A lot of statistical data and analysis is published about SMB online activity in the top US markets, often leaving out many of the tier two cities. In this post, I will share some data on the online visibility of local businesses in Columbus, Ohio. With a population of some 750K, Columbus and its surrounding area are home to over 80K small to  medium businesses.

As it turns out, many Columbus business owners are active online, building websites, updating their listings and advertising their business on various sites. The following chart shows the percentage of Columbus SMBs who have a visible website, who have claimed their local listing, and who advertise online. The data is based on Palore’s coverage of the leading search engines, yellow pages sites and local search sites (excluding PPC ads on search engines that are difficult to track).

As always, it is important not to bundle all local businesses into one group, as different verticals often behave differently online. The chart below shows the same data for Columbus plumbers.

Interestingly, plumbers are twice as active as the average Columbus SMB when it comes to online advertising. However, they are almost half as active when it comes to publishing a website and claiming their business listing. This data is consistent with what we see in other major cities where different verticals exhibit different levels of online activity.

While this does not introduce significantly new or contradictory findings, it merely sheds some light on a tier two market that exhibits similar characteristics to those of larger markets.

Start-ups and large media companies alike tend to focus on large and prominent cities when launching new Internet services. Therefore, your typical coffee shop in San Francisco is bombarded with offers from Internet companies, offering innovative services from online table reservations and virtual coupons to sundry online advertising options.

As it turns out, your average café on Columbus’s High St. may not boast an active Twitter account, but its owner probably has some online activity and is probably more available to hear about new ways to promote his business online.

Local businesses typically use search marketing to achieve two main objectives: getting customer calls and walk-ins. They do this by publishing their address and phone number in search engines and local directories so that an interested customer can take action one way or another – by walking into a restaurant or calling a plumber for example.

But while getting more customers on the phone or through the door is the declared offering of many SEM agencies, “Advertise with us and your mailbox will be packed with new emails every day!” is one advertising slogan that you would be hard pressed to find online. Many small business owners are happy to “Pay Per Calls”, or “Pay Per Actions”, but getting unsolicited emails is something that most people might shy away from.

Last month, Palore was commissioned to research the state of SMB emails online, and the results suggest somewhat different conclusions. SMBs typically appear online in directory sites (e.g. Yellowpages sites, local search engines, vertical sites etc.) and, if available, in their own business website.

When looking at directory sites, we found that roughly 10% of the businesses display an email address on one or more of the major directories. Note that this is an aggregated number covering all major directory sites – when looking at any single directory, we usually found just 1%-2% of businesses that displayed an email address in their profile page.

When looking at the SMBs’ websites, the numbers are also quite low. To begin with, about half of SMBs do not have an active website at all. Of the remaining half, we usually did find an email address in one of the websites’ pages. However, a closer look showed that a fair share of these emails appear to be non-personal email addresses that are not checked regularly by the business owner, but are rather a technical contact of some sort.

In other cases, we found local business websites with multiple email addresses, as in corporate websites.

And yet, in many cases we did find what appeared to be personal, frequently-checked emails addresses.

While our research seemed to confirm the notion that few SMBs would choose to publish their active email address openly, a closer look suggests otherwise. Since only a minority of business owners are actively engaged in updating their listing on directory sites, and less than half maintain an active website, in reality, a very significant portion of “Internet active” SMBs do publish their email address on the Web.

Many businesses use email marketing to communicate with their customers. However, why so many small business owners publish their email address openly is unclear to me. It may be that incoming email is an effective communication channel that generates a lot of new business. Of course, it may also be that many business owners are simply ignorant of the perils of spam.

SEM agencies continually try to demonstrate ROI for SMBs’ search marketing dollars through measurement solutions such as call tracking systems and online reservation systems. If indeed SMBs use search marketing to generate new leads and customer emails, then SEM companies may want to monitor that channel as a result of their search marketing efforts as well. But that is a big IF… what do you think?

The handful of SEM companies that we work with at Palore make millions of calls to Small and Medium Businesses (SMBs) every year. This raises the question of whether the market for SMB online advertising is saturated, and how much room there is for growth.

A good (albeit somewhat simplistic) way of answering that question is by looking at how many SMBs are currently marketing themselves online, and more importantly, how many are not. It is this latter group, local business owners who still don’t advertise or otherwise promote themselves online, that defines the room for growth in this industry.

In this post, I will share some statistics on what local businesses from two categories – dentists and limo drivers  – are currently doing in one small US market. The following charts present their online activity, based on a project we ran in the Alexandria, VA area, covering over 60K businesses. The data covers these local businesses’ activities on the top search engines, Internet Yellow Pages (IYPs) and local search sites.

I’ll start with some definitions: “Widely listed” means businesses that appear (even as free listings) on at least half of the leading search engines, IYPs and local directories. “Have website” means businesses that have their website listed on one of the above directories (there may be additional businesses with websites, but these did not appear on any of the main directories.) We assume that the other labels are self explanatory.

The blue section shows how many businesses fall into each category, while the orange section shows the portion of businesses that do not – for example, 48% of Alexandria dentists have a website, while 52% do not.

Obviously, there is more to online marketing than being widely listed and having a website – there is a myriad of effective techniques, from adding a video to properly optimizing your site for search engines. However, this snapshot does capture only one aspect of online involvement by these SMBs.

Getting back to the original question, I would argue that if the orange areas  represents the growth opportunity for both SMBs and marketers, then the answer is a resounding “Yes”, and further, the growth opportunity in online marketing for SMBs is significant, and “No”, the market is still far from being saturated.

When dealing with someone, the first thing that you want to know, is who that person is. In the SMB world, this boils down to what category a local business belongs to. In the old days of the yellow pages, consumers were used to knowing search the pages for, and media companies were used to selling to many distinctly different categories of SMBs.

However, in today’s online reality, we find that many local businesses fall into multiple categories. For example, “L & G Drain Cleaning” from Falls Church, VA, has 5 categories on Superpages (Plumbing Contractors, Sewer & Drain Cleaning Service & Repair, Plumbing Service & Repair, Water Extraction & Damage Restoration, Fire & Water Damage Cleaning & Restoration).

I wanted to take a more scientific view of the matter, so I asked my team at Palore to run a few queries on our database, which covers millions of data points on SMBs’ online activities throughout the US.

The following chart shows the number of categories per business in a couple of large IYP sites around Alexandria VA, covering some 62,000 SMBs.

As you can see, while 40% of SMBs have just one category, most have two or more. This is not necessarily a bad thing; the fact that L & G Drain Cleaning has 5 plumbing related categories (see above) is beneficial for both consumers and the business owner.

However, anyone who has spent some time looking at SMB categories knows that there are quite a few mistakes and cases of abuse. Take a look at Empire Golf School from NY that is listed under the general “Schools” category, right next to colleges and Christian schools; or nearby Land’s Home Remedies that is listed under no less than 46 categories!!

From the business’s perspective, being listed under multiple categories is not a big problem. L&G Drain Cleaning probably would not mind being listed under the “Pizza” category in addition to his real categories . While he may get a few irrelevant calls, he probably would not mind getting the free advertising.

However, missing out on your main category is a big deal, as noted in David Mihm’s Local Search Ranking Factors, associating your listing with proper categories is critical for being found by potential customers.

From the consumer’s perspective, mis-categorization can be a cause for frustration – no one likes finding plumbers after running a search for “Pizza.” And this, by extension, becomes a problem for the local search sites. Search engines and, to a lesser degree, Internet Yellow Pages, are gradually replacing the categories model with a keyword-based model, but like any hundred year old tradition, it’s a habit that is hard to break.

Categories were great in the days of print yellow pages, where each business (usually) appeared under one physical section of the book, but nowadays, when a business can be listed under 46 categories, the time has come for a change.

Lately I’ve been speaking with SEM experts about what small business owners should do to increase their online visibility. While opinions vary, most experts agree about the importance of ranking high on Google’s various organic search results.

Listening to them explain what a local business can hope to achieve, I found that the language was hardly ever about being the “only winner” in a category, but rather being in the “leading group of search results”. This is consistent with the reality of search, where we are used to seeing multiple results in each page. Being “among” the 10-pack is often considered a great achievement, not to mention having your website or profile page appear in the first search results page (i.e. along 9 other links). In other words, in every category within a given market, there are usually a handful of winners who enjoy a good deal of online visibility.

And then, during a chat with Will Scott from Search Influence, I ran a Google search for “New Orleans Chiropractor” which brought up this page:

What I found striking about these results were several things:

1. There was just one “one box” result (not a 10 or 3 pack), dominated by a Dr. Dubois.
2. Above the one box, there was no typical “Local business results for…” link that usually takes the user to a list of other chiropractors.
3. The first organic search result below the one box belongs to the same Dr. Dubois.
4. The following (indented) link is from a page on Dr. Dubois’ site.
5. While the next link (already mostly below the fold) directs to a different chiropractor (Dr. Thompson), a quick investigation shows that he and Dr. Dubois share the same phone number and are probably affiliated.
6. Most of the remaining links on the first page are directory sites, but even there, Dr. Dubois managed to dominate a couple (e.g. on InsiderPages).

While this is no LA, I should note that there is no shortage of New Orleans chiropractors in Google’s database – you can find hundreds of them if you run the same query on Google Maps:

There is no need to expound the benefits of such an overarching domination of the search results. Consumers using these keywords on Google would be hard pressed to find other chiropractors in New Orleans, and the impact on both Dr. Dubois’ business as well as on his competitors is probably significant.

As far as I can tell, Will’s work in this case was a mix of some good old fashioned SEO and a not too competitive landscape. But the end result shows just how much this industry can do for those SMBs who are ready to take advantage of the opportunities presented by local online search.

(I should note that I am not affiliated with Will or with Search Influence in any way.)

Having worked in the local search space for a while, I am often asked how is it that SMBs are so slow in adopting self-serve systems in their online advertising. And indeed, in the age of Internet advertising, when anyone can purchase keywords on search engines, is there really a need for a middleman anymore?

While an important function of these middlemen is to convince the local plumber or dentist to spend their hard earned money on online advertising, they also help guide the SMB owner through the planning phases of the ad campaign, explaining the various options and helping to optimize the campaign.

In this post, I will review a number of local search platforms, from the traditional to the new, and examine the complexity that is involved in advertising on them.

Print Yellow Pages, the forefathers of SMB advertising, are relatively easy to understand – in order to gain visibility, an SMB has to purchase a large ad on the first page of his category. Pretty straightforward and simple:

Online Yellow Pages have added new features to their offerings, but the concept is still mostly the same – visibility is determined by size and placement of the SMB’s ad:

Local Search Sites such as CitySearch have added yet another level of complexity with features such as performance advertising that require some additional explaining.

And then we get to what many regard as the most effective form of local online marketing – search advertising. Search Engines have opened a whole new spectrum of options that make it far more difficult to understand and manage local ad campaigns. There is constant discussion on what SMBs should do to rank better (a couple of weeks ago, David Mihm posted his second volume of Local Search Ranking Factors – 27 experts analyzed and evaluated 49 criteria). Many SMBs may think that if they appear “first” on Google Maps in a certain relevant search, their job is done… However, this is often far from true.

Take for instance the following searches, conducted a few minutes apart, and the results they generate.

Search 1: plumbing contractor los angeles

Search 2: plumbing contractors los angeles – note that “The Best Plumber I Ever Had”, #1 from the previous list, is nowhere to be found.

Search 3: cheap plumber los angeles

Search 4: emergency plumbing los angeles, ca – and here is “The Best Plumber I Ever Had” again…

There are many more possible searches in this category and it is very likely that each of them will yield different results. Small, seemingly insignificant variations of a keyword (e.g. from singular to plural) or a geographic modifier (adding “ca”) can change the content of the 10 pack. This inherent complexity has bred a whole new class of companies like ReachLocal, Yodle and Webvisible, that help SMBs effectively manage such campaigns.

Looking at the development in the local advertising industry, from print to online, and even within the online world, it is clear that if anything, local search advertising services are getting more complicated. It is ironic that the question of whether mediators are still required in this industry has intensified in parallel to the ever growing complexity of online advertising. A complexity that for now, for the majority of SMB owners, can be overcome only with the help of… a middleman.

Being a big believer in self-serve, I predict that one day these complicated ad services will also be automated into systems that mask their complexity and enable users (SMBs) to simply enter their needs and budget and get the right solution. However, that will take some time and until then, the middleman will remain a critical component of this eco-system.

Today, the question every small business owner needs to ask himself is: will search engine users be able to find my business online?

The online visibility of a business is difficult to measure. Having a good website is just the beginning. SMBs need to be listed on leading directory sites, vertical and local sites and they need to know which sites will bring them the right customers and a lot of them (see our post on the importance of measuring SMBs’ online visibility for more on that).

Moreover, online visibility of SMBs is a relative term. To measure an SMB’s online visibility we have to compare it to the visibility of its competitors—local businesses in the same vertical and in the same market. For example, a New York dentist with a good website, who advertises on many directories, may have low online visibility, because his local competitors invest even more in online advertising. Conversely, a Milwaukee dentist, with a mediocre site and only a claimed profile on Google, may be the most visible dentist in his area because his competitors do not do much with their own online presence.

Take a look at how it looks on a map: A Boston dentist, Business A (the blue icon on the map), can see how visible his business is in comparison to 10 of his direct competitors. The green icons represent businesses that are more visible than Business A, and the red icons represent businesses that are less visible than Business A.

Business A, Beal Mark, advertises on an IYP site and is listed on various online directories. Most of his competitors have done less and are therefore less visible to new customers, like Business B, who has claimed his business profile on two leading search engines, but does not advertise. Other dentists are more visible to new customers, such as Business E, who advertises on an IYP site, and also uses PPC (Pay Per Click) ads on local sites. 

It’s like the joke about the two friends who are walking in the jungle, when suddenly a tiger appears in the distance, running toward them. One friend pulls a pair of ‘Nikes’ out of his bag and quickly puts them on. With a surprised look, the other friend says, “You don’t really think you can out run that tiger with those?” “I don’t need to out run the tiger”, his friend replies, “I just need to run faster than you.”

Both SMB owners and companies that sell online advertising to SMBs should take this into account: not all markets and verticals are the same, and should be approached differently. While SMBs in some markets can get to the top of the list by spending just $20 a month, others, in more competitive markets, may need to spend thousands of dollars to gain online visibility.

Our clients often ask us for help in picking their next markets and verticals—they are usually interested in the hot markets and verticals, where many small and medium businesses (SMBs) already invest money online. Palore provides this information by analyzing millions of web pages and seeing which SMBs advertise and where they advertise.

The chart below shows the penetration of SMB advertisers on leading IYP sites in 8 verticals, covering 8 major cities. The bright blue cells indicate a low percentage of advertisers in a specific market/vertical, darker cells indicate higher percentages of advertisers per market/vertical. The highest penetration we have observed is a little under 50%.

As can be seen in the chart above, some verticals show a stronger penetration of advertisers (e.g. life insurance), and some markets are generally stronger than others, with a higher percentage of advertisers across all verticals (e.g. Seattle).

Much of this information is not news to anyone in the industry. The interesting way to use it is to find where the opportunities are. For example, construction companies generally advertise a lot, but for some reason, this is not the case in Las Vegas—there may be an opportunity there (although construction in Las Vegas is a touchy subject just now). When you look at the chart, basically any bright cell surrounded by darker cells represents potential, since it means that SMBs in that vertical advertise a lot elsewhere, but not in that market, and that other verticals advertise a lot in this market, but not in that vertical. Having this detailed information and making an educated decision can mean the difference between success and failure of future launches in new markets and verticals.  

Before investing millions of dollars in a new market or vertical, be sure to look not only at the penetration of advertisers, but also at the total number of businesses in the specific vertical and market. For instance, while in Minneapolis, 28% of movers advertise on IYPs, the total number of businesses in this vertical on leading IYP sites is under 200.

Furthermore, in some cases, it is also important to look not only at the industry averages, but also at how many SMBs advertise on a specific (competitor) site. You may want to focus on verticals and markets that have proven to be successful for a certain competitor or rather take a shot at the ones where the competitor has yet to succeed.

The decision of where to launch your services next is crucial. Basing your decision on concrete market knowledge can make the difference between failure and success.

The term “online visibility” usually refers to the visibility of sites on the web.  This column will discuss the online visibility of small and medium businesses (SMBs) and why it is harder to define, identify and measure SMB presence than web site visibility.

Web site visibility consists of several relatively easy to measure features such as how well the site appears in search results on search engines or how many external links lead back to the website

The online visibility of an SMB is more complex. For one thing, the way a website appears online is very conclusive: the site has an explicit, unique URL. An SMB, on the other hand, can have various, sometimes very different, online appearances. The main attributes that comprise the appearance of an SMB are its name, address and phone number, and these can appear differently on different sites. For instance, an SMB’s address can be “1241 Main St., LA” on a vertical site and “serving the greater LA area” on an IYP site. The same SMB can also have its real phone number in its IYP listing and a tracking number on a local directory.

But online visibility is not just about being listed in many places. What is important is how many consumers see the SMB when searching online, or put slightly differently, how much traffic the different sites and directories have. However, general traffic figures are not enough. For SMBs, it is important to know which sites and directories are more suited for their prospective customers. For example, it would be fairly safe to assume that when a consumer searches for an attorney, she will turn to one of the vertical sites specializing in attorneys, such as Lawyers.com or FindLaw, rather than to one of the local directories, where she would usually go to find a restaurant.

Furthermore, an SMB’s online visibility is affected by the way it is listed. Advertising on a directory or even claiming your listing significantly improves an SMB’s visibility. If you are a Realtor who advertises on a local directory and you appear in the first three results, you’re a lot more visible than another Realtor who has a free listing and appears on page 37.

To complicate things further, an SMB’s online visibility should not be calculated in objective terms, but rather relative to other businesses in its market and vertical. For example, even if a Wyoming plumber is much less visible than your average New York lawyer, he may still rank high if he is more visible than other plumbers in Wyoming. SMB online visibility, on top of everything else, is a relative term.

In other words, online visibility for SMBs involves a broad array of parameters, on all forms of local search sites. It should also take into consideration the SMB’s own website – a roofer with a highly optimized site can still have good visibility even if he is not listed well on the leading directories.

Since we already collect information about the appearance of SMBs on leading search engines, IYPs, local and vertical sites, dealing with the complex merge issues described above, we decided to compile an online visibility measurement in some categories. The chart below shows the online visibility figures for contractors in Georgia:

Understanding the online visibility of an SMB is very important for companies that sell online marketing services to SMBs. This knowledge can help them improve their offering to existing customers and improve sales conversion rates. For SMB owners, knowing what their real online visibility is, especially compared to their competitors, will let them know where they stand and how they can improve their online presence and reach more customers.

SMBs who wish to advertise online now have many options: vertical sites, local sites, search engines, traditional and new directories; SMB owners need only choose where they would like their business to appear. Online directories are a common choice for advertisers, and the group at Palore chose to examine the more traditional type of national directories such as Internet Yellow Pages.

We decided to focus on the south of the US for a change, rather than the top markets on the coasts. Looking at leading categories of SMBs in 3 major cities: Atlanta, Dallas and San Antonio, our review covered over 500,000 businesses on leading directories. Out of these, we focused on the 10,700 businesses that advertised on traditional directories, and we checked if they perform other online activities. First, we examined how many of these advertisers dabble in other forms of online visibility and claimed their business profiles free of charge (either on search engines or on other online directories). See the chart below for the results:

As you can see, 30% (3,200) of the businesses we analyzed claimed their business profiles on other directories or on search engines.

Upon further examination, we found that an even larger percentage of these advertisers also advertised elsewhere, on local and vertical sites, as well as on search engines. See the chart below:

A majority of 65% (6,900) of SMBs who advertise on traditional online directories also advertise on other sites.

It is clear from the two charts above that most advertisers on traditional online directories also engage in other, either free or paid, activities to increase their online visibility. In other words, if you’re an advertiser on sites such as IYPs, odds are you’re also advertising and promoting your online presence somewhere else on the Web. By the way, this also applies to businesses that advertise primarily on local and vertical sites.

What is even more interesting is that of over 500,000 businesses we examined, we found that the vast majority of SMBs do nothing in terms of online advertising or visibility. SMBs are hard to get in the game, but once in, they try out different things.

Selling additional online services to that group of “low hanging fruit” SMBs is a common practice among online marketers. But the real challenge presented here is how to get all those SMBs that are still on the sidelines into the game – a challenge we face as an industry. What is the best way to get them involved? A group of SMBs we called “seekers” in our previous column, SMBs that don’t advertise online but do claim their business profiles, represent a bridge to this untapped group. I will be talking about this in further deatail at LeadsCon in March, where a group of industry experts will discuss ways to attract SMBs online.