Part 1 Video start 0:13 - Walmart does drones deliveries ahead of Amazon while gig deliveries are failing
Part 2 Video start 7:18 - Google Marketing Live & I/O events point to AI, automation, ads & images as Google’s near future
Part 3 Video start 15:53 - Google testing new Local inventory ad unit that looks like the 3-pac
Transcript Ep 66:
Greg: Welcome back everybody to the Near Memo where David, Mike and I talk about the week's events in search social commerce with a local lens. And we're excited to be talking to you today ahead of our. Memorial day weekend. We don't know when you'll be listening to this, but if you're listening to it ahead of, or during the weekend, have a great weekend.
Well, if you're not anyway as always a lot of news and a bit of, a bit of a mishmash of this week, we're going to start with Mike, who's going to talk about Walmart's drone delivery program, which they announced would be rolling out to 4 million homes in six states this week.
Mike: So I just thought it was interesting this week also Gorilla, which is Europe's leading grocery delivery service announced laying off half their staff and putting half their markets on the block, UberEATS over the past three, four weeks, it's talked about gaining efficiencies to achieve better economic better unit economics when they scale. It's like, hello, they've only been at this for a few years. When are they going to?
Greg: 13 years? I think something like that.
Mike: So it just fascinating to me that these, that the model. (and Instacart having problems with the model) of charging businesses so much for this service is, seems to be failing all around us, not scaling.
Meanwhile, Walmart is moving full speed ahead. Six states. They're doing drone delivery in Arizona, Arkansas, Florida, Texas, Utah, Virginia, packages up to 10 pounds, packaged in the local store. And the drone operated by this company called DroneUp, who remotely controls. It brings it to your house, drops it in your, with a cable.
I don't know if you have to take it off or it just gets delivered. I have no idea. And they noted that one of the top delivery items was Hamburger Helper.
Greg: Strangely, but at least it's at least it's not tuna helper.
David: I heard it easier to deliver that then actual hamburger. So..
Mike: yes. Yes.
Greg: I don't think there's food. Food is not part of this, right?
Mike: Like a hundred thousand items, they said up to 10 pounds.
Greg: But perishable food is not delivered
Mike: I don't think perishable food is part of it, but I just thought it was interesting that one Walmart is moving ahead, it steams, at full pace with drones while these other guys are failing.
Two, Amazon, does their drone program seems to be sort of caught in limbo.
And. It's also interesting to me that Walmart is uniquely able to leverage their local store presence, which is close to 90% of Americans for this type of activity, which, and it seems like they've developed a way to do it that's cost-effective and sustainable. I just, the whole story just is interesting to me.
Greg: You couldn't do this from… I think the local store part is really critical because you couldn't fulfill this through warehouses. You couldn't do it from warehouses. You have to be in close enough proximity to the ultimate destination to make this work. And those network of stores is the enabler here.
Mike: And it's also interesting to me that Walmart's at the leading edge of this. Rolling it out. It seems to be fairly quickly
Greg: But you know, another interesting…
David: also, I mean, we don't typically think of rural and local as being you know, sort of the tip of the iceberg. And in this case, it actually only makes sense in rural markets or suburban markets, because if you try to deliver to a high rise, how do you get the item to the fifth floor of a condo building?
So it's just an interesting. Sort of somewhat counterintuitive sort of innovation and, and we just, don't see startups choosing a rural market or a series of rural markets for their initial stab at a product.
Greg: So I, I think that's a really interesting point and totally true.
I mean, this in many ways, flips sort of all kinds of things on its, on his head. I mean, interesting about the. The condition of these delivery businesses. Now, you know, I mean, just a year ago, the market was completely bullish on delivery. Everything was going to be delivered. And then this comes out of the 20, 20 e-commerce boom.
You know, people are gonna not go into stores as much, and everything will be ordered online. And what we've seen over the last several months is e-commerce is flat store foot traffic is. Store sales are up. And so there's a kind of rebalancing. That's not to say that people aren't doing delivery. But it's, but it's much less frequent than it was and the volumes are going down and the, and the model is just.
Kind of too expensive. I think for everybody, the human delivery model is too expensive. In most cases, not all, perhaps
David: interestingly at the end fuel costs right now. I mean, putting so much pressure on everybody.
Greg: So, right. That's an important point because I mean, I think Uber drivers in particular, Uber and Lyft drivers are really chafing under the cost of fuel.
And they're not, they're not making a living wage if they ever. Especially now. So in
Mike: a related story, I read last week that Amazon was partnering with large retailers to hold inventory for Amazon, that would be delivered same day by their flex drivers. So again, it's a model that pushes out to local retail.
