Small Businesses Need Helping Hand to Embrace Web Advertising

  |  October 12, 2007   |  Comments

Entrepreneurs fear cost and complexity of online marketing, says report.

Most small business operators who shy away from online marketing fear they can't afford it, says a Opus Research survey in which 25 percent of respondents said online advertising would break their budget.

Additionally, 20 percent said they believe Internet marketing is too complex, and 15 percent said they don't think they have the manpower to handle it.

The survey shows a need for educating entrepreneurs about the realities of Internet marketing, said Opus Senior Analyst Greg Sterling, author of "Small Business Attitudes toward Online Marketing and Web 2.0." Sterling's report is based on answers to an online survey conducted in August by Local Mobile Search and AllBusiness.com.

The online survey drew nearly 1,200 responses, 653 from North America.

In essence, Sterling says there's huge potential selling online marketing and advertising products and services to small businesses, but companies wanting a piece of that pie should be prepared for hand-holding and education.

"The Internet is now front-and-center for these businesses in terms of it being a serious marketing medium," said Sterling in an interview. "The principal reasons the respondents said they weren't doing any [Internet advertising or marketing] was lack of budget, lack of time, and personnel and confusion, which indicates a need for education and support."

Aside from concerns about cost and difficulty, some small business operators voice general disinterest in online advertising. About 18 percent said they felt the Internet wasn't relevant to their businesses, and 10 percent expressed doubts about Web marketing's effectiveness. Nevertheless, 28 percent said they would likely change their mind if shown "empirical evidence or case studies," writes Sterling

Most people surveyed realize a Web presence, at the very least, is a necessity these days and 55 percent say they have Web sites. This is hardly cutting-edge, Web 2.0 action, but the report says social networking may play a big role in the near future. That's because about 58 percent of the respondents say at least half their business is being generated by word-of-mouth.

"This perception itself is an argument against paid advertising, online or off-," wrote Sterling. "However, there's a clear relationship between "word-of-mouth" and the Internet, in the form of online reviews and social media sites. The Internet amplifies and extends offline word-of-mouth onto a much larger platform."

Aside from determining many of the small businesses operators carry misconceptions about the cost and complexity of online marketing, the researchers came away with a relatively bright picture for those involved in online/interactive marketing. Unlike the findings of similar studies conducted only several years ago, small business operators no longer feel the Internet is a novelty and unnecessary.

In fact, most of those who responded seem to be "generally online savvy." "Maintaining a Web site ranks as high as advertising in local newspapers for local marketing of goods and services," wrote Sterling.

Over half of those surveyed (59 percent) say they don't market online. Many who have Web sites don't consider the sites a form of online marketing.

The study found while less than 30 percent of the small businesses have produced videos for cable, local broadcast, or Internet distribution, a third are evaluating doing so in the next 12 months. It also determined e-mail marketing is a popular tool, and over 10 percent of the respondents are using blogs and social network sites to spread their company's word.

Search engine marketing, while not the most commonly used strategy, is more popular than traditional print yellow pages.

"I think they've reached a certain level of conceptual sophistication, but by and large they haven't acted on it," said Sterling. "What's happening is these businesses now understand very well the Internet is very important. But this notion of conceptual awareness versus the ability to execute and successfully market online, that's the chasm that has to be crossed."

Sixty-four percent of those surveyed are aware of sites offering consumer reviews of local businesses. Sterling concedes he was surprised 59 percent said these sites are beneficial despite sometimes containing negative reviews.

"I was really struck by the generally positive response to the phenomenon of online reviews," said Sterling. "Most of those who were aware of them were embracing them and said they saw them as a good thing and an opportunity to improve their businesses."

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