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Leverage the Internet to Weather the Economy

With Main Street firmly in the grip of a nine-month economic slowdown, many small business owners are being forced to make tough decisions about cutting costs. Most business owners have heard the advice: In economic downturns, even recessions, you must be proactive. This includes continuing to spend on marketing and advertising.

Still, when it comes down to paying employees, buying supplies, and paying rent, many small business owners find the only budget line with any give is for advertising and marketing. They know they should reach out to new customers and broaden their markets, but it's just too expensive. And that used to be true. In times past, the best way to do that was through expensive newspaper or radio advertisements. But technology has radically changed the nature of sales and marketing. No matter how small your business, you can get your message out by adopting an Internet strategy. And the costs are remarkably low.

The Interactive Advertising Bureau (IAB) is the trade association for ad-supported interactive businesses. The organization's more than 350 members account for about 86 percent of the interactive advertising sold in the U.S. The group includes all the big players, from Google, Yahoo, AOL, and MSN to The New York Times, Time Inc., CBS, and Walt Disney. But 61 percent of its members are small businesses that earn less than $1 million annually and employ fewer than 50 people, according to Randall Rothenberg, the group's chief executive, who testified recently at a House Small Business Committee hearing on online advertising.

"Last year, together, these publishers sold more than $21 billion in interactive ads, according to research conducted for IAB by the consulting firm PriceWaterhouseCoopers. To put that in perspective that means that interactive, as an advertising medium, now is larger than outdoor [advertising], magazines, and radio," Rothenberg told lawmakers. Evidence suggests that much of this ad spending is coming from small businesses. Research by the consulting firm Booz & Co. for the IAB, the Association of National Advertisers, and the American Association of Advertising Agencies shows that 40 percent of IAB members' revenues come from local businesses.

I've also learned firsthand about the power of the Internet. About seven months ago, I wrote a column that was, in part, about launching my own Web site, TheImproper.com. The column was part of a continuing series on startup companies. The idea was to revisit from time to time the companies I featured, to get a report on their trials and tribulations. In this case, I can speak from my own experience about the power of the Internet.

Like many who start Web sites, mine was born of a personal passion. I've had a lifelong interest in art, music, theater, and popular culture. In New York City, where I live, an unbelievable number of highly talented artists practice their craft. Yet the overwhelming majority are overlooked by the mainstream media. The idea was to focus on local music, theater, and arts, spotlight new and emerging artists, and point visitors to their performances. We conducted a soft launch of the site last November to test the concept, and hoped to have about 40,000 monthly page views by this June. But by the time we reached that landmark earlier this month, the site was posting more than 200,000 monthly page views and had more than 150,000 unique visitors. In short, I vastly underestimated the power of the Internet and its global reach. I get traffic from all over the world from people who have an intense interest in the arts. It's an educated, upscale audience, and they look to New York for trends and ideas.

Now we are moving to Phase II of the site's development; more formal advertising and marketing, upgrading our server and seeking a venture capital partner to expand the business. Others have had similar experiences.

Rob Snell is co-owner of Gun Dog Supply in Starkville, Miss., a family retail business that sells supplies for hunting dogs. Snell also came to Washington to testify at the House Small Business Committee hearing. "For my family, selling on the Internet has literally changed our world. We went from a retail company doing $400,000 a year and struggling to pay the bills to a multimillion dollar retailer in a few short years," he testified.

The family business was threatened in 1996, when big-box retailer PetSmart opened across the street. "Fifty percent of our competitors went out of business overnight. Our sales dropped too. In 1997, I built a five-page Web site. I wrote a killer Yahoo Directory listing, and we started getting tons of visitors from Yahoo. We had to figure out how to sell online and fast. Fortunately, we found the online store builder which is now Yahoo Store."

Snell said the Internet was perfect to leverage the strengths of his small business: unparalleled product knowledge, enthusiasm for what they sell and do, and outstanding customer service and support. "Bigger retailers cannot compete when we go head-to-head, product-to-product," he said.

"With an online store, a small retailer can instantly have access to millions of potential customers. With as little as a $5 deposit in a Google AdWords account, a small business owner can buy targeted advertising and get instant traffic to his or her Web site," he added.

Indeed, Google has become a force on the Internet in large part because of its willingness to embrace small businesses and small Web site publishers. In the development of my Web site, Google has been a key partner as a search engine, supplier of online advertising, and as an outlet for content (through Google News). And through the power of simple-to-use Web analytics, small businesses can track the effectiveness of every ad and tell exactly how they are getting traffic and where it is coming from.

But small business owners don't need to create a full-blown Web site to establish an online presence. Blogging is highly effective and inexpensive. Easy to use software to create a blog is available for free over the Internet, and the cost to host it on a server can be as low as $150 a year. There are more than 112 million blogs worldwide; in the U.S., as of July 2006, some 12 million American adults (about 8 percent of the population) were publishing their own blogs. And 57 million others were reading them, according to the Pew Internet & American Life Project.

The Internet is the most powerful tool for sales, marketing, and communication since the invention of the printing press 600 years ago. And it's having the same impact on society. Now is the time to ramp up an Internet strategy. It could provide the edge you need to expand your business in the tough economy.

- Keith Girard