October 31, 2014

Beyond Banners and Buttons

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How local sites can better serve local businesses

For many local sites the revenue generated by standard online advertising—banners and buttons—is not sufficient to sustain and grow their enterprises. The goal of this project is to help local sites better target and serve advertisers, as well as identify products and services that can generate increased revenue.

Recognizing that one of the challenges facing local sites is a lack of market research, this project will explore and analyze the digital presence, marketing needs, and revenue potential of local businesses, including smaller operations that may not have advertised previously in traditional media due to cost. We will also work with a local site to develop and test a “suite of services” aimed at growing revenue beyond traditional ad sales.

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Phase One: How digital are local businesses?

OVERVIEW

One of the challenges facing local sites as they strive to increase their revenue is the lack of market research regarding small businesses. That’s why our goal for Phase One of the Beyond Banners and Buttons project was to gain a better understanding of the current online presence of local businesses—to determine “How Digital Are They?”

Toward that end we conducted comprehensive surveys of 500 local businesses in each of two locations. We present the results, highlights, and analysis of that research here. In addition, we suggest that the research identifies an opportunity for local sites to generate increased revenue from current and new advertisers.

THE “HOW DIGITAL” SURVEY

Survey Locations
We conducted the surveys in two disparate geographical locations: An ethnically diverse New York City neighborhood with an estimated population of 90,000 and a suburban New Jersey town (population of 13,000) with a vibrant downtown that has made it a popular social and commercial destination for residents of surrounding towns.

The Survey Process
➢ For each survey, we compiled a randomly selected list of 500 local businesses in a number of classifications, including retail, professional services, home improvement, beauty & health, restaurants, and real estate, among others.

➢ We then measured the online presence for each business against the following nine categories: Website/Blog, Email Newsletter, Google Places, Facebook, Twitter, Yelp, Yellow Pages, YouTube, and Foursquare. A value based on a defined level of activity exhibited by an individual business was assigned for each online category. (See Survey Logging Guidelines for details).

➢ The surveys were conducted in January-February 2012.

Survey Results
➢ Raw data for both surveys is accessible in Google Docs: NYC Neighborhood and NJ Suburb. (Select “File > Make a copy.”) Or download as Excel spreadsheets: NYC Neighborhood and NJ Suburb.

➢ The survey data is available for further analysis by any interested party. Note: individual business names, addresses, urls have been redacted. Businesses are identified by number and business classification.

Survey Highlights
➢ While some businesses in a variety of classifications maintain a consistently updated online presence on websites, Facebook, Twitter, and the like, the majority of small businesses are not maximizing their digital marketing options.

➢ Although 68% of the NYC Neighborhood businesses had websites or blogs, only 10% of those sites were active, which we defined as “updated in last month.” The numbers were similar for the NJ Suburb: 62% of businesses had sites, but only 9% were active. And perhaps, even more surprisingly, 32% of NYC Neighborhood and 38% of NJ Suburb businesses did not have a site.

➢ Businesses were more active on their Facebook pages (defined here as “updated in last two weeks): 23% for the NYC Neighborhood and 21% for the NJ Suburb. Still, 45% of NYC Neighborhood and 47% of NJ Suburb businesses have no Facebook presence at all.

➢ Very few businesses distribute email newsletters of any type: 16% in the NYC Neighborhood and 12% in the NJ Suburb.

➢ Businesses in both the NYC Neighborhood and the NJ Suburb are not particularly aggressive in verifying ownership of their Google Places pages: only 33% in the NYC Neighborhood and 28% in the NJ Suburb have Owner-Verified listings.

➢ For the most part, businesses have been slow to adopt Twitter as a marketing tool: In the NYC Neighborhood, 22% were frequent tweeters (“latest tweet in past week”) vs. 13% in the NJ Suburb. 68% of NYC Neighborhood and 78% of NJ Suburb businesses did not have a Twitter account.

➢ Although almost everyone’s cat or kid has made an appearance on YouTube, 79% of NYC Neighborhood and 86% of NJ Suburb businesses have relegated the ubiquitous video platform to the “pay no mind” list.

➢ More NYC Neighborhood businesses (62%) are listed on Foursquare than those in the NJ Suburb (47%).

➢ 28% of NYC Neighborhood and 11% of NJ Suburb businesses don’t have a basic YellowPages.com listing. And hardly any businesses advertise in the online Yellow Pages: 2% for the NYC Neighborhood and 1% for the NJ Suburb.

Survey Analysis
Here are graphic analyses of survey data depicting:

➢ The digital presence in nine online categories of all local businesses surveyed: NYC Neighborhood and NJ Suburb.

➢ The “active” digital presence, as defined by the criteria in the Survey Logging Guidelines, of all businesses surveyed, broken out by classifications: NYC Neighborhood and NJ Suburb.

To illustrate the potential for any number of deeper dives into the data, we charted the online presence in selected categories of NYC Neighborhood businesses in three classifications: Restaurants, Lawyers, Home Improvement.

OPPORTUNITIES

As smartphones and tablets proliferate, consumers are spending more and more time online. Many small businesses, however, are not keeping pace. For a number of reasons, they are simply not taking full advantage of the numerous online marketing opportunities that are available. As a result, we see an opportunity for local sites to position themselves as “digital agencies,” not simply media companies, by offering a “suite of services” to small businesses. The desired result, of course, is that a business improves its online marketing efforts (and thereby increases sales), and that the local site develops a source of revenue beyond traditional ad sales.

NEXT STEPS

• Working with local sites, conduct in-depth interviews with owners or operators of 15 small businesses in different locations across a number of classifications, including, retail, restaurants, professional services, home improvement, and others. The interviews will focus on identifying marketing goals and needs, analyzing current marketing programs, exploring what works and what doesn’t, and estimating potential marketing budgets.

• Analyze findings and put together a suite of services that local sites can offer to small businesses. Possible elements could include: website development, online profile and social media development and execution (Google Places listings, Facebook, Twitter, Yelp, Foursquare, etc.), marketplace/directory listings, local discount card, coupons, and events.

• Devise a measurable test for the suite of services sales package.

• Test the suite of services with local site.

MODEL SPREADSHEET

We constructed a model “How Digital” spreadsheet that sites can use to compile profiles of businesses in their markets. (In Google Docs select “File >Make a copy.”) Or download as an Excel spreadsheet. Also, please see Survey Guidelines for logging details.

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CONTRIBUTORS:
Business Analyst: Jennifer H. McFadden
Research Manager: Matthew Draper
Researchers: Jose Bayona, Ian Chant, Mitch Trinka

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