Small Companies Are NOT Using Technology to Drive Business

According to a recent Citibank survey, most small businesses do not utilize affordable technologies to drive their business.

37 Percent Not Using Web site to Expand Business; 84 Percent Not Selling Products, Services Online; 62 Percent Not Using Email for Marketing

63 Percent Say Word of Mouth Most Effective Way to Market their Business and Find New Customers, Yet 81 Percent Don’t Use Social Media

Despite the ubiquitous and relentless buzz around social media, most businesses today aren't leveraging basic online tools readily available to them to help grow their businesses, according to the latest small business survey by Citibank.

“This may be because the online world does not fit their business model or other factors such as inexperience with technology or lack of time to effectively enter these marketing channels. It’s encouraging, however, to see that many intend to utilize more of these tools in the next 12 months.”

According to the survey of 552 small business executives across the United States, in the last year 37 percent of small businesses have not used a Web site for marketing or expanding their business and 84 percent have not used ecommerce to sell their products or services. Additionally, 62 percent aren’t using basic email for marketing their business. Yet among those businesses that do have a Web site, 74 percent say their site has been effective at generating more business.

“Many small businesses today have yet to really harness the marketing and communication power that online tools can provide them,” said Raj Seshadri, the head of Small Business Banking at Citibank. “Our survey reveals a huge opportunity for many businesses to begin using some of the basic online tools, such as email marketing, to drive their sales.”

When it comes to more advanced methods of online marketing, and increasing reach and influence, the survey’s findings were similar: Sixty-five percent of small businesses are not placing online ads to expand their business and 67 percent have not used search engine optimization.

The survey also uncovered a disconnect regarding the importance placed on word-of-mouth marketing by small businesses. Sixty-three percent of respondents say word-of-mouth marketing is the most effective way to market their business and find new customers. Yet this doesn’t translate into online behavior, showing that many do not view social media as a word-of-mouth channel; 81 percent say they have not used social media sites such as Facebook, LinkedIn or Twitter. Among those not using social media sites, 47 percent don’t believe these sites are of value to their business while another 21 percent believe these sites are more for personal than business use; 18 percent say they don’t know enough about how to use the sites.

At the same time, many small businesses say they plan more online activity in the next 12 months. Among the findings:

• 72 percent say they are likely to use a Web site for marketing or expanding their business in the next 12 months - up 14% from those who do today.
• 24 percent will likely use ecommerce to sell their products or services online over the next 12 months – up 50% from those who do today.
• 30 percent say they intend to use social networking sites such as Facebook, LinkedIn or Twitter for marketing or expanding their business – up 58% from those who do today.

“This survey shows that many small businesses have yet to add new tools to traditional marketing methods that they have found effective in the past,” said Seshadri. “This may be because the online world does not fit their business model or other factors such as inexperience with technology or lack of time to effectively enter these marketing channels. It’s encouraging, however, to see that many intend to utilize more of these tools in the next 12 months.”

Small Business is 70% of the Global Economy

As Ian Pennell, Cisco's Co-Chair of its small business counsel attests, smaller companies are the heart beat of the global economy. Watch his video on the Cisco intiative are solutions designed for small companies and organizations.



Hulu's Business Model Dilema

Hulu, yet another example of an industry trying its best to maintain its business model with minmal innovation in the face of a rapidly changing world. "Remember that Woody Allen movie "Take the Money and Run" where Woody's character keeps getting his glasses broken by bullies and finally in one scene when he is confronted again he takes them off himself and smashes them? Well, that's the kind of logic the industry used on Hulu." This according to Joe Flint of the LA Times yesterday morning and Joe's right...But there's more.

As the LA Times reported, Hulu, the popular online site for watching television shows, is preparing to execute the toughest maneuver in digital media: moving from free to pay. The service will begin testing a subscription offering as soon as May 24, according to people with knowledge of the plans.

Under the proposal, Hulu would continue to provide for free the five most recent episodes of shows such as Fox's " Glee," ABC's "Modern Family" and NBC's "Saturday Night Live." But viewers who want to see additional episodes would pay $9.95 a month to access a more comprehensive selection, called Hulu Plus, these people said.

Its important to remember something when you consider Hulu , its owned by a consortium of content creators, News Corp., NBC Universal and Walt Disney Co., who want to preserve the cable and satellite fees that pay for the high cost of TV production. In other words these guys want to make certain they continue to be paid vast sums of money for what they make. They don't want their business model to change; its too profitable. Therein lies a bit of Joe's analogy and therein lies the pickle Hulu is in. They have to control the distribution channel to realize their goals.

According to the LA Times story on the topic "Television executives don't want to suffer the same fate as music industry or newspapers, which saw revenues plummet after users flocked to free access to songs, stories and classified ads online. Already, Hulu fans are decrying the proposal and threatening to turn to Internet pirate sites to watch their favorite shows."

