Tuesday, January 18, 2011

Sharing the wealth

I received 5 emails this AM promoting different crowd enabled discounts for restaurants, nail salons, and kids birthdays. Each invitation was for the benefit of a small business which I had never before frequented. It got me thinking.

It's amazing the shift we have seen in the past three years in company creation. We are witnessing history's fastest growing firms across multiple segments:

Entertainment company- Zynga

Communications company- Twitter

Commerce company- Groupon

New market (social networking) with a huge leader, Facebook

Delving a bit deeper, it seems as if the elusive riches to be garnered by providing useful marketing and lead generation services to the 4+mm Small and medium sized businesses (SMB) will finally be cracked. We have seen a glimmer of this opportunity with the success of Constant Contact (CTCT). This public nearly $900mm market cap company has served more than 150,000 customers with its ubiquitous e-mail marketing solutions. Historically, the three largest obstacles to success in the market were architecting a truly easy to use solution at a reasonable price, surmounting the high cost of customer acquisition, and dealing with high customer turnover (churn).

In the past two years multiple local oriented options have become available to businesses, led by search (cross platform) and display; but now expanding to social, email, group buying, affiliate, and mobile advertising programs. Each has great merits to help SMB's reach their potential customers more efficiently. Though not directly competitive, each market will also vie for the same marketing budget allocation. I suspect we will see a dramatic shift/rise in SMB spending; first away from local print and later split amongst print and more accountable mediums.

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