The Web remains an unexplored frontier for many small businesses, but realized value for small companies may soon drive a surge of online colonization, according to a report.
Posted Apr 30, 2007
Developing a Web presence in business today may seem to be a no-brainer, but the Internet is still an intimidating domain for small businesses with limited time and resources. According to a new report from Jupiter Research, only 36 percent of small businesses had a Web site in 2006. Furthermore, of those with a site, the majority of online businesses did not deal in e-commerce nor did they use the Web for lead generation purposes. The report asserts that as more small businesses see the potential gains of going online, Web penetration among these companies will increase; however, lack of education surrounding the Web as well as resource constraints will continue to make progress slow going.
"The penetration of Web sites and Internet marketing techniques such as search and search marketing is positively low among small businesses. It's not as high as people would think," says Sonal Ghandi, analyst at Jupiter Research and author of the report. Jupiter defines small businesses as those with fewer than 100 employees. The report indicates that Web penetration increases with the number of employees the small business has. For businesses with 10 or fewer employees, the Web penetration rate is 28 percent. Because these very small businesses comprise the largest segment of small businesses, they bring down the overall average for companies that have gone online. For businesses with 25 to 99 employees, for example, the rate of Web penetration is a considerable 86 percent.
Even for those companies that have made the leap online, however, very few are using their online presence to its full potential. Approximately one out of five (21 percent) small businesses that have a Web site use this site for lead generation purposes or for e-commerce. This means that 79 percent have no way for customers to request product information, for customer interest to generate a sales call, or for consumers to purchase company services or products online. Online marketing is unsurprisingly more sophisticated for those companies that sell online. Of those who have e-commerce, 30 percent used pay-per-click paid search in 2006 and 50 percent used search engine optimization. Only 17 percent of small business Web sites without e-commerce use search engine optimization and 7 percent use pay-per-click, according to the report.
Ghandi explains that although Web penetration is quite low currently for small businesses, these percentages are expected to rise in coming years. She says that the perceived time and effort of going forth with an online initiative is often a large intimidator for small businesses. "The more benefit small businesses start to drive out of Web presence, the more others will eventually follow as well," Ghandi says. "Some of it is they just don't have the time right now, but will eventually get to it. If they had the time to educate themselves, then everybody would be online and competing with each other."
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