Although in this case, third-party retail too, to warehouse the items and uses Amazon's ruthlessly efficient PR delivery system to work. One could envision Walmart leasing out space as well, and delivering items by drone, from a Walmart store. Right? So it's interesting that the whole quick delivery is going this way.
And I think it has to, in some ways it has to be fully automated or nearly fully automated and very cheap. And I don't see how Uber can do it.
Greg: Well, perhaps they cannot over the long term. Well, Mike, we don't want
David: you droning on any longer think it's time to shift Greg. I had to get that. And that was
Greg: all right.
Okay. Yeah. So I guess,
Mike: do I at least get credit for the joke?
Greg: Yes, Mike, that was Mike's joke delivered by…
David: the greenroom joke that I was not gonna let stay on the cutting room floor
Greg: powered by Mike Blumenthal jokes powered by Mike Blumenthal.
I kinda wanna mish mash up a couple of things, which is Google IO from last week, I guess, and Google marketing live, their ads events that happened this week and the two events together reflect some really interesting things, I think in terms of the development of search and how ads are playing into that and just sort of my high level observations.
You know, we saw it IO that search in Google's mind is a really a multimodal thing. You know, SEOs and people in digital marketing tend to think of searches, texts, queries in a search box with a SERP. And, you know, Google thinks about it much more expansively as a kind of information retrieval process with multiple inputs and multiple outputs.
And they were talking about, you know, search any way in anywhere. And that was voice tech. Or visual search using the camera and behind the scenes, they've, it's just evident that there's enormous sophistication, more and more sophistication, computer vision stuff. You've written about quite a bit.
Mike just natural language understanding is getting better and better and better. And and, and so machine learning and AI are there behind the scenes to, to understand queries and to some degree, make different kinds of search experiences possible like visual search. And then at, at at, at IO or excuse me at a Google marketing live, you know, they said, they said some, a couple of really interesting things about this.
They said Jerry Dischler who's the VP of ads said this is a quote we're transforming the syrup into an endless stream of visual ideas, which is something that is basically would, would have been unrecognizable or would have been completely unacceptable to Google. You know, Sergei, Brin and Larry Page and the early Googlers who were kind of committed to a kind of minimalist presentation of information.
And it also reflects how just this, the SERP is becoming this V just wildly variable thing. The other thing I wanted to say is that automation sort of analogous to the machine learning and AI on the query understanding side is becoming more and more the norm in their ad products. So what, what digital also said is that AI driven advertising is our future kind of exemplified by the performance max product, which goes across multiple Google channels.
And we'll, we'll in the future. Have an in-store optimization. A piece of it. So there's more and more of their ad products are being created dynamically or are automated in some passion. And the, the, the combination of all these things just really reflects how dramatically search has changed. I mean, I know it's been incremental, but I just thought, wow, the SERP itself is, is, it seems like change is accelerating.
What's going on behind the scenes is really kind of amazing in terms of the advancements and the, the way in which search has expanded is also really kind of powerful and amazing. I mean, I'm not trying to sound like a fan boy or anything. It just, it just, there there's, there's AI at the center of all of this and just it's they blown out what searches and the way in which they're expressing search results, right.
Mike: To put a number on it, you know, I've analyzed a number of mobile search results. And somewhere in the order of 30 to 36% of the space from ads to local, organic is occupied by visual images. I'm going to analyze on a pixel basis. And they're applying this AI to their understanding of those images, deep understanding of those images ever increasing.
They noted a couple of weeks ago that they had 4 trillion images in Google photos alone, and they were being uploaded 28 billion images and videos a week were being uploaded just in that product. And if you edit all the images. Merchant center, all the images they're scraping across the web, all the images they get from businesses and reviewers and consumers.
They have this image database that is got to be 10, 20 trillion images big, and they're using every one of those images to train the machine to better understand. And so this idea that it's visual is happening and, and it's largely happened. Over five years, I guess. Cause in 2017, when I looked the mobile results had virtually no images and now they're at 30 some percent.
Greg: Yeah. I mean, it's. Go ahead
David: on the automation note, for those of you who didn't hear our near memo, probably six episodes or so go at this point, the, you know, the implications for performance Macs are, are pretty dramatic for both agencies and brands, right? I mean, if there's less, if there are fewer levers for an agency to pull you know, I think agencies need to start thinking about where they can still add value in a largely automated ads ecosystem.
And the second thing would be, you know, if I'm a big brand with a million dollar budget, Running at least a 10% experiment with performance max, as opposed to having my agency spend that and seeing what the results are. I just think it's a pretty, pretty stark writing on the wall. That's been here for a few years.
Certainly since about 2017 or so. Based on Google's public statements that LSA events and the like or now locality events in the light. But I think we're now starting to see it and unlike Google IO, which I felt like was a lot of papers. I think that I think Google marketing live is we're.
We're really seeing actual products in the wild. And this is, this is a classic objects in mirror may be closer than they appear a moment for agencies.
Greg: I think that's a, that's a, it's an important point. I mean, I think there are still a lot of ways for agencies to add value because I think ultimately, you know, a lot of brands really want to outsource much of their marketing and their multiple channels.
It's not just search there's social, there's other kinds of channels that agencies can handle. But I think, I think that you're right. Brands might not tolerate agency margins. I don't, I don't know where agency margins stand percentage of media spend used to be the rule, but I think that there'll be more pressure on, on on margins as a result of this.
If you're not doing anything, why do you have to charge me, you know, additional, additional money?
Mike: David IO motivated me cope with a new phrase for. Google glasses they're called vapor wearables.
Greg: You're just really rolling with the humor. Yeah. Yeah. Well, it's just, you know, w what was also sort of striking is the way in which Google is really emphasizing retail and retail advertising. I mean, that is a huge area of commerce. You know, bill Reddy, who's the VP of commerce for them. Had a lot of really interesting things to say, but they're, they've, they've created kind of completely different user experiences on the SERP for, for shopping queries and their biggest growth driver in terms of ad revenue over the last, I don't know how many quarters has been retailers, right.
So they're really they've they they're trying to amp up. Competitive, you know, competitiveness with Amazon, but that's where a lot of their growth is. And so we're seeing SERPs that look really different. You know, they've, they've created bigger interactive ads. It's, it's, you know, it's very interesting to see, to see what's going on with the, with the syrup.
Mike: It's true with organic reasons too. They are bringing all of this merchant center information and scraped web information. Into the organic as well. So, and it's all around shopping. When you do an, any sort of high intent search on Google, that's around a product sneakers or jewelry, you'll see these new organic units may take up a huge percentage of space.
And they're typically tied into shopping either through images or through just a panel that ties out to eat at sea or someplace
Greg: else. Yeah. So in a, in a. So I'm now I'm going to segue into, into David here, but I want to say something that's sort of enables this to happen. So even as Google has built out, you know, more and more capabilities around search and is doing all these amazing things on the back end, there's kind of a general perception that search quality.
Where the search experiences has, is becoming degraded or more degraded or something, you know, it's, it's, it's not as good as it used to be. I think that that's a kind of anecdotal view that a lot of people in the industry have. And one of the reasons for that I think is because they're pushing more and more ads into the SERP and we saw sort of an interesting example of that last week.
So you wanted to talk about that.
David: Yeah. A Twitter user who I've not come across before sod Ali Khan tweeted to Barry Schwartz and to joy that he had discovered what he thought was a new ad unit which was the query was shoes or something, something related to shoes. And there was the sort of classic Google shop.
Carousel of ads at the top of the result and then a totally separate result for shoes near him. And then below that a set of pack listings with shoes highlighted in the photos. And so we're seeing this I think it sort of ties so many stories today that we've been talking about together. We have a increasingly visual search.
You hardly see any texts even two or three scrolls on a mobile device. You're seeing images of shoes with price information, and then images of shoes near you with price and location information, and then locations with images of what you're looking for. So there's just, no, you know, the, the 10 blue links element here is just totally absent from the first three or four scrolls on a mobile device for a very high.
Purchase intent, you know e-commerce type of query, which is just really, really interesting. The Greg, you and I are, we're talking in the, in the green room before we started recording that we had sort of seen these local inventory ads before more sort of blended into the typical Google shopping carousel.
But now at least in this test or not even a test, this. Particular new ad unit. It seems like they've actually been separated. And so the survey really is as, as I as I sort of sort of predicted, I guess, but not quite to the right level and not quite to the, I didn't, I didn't quite get the year.
Right. But that the surf is becoming ads and knowledge panels when you're talking about local results. And that's real. I mean, you just, we'll we'll link to this post. And the recap of this episode, but the, you just have to look at this syrup and say, where, where is my, you know, sort of classic. Text link, click the link, choose my size, check out on a website, enter all my information like that experience is totally gone from, from these new mobile serves and importantly, to sort of tie back to Mike's comments around drone delivery and, you know, Google's positioning against Amazon.
