Location - Hype springs eternal

John Battelle on the "Next Big Thing":

Today I was in a meeting with a number of consultants to a very large technology company. Their job: market research, essentially. They called to ask me my thoughts on the media and technology world, in particular as it might play out in the next five or so years. They were responsible for helping the Fortune 50 company navigate an increasingly complicated world.

.............

I've been a student of technology cycles for a couple of decades, and often times what's directly in front of you is, in fact, the next big thing.

So when I got this question: "What's the next big thing after social?" I didn't lose a beat in answering: "Location."

Now, many, many folks before me have been saying this for years. I'm in no way first. But I'm an early convert, in particular, as it relates to what I call the conversation economy. And the reason is simple: Once someone can declare where they are, they add extraordinary context to both search and social, and to their expectations of what a search or a social connection might yield. For an example, see The Gap Scenario.

In short, location is a key factor in the future of search, social, commerce, and media, among a lot of other things. And that's why the news today that Google's Marissa Mayer, long the VP of Search Products at Google, is taking over responsibilities for the location business, strikes me as a Big Deal.

That Google is re-allocating Marissa Mayer here is a sign of a hyper market, to be sure. It is a time for image, as with location there is still very little substance - generation 1 failed, generation 2 are resorting to ever gamier tricks to keep user interest. But to be very publicly Seen To Be Doing Something.....well, just look at the headlines generated today to start!

The holy grail of location is localised, personalised, highly valuable advertising (compared to the appallingly low rates that most social advertising gets)

Well, as readers of this blog will know, we think Location based service opportunities are overhyped (that has never stopped fools from being parted with their money, of course) for the following reasons:

1. Fundamentally, its a feature, not a stand-alone business. Location will be integrated into other things you do (cf Twitter). This means, apart from a few Location companies being bought at fairly low cost, we are not going to see large exits. The real money will be made by people like Google rolling it out into their large distribution channel.

2. Dreams of high advertising values are a chimera - the mass audience volumes aren't there, and the personalisation/understanding of intent is lacking unless there is a deep understanding of the rest of the customer dataset. This will be like Second Life for a few months as every Big Brand feels it has to be seen, and then it will fall away as they realise that you don't want to buy X every time you go near place Y. And the privacy safeguards required - certainly by EU law - will limit a lot of the data rapine that will be required hor high personalisation.

3. Most of the "location based" services that add a lot of value to the user do not lend themselves to advertising anyway, and also they tend to require other services to interact with them (see point 1 above) which dilutes/complicates/adds cost to the Ad value chain. Can you imagine if every time you wanted to read a map on your iPhone you got an Ad pre-roll? Or that you had to syndicate your personal data across 4 service providers every time you needed to know the nearest X joint, and they had to bump up the Ad rates to you to cover the cost of paying 4 separate people and managing the process?

In oher words a small number of small companies will sell at a nice little price, the big guys will build it in as a "stickiness must have" and it will be just another feature in the service mix. Location will be like email - a feature you must offer, but not something you can intrude on too much before people shy away from it. As to the Googleshuffle, whisper it who dares, but Google Search is in need of a major revamp that probably only a fresh head can bring, so that is probably another contributing factor.

As to what the Next Big Thing really is - well, thats obvious, you just look at where the money is* - it's Web TV 2.0. But more on that later......

*Bear in mind that Social Media is still a zero billion dollar industry - there is as yet no evidence that Facebook et al can turn a profit. In theory they can, but whether it is anything like what is required to justify their valuation requires you to believe some far fetched hypotheses, frankly. The only real money made to date has been by large companies paying hype-level prices for social media companies at the top of it's hype curve. Which, of course, explains the Rush for Location