Vertical Marketing Digest for Small Business

Peter Krasilovsky has recently launched The Local Onliner, a blog on local search, local advertising, and other local media issues. Take a look and subscribe to his feed.

This article (Perfect Storm of Local Marketing) reminds us that marketing doesn't have to be as hard as we make it sometimes. A nice success story.

Here is a good article in the Boston Globe about the impact on restaurants of using online reservation systems. Since Boston.com links have a limited shelf-life (and they now require registration), I'll summarize below.

The article primarily features OpenTable.com, one of the leaders in the space. As you might imagine, a computerized reservation system gives you information benefits (e.g., you know when your regular customers are coming in, you remember food allergies and other preferences). It works well, and about 30% of reservations come in when restaurants are closed, so the restaurant is providing value to the diner by offering this. OpenTable charges a monthly service fee, plus $1 per online reservation.

However, more significant is the way restaurant owners are using it as a form of marketing to manage demand, since they can choose which time slots and which tables are listed on OpenTable. Any top restaurant can sell out Saturday night, but why not list "Tuesday night @ 6pm" and see if OpenTable can sell it for you?

TAKEAWAY: Electronic advertising media, with their immediate effectiveness, will increasingly be used by businesses for dynamic demand management. Based on the specifics of YOUR business, you can alter your spending.

Anything can be a significant variable in your calculation. Nearby construction scaring people away from your restaurant this month? Boost your AdWords spend. Two servers just quit at lunchtime? Close down a few tables on OpenTable for this evening. You get the idea. All of this will continue to weaken the positioning of traditional media -- newspapers, Yellow Pages, TV -- while providing opportunity for the creation of new electronic ad venues. [For instance, the airlines are excited about travel search engine Kayak.com because now they can market Denver fares only to those looking to go to Denver, and only when they have a glut of seats.]

P.S. OpenTable even buys AdWords to benefit its associated restaurants. Search for [Boston restaurant] or even [Boston steak] and the 1st or 2nd paid results (currently) are links to OpenTable's Boston restaurant landing page. (UPDATED 10/14/05: [Boston restaurant] only shows OpenTable every 5th time or so, and [Boston steak] isn't showing them at all.)

Good article on Entrepreneur.com on the 12 block rule for local marketing: most consumer purchases are made within 12 city blocks. (as seen on the Better Local Marketing blog - old location and new location)

Great piece from Jeff Jarvis suggesting that newspapers can become more efficient by focusing on their core value: local news. Cut the costs of reporting and printing the rest, but without much impact on the reader, who is probably getting their stock quotes, box scores, and TV listings on the web anyhow. To be fair, he still suggests covering non-news topics, but with syndicated content.

One issue: the separate sections of a newspaper help provide the targeting needed to maintain ad rates (e.g., the local sporting goods shop is happy to advertise in the sports section but probably not in general news). But maybe a focus on local sports with some syndicated national sports would do the job just as well, with a huge cut in the reporting budget.

However, it is clear: newspapers are undergoing radical changes. [See an earlier post covering a recent talk by a Hearst Newspapers VP for more info.]

Emergic.org pointed me to The Age of Engagement: one of the Internet's long-time analysts, Mary Meeker at Morgan Stanley, takes a in-depth look at the global trends driving Internet advertising. Interesting reading (here's a direct link to the slides - PDF).

Google's Froogle service permits any merchant to post their goods. (In addition to searches via Froogle directly, Google provides some Froogle results atop their Google search results pages, so you may get a good traffic boost for free from this.)

Hearst's Lincoln Millstein (he formerly guided the creation of Boston.com) gave a great talk on how local search is going to play out. Of course, working for a company primarily known for its newspapers gave it a decidedly pro-newspaper bent, but his analysis was thoughtful and he is an engaging speaker.

In addition to some interesting stats (e.g., local advertising is nearly at $4 billion a year and growing 46% annually [ed: not sustainable]), he made an argument for newspapers and yellow pages joining forces. The more cynical among us might wonder how a combination of those two could possible help either attack this market more aggressively, given each's generally pathetic record of delivering innovations.

His thesis was that this pairing would produce a single destination site, with a single search box and a single set of feet-on-the-street ad sales reps. In Buffalo, they own the paper and the YP, so they'll have an opportunity to try out this pairing.

Tony Gentile's Buzzhit blog has a detailed writeup on this talk, as well as a page linking to all his conference coverage.

UPDATE: Peter Krasilovsky also has a good analysis of this talk and other newspaper-centric discussion from the show.

This panel session of web site hosting providers was tasked with addressing the issues for small business about web sites: complexity, uncertain ROI, what features are needed. They represented Interland, Affinity, Vista.com, and Yahoo.