It's like, this is Google is leaning into their clear, competitive advantage over Amazon. It strikes me that they are trying to provide this. Amazon like end-to-end experience as best they possibly can where they don't actually control the, the sort of checkout and delivery mechanism in the same way that Amazon does.
But Amazon also can't offer products right away near, near you. And so I think they're trying to sort of step lean into these sort of local centric ad units and local centric search results, as a means to maybe shift some of the sort of default e-commerce. Thinking for most consumers away from Amazon and maybe back to Google and.
I think you have to
Mike: think about it as commerce, not e-commerce because it really is an amalgam. And I think that Google will develop the backend to process the order and it will either get picked up at the local store or drone delivery. Whatever I, it will be a combination project and I don't think he commerce describes it
No. And, and build ready is the VP of commerce, not e-commerce and you know, that's explicitly their strategy is that they see themselves as a kind of hub for all kinds of merchants. You know, whether they be local or e-commerce, or. Buy online pickup in store kind of scenario. I'm not sure that Google will ultimately try and host the shopping cart.
Oh, you know, they tried they've, they've gone back and forth on that. They recognize the variability of the experience that they were offering. So there was a point at which a few years ago they said, There was a new Google shopping experience and they were hosting the shopping cart and you checked out on Google and then the merchant fulfilled.
And I think that they backed away from that because I think it's just really,
David: I'm still there and you get a little badge that says buy on Google. I mean, I think it's even a faceted search in this.
Greg: I w they didn't say anything about they, I haven't heard anything about that in a while. So I was assuming they had kind of eased up upon that, but that was them.
That was their attempt to try and make the experience more uniform, more Amazon. But so maybe that maybe they are still pushing forward.
David: Yeah. It may be sort of on its way out. Potentially,
Greg: but it's, I don't know, little shopping. Well, so it's interesting. I talked a little bit to, to build ready at, at a, at an event pre ahead of the Google marketing live.
And it was technically an off the record event, so I can't quote them or anything, but he was, he was sort of talking about, I was asking about pointy and getting small business inventory online. And you know, he was saying that their partners have been really instrumental in helping that they've got WooCommerce and they've got they've got Shopify.
And I think, I think others. And so th th the, with this collection of, of partners that cater to small businesses, they've got an enormous reach. Now that's not necessarily in store inventory, but it is sort of small business inventory. So they're getting, trying to get the big, big boxes and the bigger retailers.
And then with the partnership strategy, going to the smaller business, So it's very, it's very interesting. And this is one of the most dynamic areas on, on Google. I think for all the reasons that we've, we've talked about, you know, revenue opportunity competing with Amazon fulfilling user expectations and the syrup is, is really changing to reflect how they're building out all these, these new capabilities with, with ads.
You know, and I think in a product context, ads are not as offensive to people as they are, perhaps in an, in an, in another situation, you know, Yeah. So, no, I mean, I, you know, I was doing some research on, on a. On marketing automation. And it was amazing to me too, on the desktop. It was amazing to me to see the ads, right.
There were three ads at the top four ads at the top three ads at the bottom, generally speaking, and then just a lot of crap in the middle. Just a lot of listicles that were worthless or self promotional reports. It was just amazing how. Little genuine information. Was there, you know, add
David: on as president of the society.
Do you think that that might be intentional, that the ad experience has gotten has gotten. Sort of intentional improvement and the search experience that organic expense?
Greg: No, I didn't. I didn't. No, no, because the ads were not that good either. I mean, the ads where the ads were typically Legion, you know, it was, it was download our Forester expensive Forrester report and give us your details and we'll have some sales rep call.
That was kind of what it was. But anyway, anyway, I, in a product context, I don't think people care as much. If I'm looking for a particular pair of Nike shoes or, you know, a water purifier or a space heater, whatever it is, the, the difference between an ad especially when showing me that it's available in the local store and organic content, unless I'm looking for an editorial review of it.
It's not going to be as big a deal. It's not going to be as much. One, one final thing that I thought was really interesting along these visual search lines was Google sort of promoting 3d sort of an augmented reality experience in search. So, you know, getting more and more retailers to upload 3d models of products and then going right from the search result to the camera, to see it in the, in the room or see it on, you know, whatever that was really interesting.
Really fascinating to me. Another kind of. Mo multimodal search experience on display. Any more jokes Mike, before we adjourned, I think I've got them all up. Okay. All right. Good. Well, as I said, everybody have a great weekend or hope you had a great weekend whenever you're listening to this and we will see you next week.