Sell What They Are Buying

A fascinating new study called "Main Street Goes Interactive," from Borrell Associates takes a thorough and much-needed look at the advertising practices and attitudes of the so-called SMB (Small and Medium Businesses) segment - a poorly understood and fitfully researched pool of over 14 million U.S. businesses that collectively spends many billions of dollars annually on advertising.

In many respects, the SMB market is a victim of its own label: it's hard to draw too much insight when you lump small manufacturers and distributors, retailers and even restaurants into one undifferentiated group. At the same time, the Borrell study is more focused, and many of its top-line findings track well with research we've seen from data publishers surveying their own markets.

The Borrell study places SMB average annual revenue at just $212,000, with average annual advertising spend of $5,671. Where are these businesses spending those advertising dollars? Most typically in yellow pages, direct mail and coupon-based media. Perhaps not surprisingly, SMB's are migrating to the web, with 11% of the advertising budgets now spent online, up from 4% just three years ago.

A key study finding is that SMB's see the cost of building and maintaining their websites as part of their advertising expenditures. This insight is useful in helping to inform us how SMB's think about advertising, but ultimately it's a distinction without a difference. For most SMB's, their website is their capabilities brochure and/or their catalog. When I send out direct mail, I don't separate out the cost of the artwork and the paper and the printing from the cost of the mailing list and the postage. It's all an advertising expense to me. And that's apparently how SMB's think as well.

The more important point is that websites are now central to the advertising strategies of SMB's. According to Borrell, two-thirds of SMB's plan to spend more on their websites this year. It's also important to note that SMB's are fans of online directories and search engine marketing.

This study documents what an increasing number of savvy online data publishers have already discovered (think ThomasNet and Martindale-Hubbell among many others): the best way to buttress online advertising revenue is to help SMB clients improve their own websites, whether through design services, creation of online catalogs, providing SEO services, or even managing SEM programs.

SMB's are not sophisticated advertising buyers and they need assistance in this area. Those data publishers that are moving beyond solely selling online advertising to supporting SMB's with agency-like services for what SMB's consider to be a big part of their advertising activity - their own websites - have found both a warm reception and multiple new revenue streams. If you're not doing it, it's a strategy well worth considering.

Labels: Borrell Associates, Martindale-Hubbell, ThomasNet

No Help From Yelp

As soon as you visit the popular website yelp.com, you'll know you're looking at the future of the yellow pages business ... and you'll also see why yellow pages publishers are finding it so hard to get real traction online.The young start-up combines an accurate and deep city-specific directory of all types of local businesses with user reviews and ratings that provide site visitors with plenty of information to make informed choices about local vendors. Beyond this, Yelp provides local event guides and works hard and apparently succeeds in building a sense of community among users of the site. Yelp also innovates. I previously wrote about Yelp's clever process for summarizing user comments to make them more useful.

But a recent profile of Yelp in the New York Times leaves me thinking that the company's founder is offering up more attitude than answers to the company's growing pains.

You see, Yelp generates revenue by selling advertising to the very businesses its users are posting comments about. Invariably, those two activities come into conflict. The article cites a business that called Yelp after a sudden and unexplained drop in its overall rating, and got no assistance. Yelp's founder, Josh Stoppleman, dismissively blamed the problem on an "overly vigilant" spam filter meant to cull suspicious reviews. If Stoppleman had even the slightest concern that his algorithms were impacting revenues of small businesses - the very businesses he wants to advertise - it didn't come across in the article.

When a local restaurant complained about a negative review regarding a dish the restaurant didn't even serve, Stoppleman told the Times, "We can't referee factual disputes. Why believe the business owner who has skin in the game?"

Throughout the article, the implicit message from Yelp to the business community is that "you need us more than we need you." And quick, can anyone think of another group that adopted that same attitude towards local businesses? Right, the yellow pages publishers.

And what of the late lamented yellow pages industry? Well, while Yelp exhibits more and more hubris rather than trying to address real issues with its business model, the yellow pages industry is in fact going back to the drawing board on its business model.

One great example of fresh thinking comes from SuperPages.com, which just launched a program called SuperGuarantee that guarantees its users a satisfactory experience with any service provider sporting the SuperGuarantee logo. Complain to SuperPages, and they'll resolve things to the customer's satisfaction or offer reimbursement up to $500. Best of all, users must register with SuperPages to take advantage of the guarantee, providing incredibly powerful proof of ROI back to participating advertisers.

Why is a giant yellow pages publisher willing to roll up its sleeves and get involved in messy customer disputes when the young, hip, cool start-up is so unwilling to address even clear-cut factual disputes? I think some of the answer is cultural. Too many online start-ups I see seem intent on building black box systems designed to avoid any customer interaction. Great work if you can get it, but the real world is messy, and most of the online services I see really can't deliver maximum value and utility on a totally automated basis. User needs can't be reduced to online forms. What the article on Yelp screams to me is that Yelp simply doesn't want to do the work - too messy, too slow, too labor-intensive. Unfortunately, that's a big part of what publishing is all about. And that leaves an opening competitors can drive a truck through.

Labels: superguarantee, superpages.com, yelp.com

Do You Excel?

The Internet has fundamentally impacted every segment of the publishing industry. But for data publishers, a parallel development that is not often discussed has had as significant an impact. This development, stated simply, is that personal computing, with little fanfare, has finally begun delivering on its promise.

