ReachLocal President: SMBs Aren’t Buying Ads ‘Where the Eyeballs Are’

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While it’s become obvious that digital marketing can make or break many small businesses, there is still a surprisingly high number of SMBs that are barely online. And even as social media has risen in importance, a recent Citibank study found that only 41% of small business owners have used social marketing channels (like Facebook, Twitter, and LinkedIn) over the past year. Online marketing firm ReachLocal helps local businesses bridge that digital divide. The company sets up a businesses’ online presence and provides tools to monitor where they show up in search engine results, understand their online advertising campaigns are working, update social media and more. So how much does that Facebook page or display ad matter? And what’s the best way for a small business to utilize all the digital tools out there?

Street Fight talked to ReachLocal president Nathan Hanks recently about what works and doesn’t for online marketing, how small businesses are “misappropriating” the money they spend on media, and why integration is the key to rich digital experiences.

What are some of the things businesses need to do to keep from falling behind online?
First of all there’s being good at acquisition. When I say acquisition, like how do I go out and find a customer … And there’s a bunch of things you could do there but I think the big buckets are search, display and social media when it comes to online.

The next thing I’d say is “convert.” You need tools to help you convert customers. Now people are going to your site or they are going to your social media page, how are they going to interact with you? Do you have video to capture their imagination? Do you need to have chat? Do you have a special offer? Do you have deals? Can I schedule online? Businesses need to think about their conversion tools. How do I get people to see me and how do I make it easy for them to actually do business with me?

And then there’s the idea of “retention”: how do I actually keep the customer? There really is a set of processes in terms of getting and keeping customers and in the space today, especially in the world of tech, it’s still very immature.

What mistakes are businesses making in their marketing? Is it just ignoring the processes you talked about, or is it something else?
Today, 80 or 90 percent of media dollars are spent offline, but 60 percent of consumer media time is online. So if you kind of look at where SMBs spend their money, it’s so misappropriated compared to where the eyeballs are. So, that’s one clear mistake. I think one is, yes, people are not properly allocated to online and don’t have effective online strategies.

Number two, when it comes to converting the customers they attract, you’d be amazed how many businesses don’t even answer their phones. … Businesses need to think about how to make it easier to do business with people online.

Then the third big mistake, I’d say, is that nobody has any retention marketing programs. This blows my mind, if you think about what businesses do to attract prospects, the tools they use to convert prospects to customers, and then what they do to really stay interactive with their customers. Other than saying “Please follow me on Facebook,” they are just not very mature strategies.

The fact that all of marketing and advertising has become digital means it’s much more measurable. But, until it’s integrated and connected, you can’t create a really rich digital experience for the consumer.

Have there been the shifts or changes recently in how local businesses are marketing themselves online? Are there any big trends right now?
Well, there’s the obvious ones. Everyone is going out and building a Facebook page. pay-per-click ads are at an all-time high, and lots of people are buying search ads. I think those are the two things that you are seeing happening. … But, there’s so much more to do.

Do you think it’s going to continue to be all about SEO and social media for SMBs, or do you think there’s something else out there that people should be focusing on?
If there something else out there, I don’t know what label I would slap on it. But, I would say it’s really this customer of life-cycle management. It’s this idea that the whole process of finding, converting and retaining your customers should be a single, seamless, digital experience … In my mind, over the next five years, that’s going to be the big thing.

Do you think location-based technology going to be a bigger tool in online marketing?
I do think location is very handy. Where I think location will be a big play is in the place where we are today, which is advertising … I think location is super-important in advertising and advertising is a massive industry.

What I think I’m more interested in is what’s the thread of how do you maximize the customers that are already coming to you. Because there’s a lot of attention in hyperlocal, but I think the real thing — and I’m already seeing it the groundswell of companies that are starting to address this — is: “okay so I saw you through some product or service. I heard about you through social media. I saw your search ad. How are you really going to maximize your relationship with me as a client?” It’s to really digitize that experience.

How is the internet as a marketing tool — as well as social media and LBS — changing the relationship between local businesses and customers?
All of these [technologies] that are going to be made possible weren’t possible in the offline world … The internet really can make everything more trackable. Your advertising and marketing efforts, your customer management efforts, your retention efforts. But the problem is today there are so many companies that allow you to track something, but it’s not integrated because it’s just so early in this game.

The fact that all of marketing and advertising has become digital means it’s much more measurable. But, until it’s integrated and connected, you can’t create a really rich digital experience for the consumer. If all of these systems don’t talk to one another, it’s valueless. Now the key is how are these companies going to come together to integrate the experience. But, this also goes further to why I don’t think local businesses do this themselves, but it may be easier for them to do these things themselves in the future when there are less tools and it’s more integrated.

 Isa Jones is an intern at Street Fight.

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