.5 percent of total U.S. retail spending, according to the U.S. Census Bureau (although there are signs of a shift toward more e-commerce spending, as noted earlier).

NearbyNow's model takes these important statistics to heart. Its software platform allows shopping mall retailers to put all their store and product information online in a searchable, interactive format in order to drive offline purchases. This includes store information, coupons and inventory data — the latter being an area of local search that will be increasingly influential in driving offline conversions, as noted yesterday.

"The intent to buy is very high at a mall, but we noticed that consumers weren't getting the information they were looking for," Scott Dunlap, chief executive officer of NearbyNow, told The Kelsey Group. "Who has Nike shoes? Who has jeans on sale? Who has new women's apparel?" This data previously was not aggregated for individual shopping malls, so NearbyNow began to take point-of-sale inventory feeds from shopping mall retailers — something those merchants have been enthusiastic to share, according to Dunlap.

The company offers a mapping tool to find stores and products, Internet coupons and a purchasing engine that allows consumers to reserve items online for in-store pickup. It also sells contextual advertising alongside product information, which has proved to be valuable advertising inventory because of the spatial relevance and intention to buy of consumers searching within a mall environment.

"What I'm noticing is that the rates that people are willing to pay for the clickthrough and the banner ads are really high because they know that this person is going to be at the mall," Dunlap said. "When a consumer creates a customized map or reserves a product, we know that the possibility of that person coming to the mall is very high. So as an advertiser, you know a person is specifically going to a store that might be next to you or carry something that is complementary to your product."

What About Mobile?
Mobile search applications are a hot topic right now, and NearbyNow realizes it can really unleash the potential of its search platform on mobile devices. Its next step, according to Dunlap, is in fact to develop mobile applications that will allow mall shoppers to more effectively search products, stores and specific inventory data. Anticipated GPS ubiquity in mobile devices will bring this a step further, offering the ability to serve targeted opt-in advertising to mall shoppers based on their precise locations.

There are hardware and privacy restrictions surrounding such location-based services, so it is unclear what these models will look like over the coming years for NearbyNow and many other companies in the local search space. But there will be powerful opportunities to reach mall shoppers with mobile search and advertising using GPS-enabled location-based services, and SMS messaging in the shorter term.

"For retailers it is an attractive medium because you are reaching people that are literally 100 feet from your store. So even though location-based services haven't really come around in the U.S., the numbers are building and it could be very exciting," Dunlap said. "There are also many ways to use text messaging to start a discourse with customers that isn't perceived as spam. It's all based on things they've requested, so by way of short code you can begin to do location-based advertising."