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November 1st: Torsten Jacobi, CEO of Creative Weblogging, joins host Anita Campbell. Sponsored by Six Disciplines. Show details.
Thursday, March 11, 2004
Small Businesses Using Pay-Per-Click Ads
A new survey of small-business advertisers conducted by The Kelsey Group and ConStat, Inc. reveals that pay-per-click (PPC) Web advertising is growing among small and medium-sized enterprises (SMEs).

Small-business PPC advertisers currently allocate on average 23% of their total advertising budget to PPC activities. Of these, 54% expect to increase their PPC spending next year.

"These data show that PPC is an increasingly important part of an SME's overall advertising program," said Greg Sterling, director of The Kelsey Group's Digital Directories: Interactive Local Media Continuous Advisory Service. "PPC's appeal is based in large part on the perception that it's a low-cost means of customer acquisition."
This research is based on a survey of 460 advertising decision makers at small businesses with a Web site. (Hat tip to Doug, the Infoman, for alerting me to this study.)

Based on my own anecdotal evidence, I would concur with this study.

In the past many small businesses used to tell me that: (1) they found Web advertising too expensive, and (2) they did not get targeted traffic that they could turn into business...the traffic was from surfers around the globe who were not viable business prospects.

Fast forward to this year, 2004. Hardly a week goes by that I don't hear from a small business using Web advertising to attract new customers. The biggest increase I am seeing is in the B2B side, i.e., among businesses selling to other businesses.

Just this week I met with a niche employee-benefits organization that is now bringing in one third of its new business through targeted Internet advertising, mainly Google AdWords. This company has figured out how to define key words precisely enough to get targeted traffic. Virtually all of this company's business is local, with 90% of it coming from within a 150-mile radius. They successfully use the Web to generate leads that the sales force follows up on and closes in person.

Of course, Web advertising is not the answer for every business. For example, among small businesses which depend heavily on retail walk-ins (restaurants, shops, landscape nurseries, etc.), I encounter few of them acquiring new customers from the Web. They may leverage the Web for other important purposes, such as product information or customer service, but not for direct customer acquisition.

Increasing use of pay-per-click advertising is a significant trend among small and midsize businesses -- especially those businesses which sell to other businesses and which have a niche product or service that lends itself to being described precisely in advertising key words.
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