What do I mean by this? That personal computers, and in particular their software, are finally able to do most of the things we were always told they could do, and do them simply and painlessly. That means users - in particular average users - can now confidently download, manipulate, manage and output data. And when people can readily unlock the value of data, they not only buy more of it, they are willing to pay more for it as well. The Internet has freed us from having to communicate with incompatible systems. Hardware advances have brought vast amounts of processing power, memory and disk capacity to almost every computer removing another layer of constraint. Software advances have resulted in software that is easier to master, more stable and more capable than ever before. Our customers are all now routinely working with data in ways that would have been unimaginable just 15 years ago.

But have we licked all their issues and solved all their problems? Not quite yet. The emerging issue I see is that the rapid growth of hosted applications and cloud computing is creating a vast number of data silos - standalone software applications driven by standalone databases.

We are a small company, but despite that (perhaps because of that) we use a number of hosted applications for such things as accounting, bulk email distribution, online surveys, etc. We also subscribe to a number of online databases, and maintain our own in-house database as well. My constant ongoing frustration: none of these applications talk to each other. All these applications do, however, allow me to export my data to Excel or input data from Excel, making it the default format for data interchange. That works, but it's a variation on the old "sneaker nets" of years ago. It's not convenient, it's not efficient and it's prone to error.

There's a huge opportunity here for data publishers who recognize that no matter how powerful and robust their online applications are, they shouldn't be operated as islands. Design your application so relevant data can seamlessly enter and leave your application and you are positioning yourself to become a data hub for your customers. It's taking the concept of workflow integration to the next level: in addition to powering specific business activities, you can help companies centrally manage key datasets. It's a natural role for many data publishers to serve as central data platforms for their customer. But to excel in this area, we need to think beyond Excel.

SAVE THE DATE: INFOCOMMERCE 2009 WILL BE HELD OCTOBER 27-29 AT THE RITZ-CARLOTN, PHILADELPHIA.

It's All How You Look at It

There's nothing like data visualization tools to bring your data to life for subscribers. And "living" data is not only more interesting and compelling, it's more valuable too.

For most subscription data products we've seen, however, the approach to data manipulation can be described as "you're on your own." Subscribers are allowed to download data in spreadsheet format, and they can analyze it any way they want with whatever tools they want.

This sounds like a perfectly reasonable compromise, and it is, but at the end of the day it remains a compromise. With competition strong and customer expectations high, it's increasingly risky to push customers to use your data outside your application. The more you do for them, the more value you provide, and the happier your subscribers will be.

That's why we were intrigued by the tour we got recently of a newly launched site called GraphPortal.com. GraphPortal offers a powerful capability for quickly and easily building interactive graphs of your data. Even more exciting, you can embed these graphs on your own website, all free of charge. If you want the world to know about your data, you can optionally publish your charts to the GraphPortal site, where they are available for others to use on their own sites, a graphic form of viral marketing.

Keep in mind these graphs are not static; users can filter and manipulate them for different views of the data (Excel users: think pivot tables). Click here or on the image above to get a sense of the power of these graphs -- which can be chained together to form a presentation "deck." There's even a way to add annotation to each graph.

And yes, the folks behind GraphPortal have a revenue model: they'd like you to buy the underlying software, which you can run in-house or use on a hosted basis. The software, which is more powerful than the features available in GraphPortal, even allows the development of interactive "data dashboards."
Is GraphPortal for everyone? No. If you've got a graphing capability as part of software you already use, GraphPortal doesn't bring much to the party. But if you're dabbling in graphic presentation of your data and would like to get your feet wet without a big up-front investment, it's well worth a look.

Labels: graphportal.com

All a Twitter

You've doubtless noticed the phenomenal buzz surrounding Twitter, a social networking service that allows very short messages (140 characters or less) to be broadcast to a closed group, or publicly to as many people as may choose to sign-up to receive your messages or "tweets."

What purpose does Twitter serve? It appears the overwhelming majority of users are tweeting their current activities to their groups, "I'm in the car going to the mall" and the like. Why anyone wants, much less needs, to know the activities of others in such excruciating real-time detail is a discussion best left to mental health professionals.

Ah, but who cares about its purpose if it's making gobs of money. Actually, you may not be surprised to learn that Twitter not only doesn't generate a profit, it currently doesn't generate any revenue. There are even third-party contests now to suggest a revenue model for Twitter!

Yet, the buzz around Twitter continues to grow. You can bet that we'll shortly be hearing the case for why Twitter makes sense in B2B environments. An article in yesterday's New York Times illustrates how we will begin to move down this slippery slope with the writer recounting his use of Twitter while on a panel at a conference. He sent out a tweet pertaining to the panel conversation and quickly received useful responses. Frankly, this strikes me as akin to conference speakers and panelists doing Google searches to answer audience questions, but let's not stand in the way of the Twitter juggernaut with such trifling objection s.

Twitter is fun. It is interesting. I am not sure how much of a breakthrough it is given that you can easily send an email or instant message to a pre-established group, and you can certainly post to a blog that others can subscribe to and receive push updates. We're not lacking for ways to communicate, and an arbitrary 140 character limit precludes most serious uses. So let's not tie ourselves up in knots seeking B2B applications for Twitter.

Some are comparing the superheated buzz around Twitter to the superheated buzz that once surrounded Second Life. I also recall the insistent refrain that Second Life had huge B2B applications as well. Remember Second Life? Enough said.

ISN'T IT IRONIC DEPARTMENT: It was reported today that Google has purchased a newsprint mill in Finland ... in order to convert it into a data center for its online search operations.

Labels: google, second life, twitter