Small Business Labs

The Dollar, Transportation Costs and US Manufacturing

Got pointed to two interesting articles on the impact of rising transportation costs and the weak dollar on US manufacturing.  The consulting firm Oliver Wyman has a piece titled "How the Weak Dollar is Reviving US Manufacturing" that argues that rising transportation costs and the lower dollar is making US manufacturing more competitive.  Key quote:

"Where’s the business case for making car seats in China, when the cost of shipping them 12,000 miles and the redundant cost of storing and sequencing them for an assembly plant in Indiana will far exceed the savings in labor? Factor in additional savings from leaner inventories, more robust assembly processes, and the agility to more quickly respond to changes in market demand and the case for shifting most of your footprint from North America to China or India become dubious."

Related to this is an article in the Financial Times called "Oil prices force P&G to rethink supply network."  The article discusses the supply shifts P&G are doing in response to higher energy costs.  Key quote:

"Soaring energy prices are forcing Procter & Gamble to rethink how it distributes its products, with the world’s biggest consumer goods company shifting manufacturing sites closer to consumers to cut its transport bill."

The weak dollar clearly helps US manufacturing.  Also, with transportation costs rapidly increasing locating supply close to demand will become increasingly common.  Added to the cost pressure is a growing focus on reducing manufacturing and supply chain carbon footprints.  Combined these trends are helping to drive the increased competitiveness of US manufacturing. 

We've posted quite a bit on this topic in the past and we cover it in detail in The New Artisan Economy research report.

Disclosure:  We've done work for P&G in the past year.   

The Long Tail and Small Business

Harvard marketing professor Anita Elberse has caused a stir with her Harvard Business Review article "Should You Invest in the Long Tail."  The article argues that several parts of Chris Anderson's popular Long Tail theory are wrong.  Key quote:

"It was a compelling idea: In the digitized world, there’s more money to be made in niche offerings than in blockbusters. The data tell a different story."

The article has an excellent summary of the long tail theory, so I won't bother covering it here.  But the bottom line of Elberse's research is that for the two markets she studied - online music and home-video sales - the long tail effect as described by Anderson did not show up.  Her data indicates that hits may even be gaining relative share instead of losing share as predicted by Anderson. 

We've spent a lot of time looking at niche markets, small businesses and industrial structures.  Interestingly enough, we think Anderson and Elberse are both right.  Our research shows that the long tail is happening and the number of niches able to support small businesses (or niche products from big companies) is rapidly increasing.  The two main drivers of this are:

1.  Reductions in the cost of doing business in many niche markets.  Technology, outsourcing and access to third-party services are making it easier and cheaper to create niche or highly customized products and services. 

2.  The Internet has made it cheaper and easier for buyers and sellers of niche products and services to find one another.  This means the producers of niche products can cost effectively attract enough customers to create viable niche businesses. 

These two drivers are combining to shift demand curves and create many new niche opportunities - for both digital and physical goods - as shown in orange in the chart below.  This chart is taken from the HBR article.

While the long tail theory and Elberse's article focus on companies aggregating long tail demand, we are seeing a growing number of successful small businesses that serve narrow long tail niches. An example is My Beating Heart, a pillow company we've profiled in the past.  They serve a very narrow specialty niche way down the US pillow market long tail. According to their founder, the company wouldn't exist without the use of Internet based marketing to reach their customers.  They also would not be able to make their product at a price low enough to attract customers without outsourced manufacturing and services.  They are a long tail small business.   

At the same time we agree with Elberse's research showing that hits will continue to be important.  We think this is true for both digital and physical goods.  So while economically viable niches will grow in number, hits and highly successful products will continue to garner large relative market shares. 

The market share losers, in our view, will be products caught in the middle.  These are products that aren't hits, but also aren't unique enough to be niche products.  We see customers moving away from these products on a relative basis, creating in many cases an even steeper demand curve than shown in the chart above. It is important to note that while mid level products will lose relative market share, the overall growth and size of the global economy means these products can still be successful. 