Kelsey Group's data shows that 42% of U.S. small businesses have web sites, and that number should rise to 63% over the next 4 years.

Interesting comments:

• 70% of Interland's new customers already have a site
  
• Affinity feels that there is no price elasticity at the low end, so they've raised prices from $6 to $24. Out of 70k customers, they only lost 114 due to the price increase.
  

See Tony Gentile's full entry on this session.

UPDATE: You should also see Peter Krasilovsky's analysis.

My favorite session of the morning was a panel that included three small business owners (SBO), who gave their perspective as potential customers of the services being discussed at the show. As with any contact with SBOs, it was refreshing and deeply illuminating. (Whenever one thinks they have figured out small business, one just need listen to a few more small businesses to shake them from that complacency. Too few companies in this space do this with great regularity.)

Highlights:

• all three were retailers, generally carrying specialty items of some sort to avoid direct competition with big national chains
  
• one had a vendor that pays them every time the vendor makes a sale on its website (compensating them for the local marketing the store presumably did, and also lessening the pain of that channel conflict)
  
• web site development and maintenance is still hard, with unclear returns
  
• Pay-per-click (PPC) is interesting, and even pay-per-acquisition is intriguing
  
• they do not respond to ad pitches from vendors; do not call them as they are too busy in the store; sometimes respond to snail mail
  
• they find that print ads are no longer effective
  

The VP from SuperPages.com (online yellow pages with pay-per-click category ads) was asked an excellent question: "How can little guys compete, since the big national players can outbid them?". His answer was that they specifically carve out the #4 - #6 spots in their paid rankings for LOCAL merchants (regardless of bids). Interesting approach!

He also described a risk-sharing continuum for the various ad payment models, and felt that PPC was fairest:

Pay per xxx Model:	Impression	Click	Acquisition
Risk:	Business	Shared	Publisher

Two great quotes from the panel:

1. I hate updating our site, it's painful, i just want to get it working, "make it as easy as banking" (small apparel retailer)
   
2. SME's "know value" but "need help" (VP of SuperPages)
   

The morning keynote was provided by Udi Manber, CEO of a9.com. A9 is amazon.com's entry into the search space. He was formerly Chief Scientist at Yahoo and has an R&D and academic background before that. However, A9 has a mandate to "innovate in search", not as an R&D lab but as a real product organization with real products and customers.

First Demo: a9.com search. A9 uses Google search results but provides a nice user interface consisting of columns for each type of search you want to activate for the current keywords. A9 offers OpenSearch, a capability whereby anyone can extend the set of search columns, for instance, so vertical providers can extend the list - "syndicated search". So PubMed can offer a medical search, a jobs site could offer job listings search, etc.

Second Demo: A9 Yellow Pages. The main innovation here is that A9YP shows images of the local business and they allow you to walk around the neighborhood, moving left and right. A neat part of this "visual search", as he terms it, is that you can use it to find businesses next to ones you know. A9YP is currently free to businesses; however, sponsored links are shown so that's where A9 makes its money currently.

Clicking on a business takes you, interestingly, to a page on Amazon. It looks a lot like any Amazon product page, including the business having been assigned an ASIN. Manber says that it is on Amazon so that it can benefit from all of Amazon's great capabilities -- you can write reviews, rate it, email a friend. They have extended it in two key ways: there is a click-to-call button (provided by eStara) and also the business owner can easily update the listing via a simple online form.

a9's own site has more detail on the technique used to capture the businesses images -- essentially an SUV with a big camera mounted on its roof, connected to a laptop on the front seat. [He told a funny story about having to neuter a computer mouse so that it would bounce around in the car, keeping the laptop's password-enabled screensaver from kicking in, and also described a ultimately-funny situation that ensued when one of their drivers pulled the rig over in front of a Washington DC government facility, attracting eventually a half-dozen security personnel.]

Manber's summary: They have transformed the yellow pages from a boring list of phone numbers into a visual experience. Search can be more than 2-3 words in a box resulting in a list of links.

UPDATE: Here's Peter Krasilovsky's take: Amazon Mocks Up the Yellow Pages

This show is very well attended (well over 400 people according to John Kelsey's introductory remarks). There seems to be a lot of buzz among the audience -- everyone knows the space is big, but it's so early that we're all experimenting and learning every day.

Greg Sterling from Kelsey gave a quick stats overview. eCommerce is 2.2% of US retail. 57% of US homes have broadband. For purchases over $500, 34% start online, but 90% complete offline (for reasons of immediacy, easier merchandise returns, and confidence in retailer).

Day in the Life of a Consumer: He walked through an entire buying cycle for an actual consumer looking to buy a photo printer. What stood out was that the consumer behavior is complex, so it "creates complexity for local businesses" trying to understand search, manage keywords, writing ad copy, etc.