What Will It Take to Bring All Businesses Online?

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smalltownA great number of companies and commentators have worked tirelessly over the last several years to get the word out about local search. Many small businesses are claiming their Google and Bing listings, interacting with reviewers on Yelp, and using social sites like Facebook and Twitter. And inside the local bubble, it might seem as though the importance of these activities has been long established. Surely only a business stuck in the stone age would ignore the statistics we all know and love about searches with local intent, the explosion of mobile, and the critical need to be well represented in Google search results.

How, then, are we to take the report released in these pages by Yodle last week, showing that 52% of SMBs still don’t have a website?

A website? That’s online marketing 101. And this very statistic has held more or less firm for several years now. A pessimistic person might conclude that the effort to get the word out on local search hasn’t moved the needle at all.

Sure, many of the 48% of businesses who do have a website are also conducting other online marketing activities of various kinds, with their attention split between SEO, PPC, social marketing, local search, and other activities.

At UBL, our customers fill out an extensive business profile so that we can populate online business listings on various sites with complete and up-to-date information. Businesses supply a website URL as part of that profile 93% of the time, suggesting that the vast majority of our customers fall within the 48% identified by Yodle.

Not surprising, and it stands to reason that the same ratios would hold true for most local search solution providers. For those hoping to provide competitive services in each of those online marketing sectors, 48% of the U.S. market represents millions of businesses, and more than enough market share to go around. Still, it’s curious that we haven’t seen more growth in overall adoption.

How long has it been true that roughly half of businesses do not have a website? A January 2009 study put the adoption figure at 44%, so this latest 48% suggests a rate of growth of less than 1% per year (about 0.89% to be precise), and this amidst a phase of massive and dynamic expansion of local services. It’s worth wondering whether some businesses just don’t want or need to be online.

If we take off the local search blinders for a moment, we can see that supposition making some sense. Word of mouth reputation, geographic location, foot traffic, print advertising, and other traditional forms of getting the word out may do quite well for many businesses in small towns and big cities alike. As Louis Gagnon of Yodle noted, online marketing is complex and business owners are preoccupied with the day-to-day needs of serving customers, leaving little time to focus on activities with a less clear-cut reward for their energies. The Yodle study also notes that SMB proprietors see family and time off as important considerations. They are not necessarily concerned with being the biggest player in the market. Ranking sixth in a Google search result may not be a fate worse than death in their minds so much as we suppose it to be. The exceptions to this rule are the folks who come to us, perhaps skewing our sense of the SMB population as a whole.

Why does this matter? Surely we can continue to serve the needs of SMBs who see the value in our services and continue to slowly convince others of that need. If we take the Census Bureau’s 2008 statistic of 27,281,452 U.S. firms as a measurement of the total universe of businesses, and assume (as the Census Bureau notes) that the vast majority of these are SMBs, allowing us to apply the findings of Yodle’s study and previous studies, we can predict that about 243,000 new businesses, 0.89% of the total universe, will be added to the ranks of online marketing clients every year.

It’s good to know that a steady stream of new clients can be predicted. At that rate, however, it will be an astounding 58 years before all businesses are online.

This back of the envelope math is not to be taken too seriously, but the general conclusion is hard to refute. Growth in adoption appears to have plateaued years ago. Though the health of the local search industry may not be immediately threatened, this has implications for its future. In particular, the concept of a fully digitized corpus of online business data, one that has divorced itself fully from the need to rely on legacy sources of data like keyed phone books, seems laughably far away from this perspective.

Without those legacy sources, half the businesses in the U.S. would disappear from online search. Barring a sea change in the strategies for driving adoption, this remarkable fact is unlikely to make any impression on the businesses who would need to take action in order to change it.

Damian Rollison is vice president of product and technology at Universal Business Listing, a company dedicated to promoting online visibility for local businesses. He holds degrees from University of California, Berkeley and the University of Virginia, where he worked at the Institute for Advanced Technology in the Humanities. He can be reached via Twitter.

Damian Rollison is Director of Market Insights at SOCi.