With all of the alternate means of distribution emerging, the days of owning both content creation and its distribution will become harder, without of course sacrificing FAT margins. The existing scheme of content creators owning distribution channels should be discouraged to increase competition and improve quality and diversity. In the end the consumer will decide, no matter the media industry's continued manipulation of the government to protect its interests (watch Lessig). To this point read  the "Economics of Free" and "Kindle vs. Publishers, the Wrong Debate".

The essence is competition and value. Competition for content and the value extracted by organizations who are mainly middle men; intermediaries between creation and the utlimate consumer is coming under attack in all industries. As I wrote in Kindle vs. Publishers, the Wrong Debate, "Its all about economics. In a business where barriers to entry used to be up front costs in promotion, development, distribution and production, new business models have emerged to render the past value of publishers increasingly mute." There is a reason Apple is one of the largest distributors of content in the world now - economics.

Many people believe that "The challenge will be whether Hulu Plus has enough ‘added value' so that consumers perceive that it's worth the price," said Michael McGuire, media analyst with research firm Gartner. While true that is really a near term problem. The challenge for the owners of Hulu is wether they can keep extracting their margins for what they do given the rise of so may distribution and content alternatives ala Netflix and others.

Technology and Rising Cost of Sick Care Creating New Opportunities

For all the wrangling and complaining about health care reform, an important fact is rarely included in the discourse. The one thing that could really reform health care is people living healthier lives.

As much as three quarters of U.S. health care costs are preventable. With most of the expense going to treat a few chronic diseases that are closely linked to behavior, including heart disease, diabetes, obesity and cancer.

The good news is a “pay for prevention” industry is emerging, offering organizations ways to reward workers with cash or reduced premiums for exercising more and eating wisely. Some of the early competitors in the space are RedBrick Health, Tangerine Wellness and Virgin HealthMiles.

At the center of this emerging business opportunity is technology. Smaller and more powerful devices and the ubiquity of the Internet are converging to deliver new solutions for the user that can impact behavior and outcomes.

In a recent NYT article, Sean Forbes, president of Virgin HealthMiles said, “We’re trying to create the good-driver discount for health. One reason that’s been so difficult is there’s never been a way to really measure things before, but that is changing because of technology.” Watch Kyle Rolfing, CEO of RedBrick Health explain the opportunity these new business models offer.

IPad - Implications for the Publishing Industry

There is a revolution emerging in the publishing business.  VIVmag, a digital lifestyle magazine available online, will introduce an iPad version of its content when the Apple device is released next month. The implications of this type of content delivery become pretty clear when you look at what the "magazine" (if you can call it that) will be like. Its shown in the video below.

VIV Mag Motion Cover - iPad Demo from Alexx Henry on Vimeo.

The video offers a user experience preview that readers can expect for iPad versions of digital "magazines". Like the video from Wired released last month, this and other magazines are getting ready to offer touch and video among other ground breaking experiences.

VIVmag’s chief marketing officer, said the magazine planned to make its digital issues interactive with video and full-motion advertising, including a Fandango HBO “Sex and the City 2″ advertisement and interactive spreads for Kia Motors and Estée Lauder.

This type of super interactivity isn’t going to come cheap. The magazine cost $36 for a yearly subscription of six editions, or $6 an issue. “It is an expensive process,” CMO Mullen said. “It takes the same amount of time to create as a print edition, but we’re creating a living product that is fully dynamic.” This behind-the-scenes video about the creative process used to deliver the digital content gives one an idea of what it takes.

Watch this video from Wired on the new world of publishing.



Price of Content Continues to Fall

Dan Nosowitz of Fast Company recently reported that Universal Music Group (UMG) one of the four major labels, is reacting to declines in CD sales by slashing prices.  With sales down 15.4% this year and digital sales nearing the volume of physical sales, revenues are plummeting for hard copy CD's. Retailers and consumers are looking for lower prices for the format, and the labels have responded slowly, only having droped pricing from $18 to $13 in 2003.

Now, UMG is discounting the price of the dying CD format, to $6 and $10 for single-disc releases. The announcement is making the other labels concerned as they'll have to follow UMG's lead. Given CDs have few years left anyway the long-term result of the discount is irrelevant.

In certain respects CDs are superior to music purchased from digital retailers like iTunes, Zune, and Amazon. They come with album art and a booklet and rarely have DRM, and they're encoded in high-quality lossless WAV files that can then be ripped in any format. If the choice is between a $6 CD or a $9.99 iTunes album, the CD is unquestionably the superior choice, putting convenience aside.

What is really at play here however is the drop in retail value for content. With Spotify and Pandora's technologies coming mainstream and hard copy content being sold at increasing discounts the bottom line is that the market is valuing content at a lower price. This has significant implications in the long run for labels.

While this is an encouraging show of flexibility from rigid major labels, it's not going to change the basic fact that the move is just delaying the death of a format. The cut isn't going to make CDs: viable. it'll just make CDs somewhat more desirable for a couple of years until digital firmly buries physical.