Last month, I had the opportunity to join nearly 400 leaders from major local search companies for the BIA/Kelsey DMS ‘11 conference in Denver.
The annual industry event — which this year included speakers and panelists from the likes of AT&T Interactive, Eniro, Facebook, Local Matters, Microsoft Advertising, Telmetrics, Urbanspoon, Yellow Pages Group and Yellowbook — explored the latest developments and future opportunities for small businesses in digital/online media, performance-based commerce and customer retention.
Here are five key takeaways relevant to local business owners in the process of planning their 2012 marketing budgets from the talks I heard at the gathering.
1. Small Businesses Increasingly Invest Advertising Dollars Online
Total small business ad spending for online media increased to almost 40% of total ad spend in the fourth quarter of 2010, up from 22% in the third quarter of 2009, according to BIA/Kelsey’s Charles Laughlin.
By 2015, BIA/Kelsey estimates that 70% of small business marketing budgets will go to digital/online media (mobile, social, online directories, online display, digital outdoor), performance-based commerce (pay-per-click, deals, couponing) and customer retention business solutions (email, reputation and presence management, websites, social marketing, calendaring/appointment-setting).
Already, small businesses’ spend on their Web presence has increased significantly — almost doubling between 2008 and 2010 — another indication that businesses’ digital presence is becoming critical to their advertising strategies.
While businesses’ online vs. offline advertising spend ratios depend on the types of products or services they sell and their target markets, it’s safe to say that small businesses should be putting a heavy chunk of their advertising dollars into the online space in order to keep up with competitors. It’s also important for small business owners to be familiar with online advertising options available to them.
More than 75% of small businesses surveyed said their marketing budgets would stay the same or increase over the next year, according to a recent survey conducted by Infogroup. This indicates that while local businesses may be changing the way they advertise, they aren’t cutting back but instead maintaining or increasing their investment.
2. Small Businesses Are Juggling Marketing Tools
With so many tools at their disposal, small businesses are especially struggling with how to manage social media channels and print media based on changing consumer behaviors.
Laughlin pointed out that younger businesses are significantly more oriented to social media than Yellow Pages, which are more popular among older, more established businesses.
Both platforms provide unique opportunities for businesses to reach target consumers. If a business hasn’t explored social media — or if it has, but it’s engagement has been limited — it’s time to move forward more aggressively to engage in order to keep up with new entrants in the field.
While social media has received well-deserved hype for its ability to create new connections between local businesses and their customers, Yellow Pages continue to provide strong and reliable leads to local businesses.
In fact, while 74% of consumers said they used Yellow Pages in the past year to find local businesses, only 32% of consumers said they did so via social networks. So while times are changing, Yellow Pages still provide local businesses with a strong platform to reach their target audiences.
Perhaps the most important message here is that integrating online and offline offers provides local businesses with the widest reach possible in order to reach consumers wherever they are — both now and in the future.
3. Once Websites Are Covered, Mobile-Friendly Sites Are Next
Over the past few years, many small businesses have launched websites that are becoming the cornerstones of their local advertising strategies. But with the number of mobile Internet users set to surpass desktop users by 2015, according to BIA/Kelsey, the emphasis is increasingly on ensuring that websites can be viewed as easily on mobile as they can at the home or office computer.
Today, only a tiny fraction of websites — just 1.25% — are mobile-friendly. This void is a red flag to small businesses that haven’t looked into ways to optimize their sites, and something they should prioritize in the coming year.
Adding to this, research shows that mobile websites have a lower bounce rate and higher customer conversation than traditional websites, so moving forward with creating a mobile site will reap additional rewards down the line.
4. Daily Deals Are Hot, Customer Retention & Deal Fatigue Are Issues
Over the past year, we’ve become increasingly familiar with Groupon, LivingSocial and the 600 or so other daily deals sites across the country. Many local businesses are embracing the opportunity to attract new customers through discounts publicized through these sites, despite the relatively high costs associated with the one-time offers.
BIA/Kelsey, which estimates that daily deals will be a $4.2 billion market by 2015, notes that increased focus on personalized and geo-targeted deals will help fuel this segment’s growth. Currently, the expansion and subdivision of daily deals sites into specific categories are helping to keep this area fresh for advertisers and consumers.
That said, there are obstacles that local businesses should be aware of. Todd Rose, vice president of business development for AT&T Interactive, who is part of the team rolling out AT&T’s Deal of the Day offering, said one issue facing small businesses who advertise through daily deals is determining how to retain customers on a long-term basis.
Generally, consumers who buy deals cash in their coupons, but they don’t convert into regular customers as much as businesses might hope. A question small businesses should ask when approached by a daily deals site is for additional information on the type of return on investment they should expect — both for the deal and in the weeks and months following.
In that vein, Rose talked about the importance of limiting the number of deals that a local business offers over a specified time frame. AT&T, for example, is capping the number of deals per merchant because sometimes it doesn’t make sense for a small business to repeatedly issue deals.
5. Use Specific Criteria When Choosing Local Ad Partners
Small and local business owners today are approached by an average of 40 sales reps each month, so it’s often difficult for them to cut through the clutter and determine what advertising partners and offerings work best for them.
What types of characteristics should small businesses look for in their advertising partners? Mike Centorani, VP of sales training and development at MatchCraft, and Paul Plant, founder and principal at Radicle Consulting, hosted a panel to share their insights on effective models for acquiring new small business advertisers in today’s media environment.
Working from their suggestions of what local advertisers should do to attract new small business customers, here’s a list of suggestions of criteria small business owners should measure against when choosing advertising partners.
Chosen advertising partners should:
- Be able to reach the widest distribution possible and seamlessly integrate advertising across print, online, mobile, etc.
- Be focused on delivering new business leads — not simply pushing their advertising company and its products.
- Keep in touch with small business owner, be flexible and provide ROI for their investment before they receive a bill.
- Invest time in the small business, its owner, and its industry generally, and in turn demonstrate that their offerings align with the business’ objectives.
- Offer incentives and offers — such as a “try before you buy” option — so small business owners can see that the offering works for their business.
- Offer shorter-term contacts and/or big entry-level packages as much as possible so the business isn’t tied down to a bad advertising option and gets the most bang for its buck.
Opinions expressed in this article are those of the guest author and not necessarily Search Engine Land. Staff authors are listed here.