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WSJ on small-biz marketing…
August 3, 2006, 1:25 am
Filed under: marketing

Posting this oldie but goodie here.
THE JOURNAL REPORT: SMALL BUSINESS

Where the Ad Dollars Go
As old media give way to new, small firms find more-productive ways to get their messages out
By SUZANNE VRANICA
May 6, 2006; Page R4

The Internet is helping small businesses alter the way they sell themselves.

Some small-business owners are forsaking traditional advertising venues for online advertising — including ads in search engines Yahoo Inc. and Google Inc. and free listings in online classifieds sites like Craigslist. Others are using Internet firms like Spot Runner Inc., which help small businesses create affordable commercials and buy air time for those ads in local television markets — something that’s usually too costly for smaller firms.

“The Internet has really leveled the playing field for the little guys,” says Jason Hacker, owner of Tech Plummer, a computer-repair company in McLean, Va. “The Internet and new technology helps me to get the word out.” Mr. Hacker recently began doing some TV advertising with the help of Spot Runner.

Small companies spend about $30 billion annually on advertising, according to market-research firm Kelsey Group. And old advertising standbys — local newspapers, community bulletins and the yellow pages — will likely continue to receive a large chunk of those ad dollars. The yellow pages “remains the single largest vehicle for small businesses,” says Greg Sterling, a principal at Sterling Market Intelligence, a research and consulting firm in Oakland, Calif., that focuses on online consumers.

Still, online companies like Spot Runner and small advertisers themselves see the potential for real growth for these newer ad venues — especially since the Internet allows small companies to more easily reach a wider swath of consumers. Here’s a look at where some of the small-business ad dollars are starting to shift:

LOCAL TV ADVERTISING

For many small businesses, marketing products on television has long been a pipe dream. “It’s very expensive to do TV,” says Bonnie Manjura, co-founder of Gilbert & Manjura, a small marketing firm in Longwood, Fla. “You can’t just buy one TV ad and reach the market.”

And small businesses that do buy air time on a local station usually can’t afford to spend a lot on the production — ending up with cheesy ads that run late at night.

But companies like Los Angeles-based Spot Runner are now making TV advertising more accessible. For less than $500, Spot Runner will customize one of several thousands of commercials it has created for specific industry segments. The advertiser can then book time in local TV markets through the Web site, and Spot Runner will deliver the commercial electronically to the TV broadcaster or cable company for insertion into the programming. Spot Runner takes a commission on the sale of the ad.
[online ad chart]

Barkinglot Inc., a Chicago pet-boarding service, ran a commercial in November in several local markets through Spot Runner. The ad featured a group of dogs talking about their time at Barkinglot. While the spot was a far cry from the elaborate commercials produced by marketing giants like PepsiCo Inc., it was still much better than the typical local ad fare that has lackluster graphics and a shakey camera feel.

Barkinglot paid $299 to create the ad and purchased $1,400 in ad time, which included having its ad run 144 times over a two-week period on Chicago cable systems. Barkinglot owner Brad Kriser says customer phone calls jumped by 20% during those two weeks.

To fund the move into TV, Mr. Kriser, who has a $40,000 annual marketing budget and has used it largely on local newspaper and yellow pages advertising, says he is cutting his newspaper advertising.

ONLINE SEARCH ADS

Gary Ettore, co-owner of Ettore Salon & Spa in Philadelphia, had always been fascinated by online advertising. But like many small-business owners, Mr. Ettore says he believed he needed to be a “computer whiz” or “computer programmer” to figure out how to do Internet advertising.

Then about a year ago, a sales representative from Yahoo’s marketing group called Mr. Ettore about placing local search ads on the search engine. Both Yahoo and Google have been making a big push to woo local businesses by offering local search services, which can help surfers locate businesses in specific cities.

In a matter of days, Ettore executives were working with Yahoo representatives to come up with a local search ad — a detailed Web page about the salon that the search ad would link to. The page has a description of the business, photos of the salon, a customer review section, a link for directions to the store and one to the company’s own Web site. The monthly ad package, which also includes search ad listings that appear on Yahoo’s home page, cost about $250 to $300 a month. Mr. Ettore subsequently bought a similar ad package on Google, which costs roughly the same.

Before Mr. Ettore put his ads on the two search engines, his Web site was getting about 20,000 hits a quarter. Today, he says his site gets on average 280,000 hits a quarter. More important, he says, about 80% of his new customers say they found the salon on the Internet.

The foray into online advertising has affected the salon’s use of other ad venues. The company has eliminated its use of radio advertising and national magazine advertising. These old-media options don’t bring in the business, says Mr. Ettore, adding that he now relies largely on search advertising and some local newspaper ads.

“My ad budget has been cut,” he says. “I used to spend $60,000 to $70,000 a year on marketing. Now I only spend $20,000 to $30,000.”

LISTINGS ON CRAIGSLIST

Over the past few years, many small businesses have turned to popular free online classified-ads sites such as Craigslist, a privately held company. While these sites are known for their personal and jobs classifieds, they also offer a listing of services that is increasingly being used by small businesses.

In February, the services section of Craigslist had 672,404 ads, up from 132,257 ads in February 2004.

About a year ago, Perrone Maintenance Corp., a carpet-cleaning business in Brooklyn, N.Y., was running weekly print ads in several local newspapers. “I was spending a lot of money,” says Don Perrone, the company’s owner.

In July, the company, which does about $100,000 in annual revenue, began posting an ad on Craigslist New York City. Mr. Perrone, who is also a New York City detective, posted an ad that contained several photos, including one of the cleaning machine and another of a living room displaying a clean carpet. The listing also contained the company’s telephone number and a link to its Web site. Today, Mr. Perrone says, he gets about 90% of his business from Craigslist. “I stopped the newspaper ads after a week on Craigslist,” he says, “because I was getting about 15 calls [a day] from Craigslist, and half of them led to steady service contracts.”

Andrea Lawson Grey, a 47-year-old San Francisco resident, uses Craigslist to promote her painting and drywall company. Her ad reads: “Call for kitchen, baths, additions and decks, drywall and tile… woman-owned company.” The listing also includes her phone number.

Ms. Grey relies solely on referrals and Craigslist to get business. Today, “Craigslist represents 75% of my business,” she says. “It seems to give me enough contacts that I don’t need to do anything else.”

One caveat: Each listing lasts only one week. So businesses have to repost their ads every seven days.

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