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Who Will Serve the Low End of the Small Business Market?

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One of the perpetual debates in “local” is about the viability of digital marketing products and services for low-budget small businesses. I was having this discussion with Scorpion today. There are plenty of vendors, media publishers and agencies serving the $1K monthly (and above) segment of the market. But what’s available for those unwilling or unable to spend at those levels?

Many providers and vendors shun the low end as high churning, unprofitable and difficult to serve overall.

David Mihm recently released the “Local Marketing Stack,” an infographic that cleverly uses the London Underground as a metaphor for the hierarchy of SMB needs and services. It’s a kind of reverse product roadmap:

  • Zone One involves basic operational issues and setup considerations.
  • Zone Two is websites, etc.
  • Zone Three is presence syndication and reviews, and so on until . . .
  • Zone Six, which includes apps, chatbots and beacons

While there are plenty of domain registrars, hosting companies and free listings-scan providers, there’s a gap between the “be everywhere your customers are” advice SMBs hear all the time and the capacity of the lower-end of the market to afford to do that. Accordingly, it’s mostly a DIY world below some budget threshold of, say, $500 or so per month.

More than 90 percent of US businesses fall into the sub-5 employee headcount pool. Facebook is aggressively courting these folks with some success. Google has a harder time with paid search because of the ecosystem of third party resellers and partners that take a cut of the media spend. However, Acquisio asserts that it is possible to deliver paid-search to the low end of the market at scale with automation. However, most service providers are not currently doing it — or doing it well.

As we contemplate the next phase of the SMB digital marketing ecosystem (in the cloud), it’s worth considering what will the lower-end solutions be and who will provide them? Will it be industry specific suppliers or vendors of other products that move into marketing services? Will it be point solutions providers that can deliver very specific “solutions” at very low cost at low overhead (see, e.g., Andrew Shotland’s Locadium ($5 per month) and David Mihm’s Tidings.)

Will the platforms themselves (Google, MSFT, Apple, Facebook) be the ones who serve this market rather than third party agencies, publishers or marketing companies? Or will it be a scattering of small local and regional agencies that repackage and utilize third party tools and deliver customer service face-to-face?

In the past I’ve argued that machine learning and automation may enable a product like AdWords Express to work much more effectively on a DIY basis. There may also be other “automated” solutions that perform with the help of very sophisticated technology and data on the back end. Accordingly, will technology eventually solve this “low budget” problem?

I’d love to hear your thoughts or arguments about the above.

7 Responses to “Who Will Serve the Low End of the Small Business Market?”

  1. Ken says:

    Greg:

    Great article on what we see as a very underserved segment of the SEO market. In fact, that is the market that we are focusing on specifically.

    Having come from a very small business background I understand the pain that these owners are experiencing. They are told to do SEO, social marketing, get involved with GMB etc but there is only so much time in the day (not to mention the cost).

    Thanks for bringing this market segment to the forefront.

  2. Greg Sterling says:

    It’s a big but challenging opportunity.

  3. Holly Lewis says:

    Greg, Great insight. This is exactly why I have been doing what I’ve been doing in the digital world for the past (almost) 20 years. Small business owners not only need low cost solutions, but they need a trusted partner to help them understand the constant changes in search delivery and consumer behavior. Just a little investment can help these small businesses not only compete with their larger competitors, but thrive and actually GROW! It’s very rewarding! #ALittleGoesALongWay
    Best,
    Holly

  4. Ben Barney says:

    Hey Greg.

    As you touch on in your article, a couple of the biggest pain points in serving this market is the cost of acquisition and operational overhead to setup and manage small budget campaigns effectively. And then do it at massive scale. At the risk of bombarding you with companies claiming they do this, iPromote is the closest thing I have seen to solving this problem at scale.

    With unprecedented levels of automation in ad creation for display (desktop & mobile), social, video, native and paid search, a complete media kit is built in just 1 click. It also combines complete personalisation using assets (images, text and branding) from the customers website, Facebook page, Twitter page and Google My Business page with machine learned taxonomies and algorithms to create and manage high performing campaigns at a hyperlocal level.

    Indeed both Google and Facebook are working to serve this market, but my bet is on 3rd party who brings an agnostic approach to audiences and the ability to procure media across all channels, not just those owned by one of the larger players.

    Another aspect of this tool is that it is built to support large resellers. Sales rep using iPromote tools can build out the campaigns in front of the customer. This co-creation process significantly improves the productivity of sales based on our experience. The side benefit of reps building the campaigns, is that less campaigns are being built by the sales operations department.

    Whilst DIY may have a role in the future, I believe enabling these resellers is useful at this stage.

    Cheers and hope to see you soon 🙂

    Ben

  5. Greg Sterling says:

    The challenge with the reseller approach is that you’re one of many products in the “kit” and they can’t sell it as well as you can. Agree with the automation/value statements. But convincing SMBs that display (awareness/branding) is effective (although as part of social it’s a different conversation) is hard; it’s a lower priority. PaperG basically exited this market as a reflection of the challenges.

  6. Ben Barney says:

    I agree that competing for the attention of the sales persons time and sales management focus is a challenge. I also agree the awareness/branding conversation of display does not resonate and is probably doing the medium a disservice. I think we have some work to do in educating people on how different mediums effect users at different stages of the buying funnel and last click attribution is clearly not accurate.

    I know there is a ton of research out there, but some of the interesting pieces I have read most recently include: http://www.stern.nyu.edu/experience-stern/news-events/one-additional-minute-exposure-display-advertising-can-boost-direct-traffic-company-s-website-10

    Some of the highlights show:
    – “One Additional Minute of Exposure to Display Advertising Can Boost Direct Traffic to a Company’s Website by 10%”

    Exposure to a single display ad increases (LIFT effect):
    – 36% more likely to make direct visit to advertisers site (direct visits require higher levels of consumer engagement)
    -Increase of name/brand search by 26%
    – Increase in category based keyword search by 18%
    -7% increase in purchase intent / positively impacts consumers decision to convert
    -29% more likely to click on future display ads

    This research also points to the benefits of a multi-channel approach e.g
    – More clicks and better conversions when running BOTH web and mobile ads, than either alone.
    – Video (with its longer, more engaging content) significantly drives up direct site visits and brand/business name searches.
    – Video (preroll) has a strong positive and significant effect on the consumers propensity to visit the advertisers site through organic search
    – Retargeted display (consumer targeted on previous actions) increases propensity to search by 26%.

    This possibly points to a need for more effective bundling as a sales strategy for these resellers.

  7. Greg Sterling says:

    Display is definitely important and can be very effective. Challenge is how it’s pitched. I think SMBs “get” video more than “traditional display.”

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