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Why Small Businesses Don’t Invest in Online Marketing

I just wrote about the story of Costco who continually expands online so it even eclipses their sales offline. Since the cost of doing business is so much less online, this is an opportunity for businesses of all sizes, including small businesses.

A new study by Opus Research shows why small businesses don’t invest in online marketing – even though it could have a large impact increasing sales. Many said (25%) the reason they don’t invest is because they think it will cost too much. Then another 20% think are intimdated by the technology or don’t have the staff to handle it.

What is the solution? Something I’m a big advocate of – education. Opus Senior Analyst Greg Sterling, wrote the report “Small Business Attitudes toward Online Marketing and Web 2.0.” The survey included responses from 1,200 businesses with 653 from North America.

Costco.com Hits the Billion Dollar Sales Mark

Internet Retailer.com reports that Costco Wholesale has reached a billion in online sales. This year their online sales grew by about 39% to $1.22 billion. Last year they were at $880 million. They reported net income of $1.08 billion on revenue of $64.4 billion for the 2007 fiscal year. Overall the web accounted for about 2% of total sales.

What is working for the retailer? They credit ongoing marketing strategies implemented since 2005. That includes marketing to Costco club members via e-mail, direct mail, a monthly magazine, as well as in-store programs, flyers, and kiosks.

Microsoft Has a Long Way to Go

It was just a few weeks ago that Microsoft CEO Steve Ballmer was downplaying Facebook’s originality and value—but now he’s bowing to a ‘higher power.’

He told WebWatch that:

In world search and advertising, Google is the leader, we’re an aspirant. We have a lot of work to do in search and advertising.

Of course, this does come a long time (okay, two weeks) after the New York Times slammed Microsoft only to highlight how far they have to go to catch up to Google in the online advertising arena.

But really, let’s put this in perspective. it’s quite a bit better than what he was saying about Facebook recently, even as rumors flew that they were in M&A talks:

ADSDAQ Launching Self Service Ad Exchange Platform

adsdaq You might have noticed a few changes to Marketing Pilgrim today. Last night, I signed-up for a sneak peak of the new ADSDAQ self serve advertising platform (from ContextWeb) and decided to test it out on the site.

What is ADSDAQ?  It’s basically an exchange that lets advertisers and publishers come together in an open market inventory platform. The new self service ADSDAQ Exchange Selling Desk lets bloggers and publishers:

  • Name their CPM price. When your inventory clears the ADSDAQ exchange, you will be paid the CPM price you set. No revenue share. No blind revenue share. No guessing.
  • Serve ad tags from other exchanges and ad networks. When ADSDAQ cannot clear inventory at your set CPM “AskPrice” it will serve tags from your backup networks and exchanges such as Google Adsense, Advertising.com and RightMedia.

Time to Rethink Mobile Marketing?

CNET’s Elinor Mills reports on a Nielsen//NetRatings and WebVisible study today that indicates that a whopping 92% felt that receiving local business ads on their cell phones would be “irritating.” This doesn’t bode well for mobile marketers, many of whom are hoping to bank on the hyper local third screen.

Other key (non-mobile-related) findings:

  • 56% “only get ads they want or need” from the Internet; television, 53%.
  • 80% researched a product online and bought it at a brick-and-mortar.
  • 74% use search engines to find local businesses in retail and services (versus paper yellow pages, 65%; Internet yellow pages, 50%; newspapers, 44%; white pages, 33%; TV, 29%; and consumer review sites, 18%).

A Study of Trust Online

Nielsen’s recent survey on trust reiterated what we all know – people trust each other more than they trust advertising. Word of mouth advertising is most trusted way to find out about products, especially across much of Asia Pacific. The survey of 26,486 internet users covered 47 markets around the world. Respondents were polled on the trust they have in thirteen different types of advertising – from conventional newspaper and television ads to branded web sites and consumer-generated content.

The internet has shrunk the world but people still rely on people they know and are influenced by their local culture. Trust of different advertising mediums from newspapers to television, magazines and radio varies across nationalities. Who trusts advertising most? Filipinos and Brazilians (67%) were found to be the most trusting of all forms of advertising. Who has the lowest levels of trust? Danes (28%), Italians (32%), Lithuanians (34%) and Germans (35%).

Google Less Reliant on Advertising Partners

As Google’s popularity grows, they rely less on advertising partners than ever. Here’s a case in point. CNNMoney.com reports that the advertising deal between Ask.com and Google is about to expire. Ask.com has Google’s sponsored links on its site but the contract will end at the beginning of next year. At first the company was confident they could renew the contract, but it hasn’t happened yet.

How things change. Google used to pay Ask.com and others to be their partner. Now Ask.com is doing the asking and Ask.com has more to gain than Google does on the deal. Here’s the data: in the second quarter, Google earned $997 million from ads on “partner sites.” Ask.com was responsible for about 10% of that, according to Barry Diller, CEO of IAC. That’s about $100 million. Google’s own sites brought in more than that—with $1.43 billion. Google shares in that revenue, maybe 80 to 85% of it. So the profit margins aren’t that thick—perhaps near 1%.