I thought you might like to know what is happening in the online world so maybe when you plan to do some time of advertising you will know what the trend is...
Advertisers – especially the Small and Medium-Size Businesses (SMBs) are glomming to search advertising.
The harsh economic environment has caused them to re-evaluate longstanding practices of relying on Yellow Pages, newspapers, radio and Direct Mail to reach consumers.
Over the next five years, their ad spending on these four legacy media alone are forecast to fall 19%, representing average annual declines of $3.4 billion.
Meanwhile, spending on paid search by local advertisers is forecast to rise 39%, representing average annual increases of $242 million.
The problem is, the quick emergence of the multibillion-dollar paid-search industry has spawned unrealistic expectations among local businesses eager to turn the Web into a cash register – and a cottage industry of companies eager to bolster that dream.
SEM has no doubt been oversold and mismanaged by resellers, leaving many local businesses disillusioned with a product that holds so much promise. Churn rates are embarrassing for these resellers.
Most of them lose half their customers within a year’s time. Some lose as much as 90 percent.
Approximately two-fifths of all small businesses still don’t have a Web site, and the forecast growth in search-engine marketing by this sector is expected to be 39% over the next four years.
Where do consumers turn first to find a
local business?
According to a recent Nielsen Online survey, 50% of consumers
surveyed said they turn to search engines to find a local business,
followed by yellow pages directories at 24%, Internet-based
yellow pages directories at 10%, local newspapers at 4%, and
white pages directories at 3%.
The survey found that consumers use search engines 72%
more than they did two years ago, when a similar survey was
conducted.
Source: Nielsen Online/WebVisible survey, Feb. 2009
What Makes a Successful Local Advertising Program?
Technology is obviously critical to success, because it is
what differentiates players in this market. SEM depends
on being able to offer advertisers access to multiple search
engines, along with conversion tracking and dashboards
or similar comparative ad management tools.
But technical prowess is no guarantee of success. According
to Kim Peters, CEO of the recruitment search engine Eluta
and a former head of Workopolis and Working.com, SEM
businesses face a key barrier to success: lack of education
within the community of potential customers.
What this means in practical terms, she says, is that while there is value
in these services, resellers are dealing with small businesses
with little or no expertise in marketing, and no one really
responsible for ad budgets.
What Peters believes these smaller businesses need is to try
search engine marketing, and hopefully find that it works,
before moving on to optimize their investment and increase
their spending levels.
Addressing Churn
There are two fundamental barriers to making money from
SEM from the high-growth smaller business sector: typical
ad spends are low, and customer churn is high.
For instance, one major
reseller says its average churn rate is 35-40%; this breaks
down across its affiliate reseller groups as follows:
• Yellow Pages 35%
• Newspapers 20-25%
• Small Business Aggregate 50%+
• Small Businesses 30-35%
As we’ve identified, despite the excitement and growth in
the SEM industry, churn is the elephant in the room.
Though we may dissect the instigators of churn – less money devoted
to keyword buys, poor or unquantifiable results for advertisers,
greed by the affiliates or resellers – the single biggest
issue is the sales approach.
Are reps selling (and many of them are) a “bucket of clicks,” or are they selling an advertising package that includes various media aimed at generating leads?
As one affiliate told us, a reseller/platform provider pitched the viability of its SEM program by claiming, “You can pocket 50% of the margins!”
Key questions for affiliate marketers, then, might be:
• Does the SEM platform have us selling traffic, or
conversions?
• Does a white-label program offer room to align the goals
of the business with the performance of the product?
• Can the platform deliver a way to optimize the performance
of the advertiser’s keywords?
Conclusion:
This is a study I found onlineby Borrell Associates and it was about 18 pages long, I pulled out things I thought might be interesting to the small business owners on this forum, if you have any questions post here or email me and I would be happy to answer what I know.
Hope this helps.
Darren :thumbsup:
Advertisers – especially the Small and Medium-Size Businesses (SMBs) are glomming to search advertising.
The harsh economic environment has caused them to re-evaluate longstanding practices of relying on Yellow Pages, newspapers, radio and Direct Mail to reach consumers.
Over the next five years, their ad spending on these four legacy media alone are forecast to fall 19%, representing average annual declines of $3.4 billion.
Meanwhile, spending on paid search by local advertisers is forecast to rise 39%, representing average annual increases of $242 million.
The problem is, the quick emergence of the multibillion-dollar paid-search industry has spawned unrealistic expectations among local businesses eager to turn the Web into a cash register – and a cottage industry of companies eager to bolster that dream.
SEM has no doubt been oversold and mismanaged by resellers, leaving many local businesses disillusioned with a product that holds so much promise. Churn rates are embarrassing for these resellers.
Most of them lose half their customers within a year’s time. Some lose as much as 90 percent.
Approximately two-fifths of all small businesses still don’t have a Web site, and the forecast growth in search-engine marketing by this sector is expected to be 39% over the next four years.
Where do consumers turn first to find a
local business?
According to a recent Nielsen Online survey, 50% of consumers
surveyed said they turn to search engines to find a local business,
followed by yellow pages directories at 24%, Internet-based
yellow pages directories at 10%, local newspapers at 4%, and
white pages directories at 3%.
The survey found that consumers use search engines 72%
more than they did two years ago, when a similar survey was
conducted.
Source: Nielsen Online/WebVisible survey, Feb. 2009
What Makes a Successful Local Advertising Program?
Technology is obviously critical to success, because it is
what differentiates players in this market. SEM depends
on being able to offer advertisers access to multiple search
engines, along with conversion tracking and dashboards
or similar comparative ad management tools.
But technical prowess is no guarantee of success. According
to Kim Peters, CEO of the recruitment search engine Eluta
and a former head of Workopolis and Working.com, SEM
businesses face a key barrier to success: lack of education
within the community of potential customers.
What this means in practical terms, she says, is that while there is value
in these services, resellers are dealing with small businesses
with little or no expertise in marketing, and no one really
responsible for ad budgets.
What Peters believes these smaller businesses need is to try
search engine marketing, and hopefully find that it works,
before moving on to optimize their investment and increase
their spending levels.
Addressing Churn
There are two fundamental barriers to making money from
SEM from the high-growth smaller business sector: typical
ad spends are low, and customer churn is high.
For instance, one major
reseller says its average churn rate is 35-40%; this breaks
down across its affiliate reseller groups as follows:
• Yellow Pages 35%
• Newspapers 20-25%
• Small Business Aggregate 50%+
• Small Businesses 30-35%
As we’ve identified, despite the excitement and growth in
the SEM industry, churn is the elephant in the room.
Though we may dissect the instigators of churn – less money devoted
to keyword buys, poor or unquantifiable results for advertisers,
greed by the affiliates or resellers – the single biggest
issue is the sales approach.
Are reps selling (and many of them are) a “bucket of clicks,” or are they selling an advertising package that includes various media aimed at generating leads?
As one affiliate told us, a reseller/platform provider pitched the viability of its SEM program by claiming, “You can pocket 50% of the margins!”
Key questions for affiliate marketers, then, might be:
• Does the SEM platform have us selling traffic, or
conversions?
• Does a white-label program offer room to align the goals
of the business with the performance of the product?
• Can the platform deliver a way to optimize the performance
of the advertiser’s keywords?
Conclusion:
This is a study I found onlineby Borrell Associates and it was about 18 pages long, I pulled out things I thought might be interesting to the small business owners on this forum, if you have any questions post here or email me and I would be happy to answer what I know.
Hope this helps.
Darren :thumbsup:
arty:
