Among consumers the trend is unmistakable. More and more people are using the Internet as a basic daily utility -- and search is a key part of that experience. However, on the advertiser side of the equation, especially among small businesses, adoption of search-based, pay-per-click (PPC) advertising is a much more nuanced and complex phenomenon, as two new surveys reveal.
First the usage data. Nielsen//NetRatings reported late last week that roughly 39 percent of Americans -- 114 million people -- used at least one search engine during the month of January. That represents approximately 76 percent of active U.S. Internet users. Another recent study by C&R Research found 84 percent of U.S. mothers who use the Web would miss it more than any other single type of media if compelled to give up one.
In addition, comScore Networks recently reported that in major urban markets across the United States, high-speed Internet access is poised to surpass dial-up access. In San Diego that has already happened. It's about to happen in Boston and New York. The trend toward broadband is clear. We've passed the inflection point. And there's considerably more empirical information that reflects the rising importance and usage of the Internet among key demographic groups.
When it comes to geo-targeted online search, more consumers clearly are using search to find local business information. Early last month, The Kelsey Group and BizRate.com conducted an online survey of more than 5,500 online buyers. The results showed that 25.1 percent of commercial searches ("looking for a business, shopping or doing research before buying") were local. The data also showed that 44 percent of respondents were performing more local commercial searches than one year ago. Furthermore, 64 percent of these respondents rated search engines as better than traditional offline sources of information, such as printed Yellow Pages, newspapers, magazines and direct mail.
What all this data shows is a clear trend toward Internet use, and search use in particular -- in some cases at the expense of other traditional media, including TV.
Now, on to the advertiser data.
The Kelsey Group recently conducted two separate online surveys of small- and medium-sized enterprises (SMEs) regarding their attitudes and experiences with PPC advertising. One study, undertaken with ConStat, Inc. focused on the small business market generally and had a range of respondents, including those currently using, interested in and not interested in PPC. That survey had 460 respondents. The other survey, conducted with WebAdvantage.net, focused exclusively on businesses now using PPC advertising and had roughly 200 respondents.
The conventional wisdom is that where usage goes, so goes the advertising dollar.
That logic would suggest near-term shift in budget allocation to PPC and other online forms of advertising. However, the results of these two surveys show that over the next two or three years at least, we may find Internet and search engine usage will continue to grow, even at accelerated rates, while advertiser dollars move online much more slowly and unevenly -- in dribs and drabs in certain segments.
Here are some key findings from both surveys:
Because respondents were self selected, these data cannot necessarily be extrapolated to the entire SME population. More detailed information about these findings and their implications will be presented at The Kelsey Group's "Drilling Down on Local Search" conference, March 30-31 in Santa Clara, California.
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