Recently there has been a good deal of prognostication on the fate of start-ups in the wake of the current economic enema. And while things are definitely getting tighter and companies are getting more cautious with their spending, I have a suspicion that local/SMB oriented Web start-ups might have a slightly easier time of things.
It’s not that local companies won’t have a hard time raising money or generating revenue (particularly from SMBs that are having a hard time themselves), it’s just that the market is so massive and the offerings so fragmented that it seems like there is still a lot of green field, even in a down market.
A couple of data points with zero statistical significance (but hey this is a blog so if I say it’s a trend then it’s a trend):
– Citysquares, yet another IYP with reviews that sells ads to SMBs, got funded yesterday (by a pair of mavericks no less).
– I had a conversation with a local flooring retailer yesterday. Business is down dramatically, but they are closing 30% of leads they are generating via search engine advertising and SEO at an average sale of $400.
– I spoke with a start-up this week that had just laid off part of their staff to conserve capital over the next year. SEO, and local SEO in particular, was now one of their top priorities. While their business was not necessarily local in nature, they and their board saw the opportunity to more effectively compete at a local level v. trying to duke it out nationally and internationally.
– I have spoken with several local-oriented SEO consultants and SEM consultants over the past week about market conditions and none of them have experienced a slow down in client activity or inbound referrals. The consensus appears to be that SEO is one of the better bets when it comes to marketing and it’s the one that everyone had been putting off as they blew through their budgets on PPC and other media.
While start-up activity may be depressed over the next couple of quarters, I do expect to see more dollars thrown at local and SEO. In fact I wouldn’t be surprised to see a number of locally oriented SEO startups start to pop up to compete with the crop that have emerged over the past year.
I realize I am just a big cheerleader for SEO (baby does need a new pair of shoes after all), but while I don’t expect SEO to be immune to the big enema, it does appear to be a relatively unconstipated area of the economy.
15 Response Comments
Andrew, I’ve had one client curb spending by about 25% but the amount of inbound referrals hasn’t slowed down at all. In fact, I posted my biggest month ever last month, and it looks like this one will be even better.
Lots of SEOs have written on the economy and the apparent immunity to the economy, but I think it’s going to his us all at least a little bit soon. Smart companies, however, will use this time to boost their rankings while other companies tighten their marketing budgets.
You are quite the optimist Andrew when it comes to local search. I’m the same way and I know the benefits but fear is setting in and I’ve spoken to a number of local business owners that are cutting back on all forms of marketing.
That provides an incredible opportunity for the smart small-business owner, that’s willing to lean in and take on this economy. We are turning up our online efforts, and off-line we are planning our biggest holiday celebration ever.
Carpe Diem my friend.
Optimism is good Mike. I visit this site because Andrew is generally pretty optimistic.
Local business is good for me – not as busy but still good – I have changed a domain name to http://www.joetheseo.com and am getting several good, strong local SEO/M inquiries
Ever one to capitalize I thought Joe the SEO was a nice move and when people call me I ask them to leave a message which I say I will endorse – a sense of humour always works as does optimism
David
Andrew,
I hope you’re right about SEO spending increasing while other marketing spends decrease. My business has grown steadily in the past few months and none of my clients have mentioned anything about cutting back. It may be that the economic woes take longer to trickle down to smaller, local businesses but I still think that SEO has such a good ROI that it will grow through the recession.
Spammy Mike, I did forget to caveat everything with the fact that I may be smoking a huge vial of crack.
But what I see in my crack-induced haze is that while the majority of businesses may be tightening their budgets, in aggregate there are still so many SMBs that the overall market is still ginormous.
When your business is sucking wind and you see Joe The Plumber, or Dick the DUI Attorney from across the street ranking well for your term, I think you might decide it’s time to do something about it.
In the meantime I’ll just enjoy the crack while it lasts…
David,
I love the JoetheSEO.com thing. It’s great on so many different levels.
While SEOs tend to smoke their own crack while drinking their own KoolAid, if you follow what the smart ones do, you may learn a lot that can apply to your business.
I would wager that most “Joethe…”.coms saw a big increase in traffic over the past few days.
If you were a local tailor you could have launched JoetheTailor.com and announced it to the local paper which probably would have promoted it, and today you would likely be up to your eyeballs in altering $150K worth of clothes.
“I would wager that most “Joethe…”.coms saw a big increase in traffic over the past few days.”
Yes it did Andrew – loads of traffic and a few juicy links.
Of course the newspapers aren’t interested but I have been getting a growing surge of traffic – even though it redirects to a profile site I don’t mind how people find me as long as I can offer them a good deal and get referrals all is well.
The non – BS – corporate answer on my phones usually raises a chuckle as I offer to endorse any message left this, of course, all adds a spin on the spins…..
I’ve never been corporate so my regular chap image works….
Crack in Pleasanton? Lucky to get a spliff when I lived up the road in Walnut Creek LOL
Cheers
D
Optimism Update: Just talking to my contractor who says his business has been “dead in the water”. After a year of resistance he says it’s time he built a website and start spending some $ on Internet marketing, particularly SEO.
I’ll post more details on this later.
Andrew this is exactly the way it’s going around here and most people are OK financially – not quite the spend, spend I enjoyed in California but now it is working in my favor with local businesses – luckily I have no need for $250,000 a year.
I bartered one job for a nice bit of landscaping 😉
David
Andrew,
Just found your blog a few days ago. Really enjoy what you have to say and the great sarcasm that goes along with it.
Keep up the good work!
p.s. JoetheSEO is awesomeness
Nice to have you aboard Brandon. Nice bridge. Put some alt-text on that sucker.
I’m glad you posted on this. I’ve seen a lot of doom and gloom predictions in the SEM industry. I will join the ranks and say that last month was my best month ever (well, okay, we’ve only been in business for 18 months), with more new inquiries for business.
I suspect that SMB are tightening budgets a bit and trying to lose the non-productive marcomm/ad efforts and discovering SEM.
I would bet you $20 that at most, 30% of SMBs have ever heard of SEO, local search, etc. (and 30% is being quite generous in my experience).
What says you?
Sean you are right about Small Businesses – A new client of mine (wonderful person) though I meant “paper clip” when I was talking about “pay per click” – no duh here – just the SEO/M etc biz is still in it’s infancy even though I’ve been dabbling in it since 1997 – when I lived up the freeway from Andrew.
I often wonder how long it took YP to “evolve”
David
Blink 182. I was wondering where I remembered that image from.
We’re one of those SEM technology startups and while the economy is making capital raising difficult (though we raised a small round) there is a lot of local opportunity.
I agree with you. The SMB market is ripe, traditional media is declining, biz owners need to get smarter about their marketing spend, and the majority of our customers are seeing a ROI.
There is also a big imbalance in the industry numbers. SMB online ad spend is a small slice of the entire online ad market, something that will become less lopsided as time goes on.
We have a bit of a different twist, we not only provide SEM services, but a dashboard to manage a wide array of online marketing.
Shameless plug: http://www.adpropel.com