There is nothing wrong with advertising, we help our partners sell tons of it every day. But the real dollars in the local and SMB space are in digital services.
“Digital services” is the basket of products that help SMBs build and manage their digital presence. Helping SMBs make their online presence more robust is a huge opportunity for local media sellers, and a must for SMBs who want to be where their prospects are and close the sophistication gap with their national and multi-location competitors.
Gordon Borrell and I drove these points home on a webinar earlier this month, “Digital Services: The Most Lucrative Business Categories and How to Find Them.”
Gordon kicked the session off with Borrell Associates data showing the degree to which the services opportunity outweighs advertising in the SMB space. The roughly $25 billion SMBs spend on local digital advertising is completely dwarfed by the $231 billion they spend on digital services — essentially all of the products involved in creating and managing an SMB’s digital presence.
The challenge — and opportunity — is in pinpointing which customers are the best prospects for digital services.
As I said on the webinar, “The days of going out with a product list and asking the customer for their business are over. That business has to be earned, and it has to be earned through knowledge.”
On the webinar we focused on one market, Norfolk, Virginia, to illustrate the opportunity in digital services for SMBs.
Using Buzzboard to analyze the Norfolk market, we were able to identify a $21.8 million content curation and development opportunity in Norfolk alone. We analyzed local businesses that has websites to see where the needed help in filling out their digital footprint — with social, mobile, eCommerce, etc.
We looked at the overall market and then drilled into the retail, home and professional services verticals. We found huge gaps that spell opportunities for local sellers.
Retailers in Norfolk, for example, trail other local verticals as well as national retailers in their adoption of a more robust digital presence. Only 17.3 percent of Norfolk retailers with existing websites also have a social presence, and just 11 percent have a mobile optimized website.
What this tells us is that local businesses are falling behind consumers — and national competitors — in their adoption of technology. The gap in mobile adoption is particularly alarming for SMBs.
“You have to be mobile and responsive to engage with the marketplace that is looking to find you,” I said on the webinar. “The worst thing that can happen is someone finds your mobile site and it’s all cluttered and they can’t find the information they are looking for. When that happens, that prospect is gone forever.”
To narrow our focus on the best sales opportunities, we ran content density scores on Norfolk SMBs across the three verticals. We look at the peak scores, those with the most robust digital presence, and the median score.
We determined that businesses scoring between the peak and the median are the best prospects for a digital services sale because they have established a baseline of digital presence but have considerable headroom to build out and enhance their digital footprint. This gap accounted for 50 percent of all SMBs listed in the Norfolk market, which is in our estimation is about a $10 million opportunity — in Norfolk alone. Do that math across hundreds of U.S. markets and the scale of the opportunity unfolds.