Mobile, Maps, and the Walk-in Economy

One of the key thoughts in my previous post on the maps tussle between Apple and Google was that the struggle is not about immediate revenue. Instead, I suggested that ownership of geo-behavioral data and overall strategic positioning are at stake. I also predicted that Apple will eventually bring to market an "Offers" like program along the lines of Google's existing service. Overall, the future of Apple Maps could tie in offers, iAd, Passbook, and other elements for a comprehensive service that is on par (and in some ways assuredly better than) Google's current suite of Map/Local/Nav/Offers/Check-in services.

But if Apple and Google are only jockeying for position now, with little discernible revenue to be gained, the longer-term opportunity has to be significant, right? So, how big of an opportunity are we really looking at? I think I can begin to give some shape to what the answer might be.

First, a few assumptions...
  1. We should assume a consumer base that has +90% smartphone adoption. It's only a few years away...
  2. We should assume steep adoption of maps services in parallel with this smartphone adoption. 
  3. We should assume that a geo-aware coupon or "offer" model like Google's will eventually become a persistent characteristic of the mobile commerce landscape. Also assume that it also will grow in parallel with smartphone adoption. (Note: such a service should not be confused with substantially less useful services like Groupon.)
Beginning with these assumptions, I believe that the market opportunity being chased by Google and Apple is a big piece of all local brick-and-mortar B2C business. I call this The Walk-in Economy, and it includes everything within retail and services, from individually-owned shops to the physical stores for national brands like Best Buy, Home Depot, and Burger King.  Based on data from the US Census Bureau, I estimate the Walk-in Economy to be worth approximately $7 trillion dollars annually in The United States. 

If Apple, Google, and other mobile players are able to use their offers platforms to monetize just 0.5% of this market for themselves, it represents an opportunity worth $35 billion annually, which is approximately equal to Google's entire annual revenues. Assuming the eventual ubiquity of the smartphone and its proven ability to change consumer behavior, this is a realistic end game within mobile.

One thing to consider is that a certain amount of this new opportunity will be cannibalizing Google's traditional AdWords revenue, which is fundamentally at risk as more of us use the web via mobile and bypass the traditional entirely (because of Maps or Siri, for example). Nonetheless, I think the playbooks are not merely defensive in this case. The mid-term and long-term opportunities are simply too enormous to think otherwise, and it's important to note how smart companies always cannibalize themselves versus risking that competitors will cannibalize them. With mobile disruption and changing user behavior, this has never been more true...

By Aaron Zwas -- Director of Emerging Technologies at Digital Marketing Works