Internet temperature rising for SMEs
The current Internet boom is being fuelled by small and medium businesses embracing the Internet, as Simon van Wyk writes.
The stereotype of corporate websites is that the bigger the company, the more likely they are to be using their website as part of their marketing armoury to drive their business. But the Interland Group’s latest Business Barometer report has revealed that small and medium businesses are increasingly relying on the Internet for business growth.
The US survey of 780 leaders of organisations with less than 500 employees found that 72% have a website, and of those who have websites, 78% said their company was healthier (i.e., had a competitive advantage or stronger economic footing) because of their website.
More than 75% said their website was a tool that generates business leads, while 57% said they generate monthly revenue through online purchases or offline purchases that are influenced by their website and 53% said their website exists primarily to provide company credibility.
The most common website success measure was customer and prospect comments (54%), followed by site traffic (48%), sales leads (36%), online sales (24%) and internal business process efficiencies (21%).
Nearly one in four respondents is now generating at least 10% of their revenue online.
Eight-five percent of respondents said having an online identity was important or very important to their business, while 63% nominated enabling online interactivity, 54% executing online promotions and 53% conducting online transactions.
2005 record for Web growth
That survey is backed up by data from UK Internet services group Netcraft, which reports that the World Wide Web, is growing faster than at any time in its history, reaching nearly 75 million sites. Netcraft’s survey calculated that in October there were 74,409,971 sites on the Web, an increase of 2.68 million from the previous month.
The gain makes 2005 the strongest year ever for Internet growth, with the Web adding 17.5 million sites in only 10 months, easily surpassing the previous annual mark of 16 million during the height of the dot-com boom in 2000.
The measure passed the 70 million mark for the first time in August, as the Netcraft survey marked its 10th anniversary. The August gain of 2.8 million hostnames, together with the July’s increase of 2.7 million sites, marked the biggest two-month increase in the history of the survey and came just five months after the survey crossed the 60 million mark in March.
The first Netcraft survey in August 1995 found only 18,957 host sites.
A Netcraft analyst, told the BBC that the boom in Web sites is partly driven by more small businesses getting online. “There’s a lot of innovative projects going on out there and very clearly folks are making money now rather than just buying Super Bowl commercials.”
This point of view is backed up by the new Science, Technology and Industry Scorecard 2005, recently released by the OECD, which shows that businesses around the globe are committed to the Internet. Sweden leads the way with 82.1% of its businesses having their own sites.
Free shipping on shoppers’ wish list
In the US, the most popular innovation for online retailers this Christmas will be an old-fashioned one: free shipping. Nearly four out of five online retailers plan to offer free shipping during the holiday season.
According to the 2005 Shop.org/BizRate Research Online Holiday Mood Study, this is in line with consumers’ desires, as nearly 80% of online shoppers said that free shipping offers are an important factor when deciding where to buy.
Scott Silverman, Executive Director of Shop.org, said “Online shoppers are clearly motivated by promotions like free shipping, gifts with purchase, and special online offers… Because companies have planned for them as part of their overall marketing strategy, these promotions will not come at the expense of profits.”
All of the companies surveyed expect to see online sales increases from 2004. Some retailers are expecting big gains, with 19% of online retailers expecting holiday sales to double from 2004. Another 54% of online retailers expect to see growth between 20 and 99 percent.
Other interesting stats from the survey:
- 56% of consumers surveyed begin shopping for a particular item or gift at a specific merchant’s website
- 37% of shoppers will start with a search engine
- 18% start at a comparison shopping site
- 19% start at an auction site/shopping portal
- 29% plan to start their online shopping via stores or catalogues
- 92% of pure play online retailers will advertise offline this year
- 54% will be investing in magazine advertising
- 41% will advertise in newspapers
- 35% will advertise on television
- 32% will use radio advertising
TV ratings surveys cop a serve
As new media change the way people interact with traditional media, the usefulness of TV ratings figures in the US is coming under attack. Writing recently in CMO Magazine, prominent marketing consultant Rob Duboff has launched a diatribe against Nielsen, the company which for decades has been synonymous with TV ratings in the US.
Duboff said that random selection and recruitment were a serious problem with the 5,100 households across the US who have people-meters installed on their TV sets.
Only 41.3% of people asked to participate accept the offer, according to official figures. Duboff wrote that the low level of acceptance “seriously undermines the credibility of the sample because it means that those who do accept are quite likely to be different from the majority who don’t want to participate.”
He said, “Even if you want to accept the sample (which few experts who are not paid by Nielsen do), the problems with what is being measured are even worse. Nielsen says it is measuring who is watching, but, at best, it counts who was in the room when ads were being shown. Were the viewers watching or eating or reading? Nielsen doesn’t know - so neither does its customers.”
“Quantitative research,” Duboff wrote, “is evaluated on its reliability and validity. Nielsen ratings are neither. Back in the day before computers and mobile phones and TiVos, maybe knowing the set was on when the ad was shown was sufficient to infer the ad was being watched. That inference now flies in the face of common sense.”
Despite this, Duboff said, advertisers continue to base multi-million dollar decisions on the ratings figures. He said that was because “hard numbers drive out soft ones. The industry needs numbers to decide whether and how much to pay for commercial time. At the same time, the buyers and sellers don’t really understand (or want to understand) market research. So the Nielsen numbers continue to be saluted, just as the Emperor was (in the parable of the Emperor’s new clothes).”
Nicholas Schiavone, former head of research for NBC and now a strategic research consultant, has closely followed ratings issues. His explanation: “Insofar as Nielsen ratings are considered the coin of the realm, even if they have all but lost their intrinsic value, as long as people see everyone else trading on them, then they feel obligated to trade on them as well.”
However, Duboff concludes, “Exposure to advertising of any kind ought to be understood simply as an analytic starting point. The real test of an ad is whether it ultimately helps to motivate an action (typically and incremental purchase of some sort).
“The industry seems relieved at being able to measure eyeballs (or pretend that it can) for each ad produced and aired. This avoids the more important question of whether or not the ad affected those who saw it. It’s kind of like the Emperor parable: All the focus on the clothes distracts the subject from the real issue of whether he could get the job done. Nielsen, at least as it is now performing, cannot.”