Why don’t local businesses use the Internet?

John makes a burrito with his goose sauce

John makes a burrito with his goose sauce

Back in the mid 90s, I frequented The Weinery, a total dive of a hot dog place in the Cedar/Riverside area of Minneapolis. Jerry, the then owner, collected email addresses and would occasionally send out specials. Say the password when you placed your order and you got a discount.

The other day, I received an email from John at Pedro & Vinny’s. John ran a burrito cart in downtown DC. (I wrote about John’s honor system earlier.) He moved away a while back. Friday’s email announced that his burritos will be hitting the DC streets soon.

But John and Jerry are rare among small business owners. In the last 13 years, Internet use has exploded and tools have gotten easier and easier. Yet few local businesses do a good job of communicating with their existing customers and reaching out to new customers.

To be fair, they haven’t been in the habit of advertising. Before the Internet, the key local outlets were newspapers, television, radio and the yellow pages. You essentially had to buy the entire DMA for thousands of dollars. Direct mail (Valpak etc.) and Entertainment coupon books were among the few options that made economic sense.

The Internet has drastically changed the economics. Publishers can slice and dice virtually infinite inventory into smaller and smaller buckets and make advertising affordable for small businesses.

So why aren’t small businesses advertising online?

  • No one is asking them.  Publishers (by and large) haven’t changed their compensation systems for sales reps. If I were a sales rep, I’d much rather work on selling the full page ad for $10,000 than an online presence for $100.
  • It’s too complicated. Search advertising seems like a prime opportunity for local businesses because it can be highly targeted. But the interfaces and the structures are well beyond the skills or interests of small business owners. They’re too busy running their businesses to run keyword campaigns.
  • They’ve been burned. Most restaurant sites look like they were built solely to show off the Flash skills of the design firm. The restaurateur spent hundreds or thousands of dollars for a site that doesn’t drive any foot traffic because it’s unusable and doesn’t show up in search results (because everything is Flash or an image).
  • It’s hard to see the return. Online advertising is a slam dunk for businesses that can complete the transaction online. They can see what they’re getting for their money. It’s harder to show that value to businesses that rely on foot traffic.
  • No need #1. In a town of 500 people, there’s no need to advertise. Everyone knows who you are.
  • No need #2. If you’re the hot new restaurant in town and there’s always a wait to get a table, why spend money on ads?

About Rakesh Agrawal

Rakesh Agrawal is Senior Director of product at Amazon (Audible). Previously, he launched local and mobile products for Microsoft and AOL. He tweets at @rakeshlobster.
This entry was posted in advertising, lbs, local search, marketing, newspapers, yellow pages. Bookmark the permalink.

9 Responses to Why don’t local businesses use the Internet?

  1. Tim Rueb says:

    Having been in the business for the last five years of convincing small business’ to use the internet, I have come to the conclusion that many don’t use it because they can’t see it’s usefulness (marketing tool potential), they didn’t come up with the idea on their own (so how can it be valuable), and they have no way of understanding the pervasiveness of this technology as it relates to the world around them.

    I just closed the deal with a small manufacturer who came to me and wanted a web site to complement his brochure and I walked away with a client that now understands that search engine marketing could produce a larger number of leads. When the light finally came on, it was like a thunder clap in the room. It was an exciting meeting.

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  3. fredwat12 says:

    As the comment mentions, many local businesses do not market online because, it’s too expensive, too complicated and too hard to prove the return.” Which anyone in the industry knows is a fallacy. Yes, marketing online is more complicated than taking out a yearly add in the yellow pages. However, the potential to have a steady flow of prospective customers, and the ability to maximize the lifetime value of existing customers, makes the Internet the most powerful marketing medium available to local businesses.

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