The growth of long tail niche markets is creating many new opportunities for small businesses.  We also are seeing a strong trend towards large corporations partnering with small companies to serve niche markets, instead of trying to aggregate long tail demand on their own.  We cover these trends in more detail in The New Artisan Economy research report.

 

   

New Online Marketplaces Target Small Businesses

While a lot of folks seem unhappy with eBay these days, online global marketplaces targeting small business continue to grow in popularity.  Several new ones have recently been announced:

1.  crowdSPRING is a new online marketplace connecting buyers and sellers of design and graphic arts services.  From their website:

"Now small businesses, one-man shops and individuals anywhere can tap into a global pool of creatives."

2.  IBM has announced the Blue Business Platform.  From their website:

"...the Blue Business Platform is a marketplace where IBM partners and software developers can market and sell their solutions online to small and mid-size companies across the globe."

The globalization of small business is a trend that continues to gain momentum. 

Pearse Street Design - Myspace Design Specialists

Pearse Street Design is a specialty agency focused on helping companies with their social network design efforts.  They have a particular focus on Myspace designs.  Key quote from their website:

"Since 2005, Pearse Street has completed more than 100 professionally designed, custom MySpace designs."

I know nothing of the firm - I ran across them due to a comment posted on this blog.  But looking at their site I was struck by the growing importance of a Myspace presence for many businesses.  Also interesting is the emergence of companies focused on the design and development of social network web presence. 

They have a blog showing examples of their design work. 

Market Economics, Deregulation and Small Business in Yemen

Two underlying, but very powerful, long term trends are driving the growth of the global small business sector.  The first is the broad adoption of market economics.  Capitalism won its contest with communism and most countries have moved to market-based economic systems.  The second, related trend is business deregulation.  Most nations are lowering trade and business barriers and joining the increasing integrated global economy.

Many debate the merits of these shifts (my favorite book on this broad topic is Supercapitalism by Robert Reich).  But one clear outcome of these changes is the combination of market economics and deregulation is creating new small business opportunities around the globe. 

A good example is a recent article in the Yemen Times titled Small Business - The way to the future.  Yemen is a small country (population roughly 23 million) located on the Arabian peninsula due south of Saudi Arabia.  One of the poorest Arab countries, Yemen has limited oil reserves.  According to the CIA Factbook, Yemen's per capita GDP is $2,300 and 45% of the population lives below the poverty line.

The article discusses the importance of the small business sector to Yemen and the government's attempts to improve the small business climate.  Key quote:

"In 1998, the law of supporting small business enterprises was enacted and put into effect. The law aimed at removing all obstacles hindering the growth of small businesses, including limiting any taxation or fees paid by these businesses, while creating government agencies such as the Social Fund for Development, aiming at providing access to credit and technical assistance. The Social Fund for Development mainly aims at helping the growth of small business and the creation of new ones."

Yemen has a long way to go before it truly has a thriving small business sector.  But the recognition of the importance of small business in Yemen is part of this broader global shift towards encouraging and enabling the growth of this increasingly important economic sector.

Emerging Markets and the Global Economy

Interesting piece by the Economist Intelligence Unit covering the increasing importance of the developing world on the global economy.  Key quote:

"Emerging markets, with their fast growth and hunger for imports, are sustaining the developed economies. If this continues, the global economy will achieve a soft landing. Yet many of these markets are showing signs of overheating: monetary tightening, or indeed the maintenance of high global commodity prices, could depress them and take the developed economies down too."

The EIU predicts a soft landing and positive global economic growth in 2009.  They also point the risks to this forecast due to rising commodity and energy prices and inflation in general.

Also interesting is how they describe different countries growth rates for the first quarter of 08.  According to the article, the eurozone showed "perky" growth of 0.7%, Japan managed "blistering" growth of 0.8% while the "sickly US chalked up a respectable annualized rate of 0.9%." 

Cell Phones, Market Data and Rural Farmers

The New York Times reports on a new service from Reuters called Market Light, which provides pricing information for rural farmers in India via cell phone text messages.  From the article:

"Reuters has dispatched about 60 market reporters to the region to report on the going price for, say, oranges or onions, and to package the data into a text message that is sent to subscribers."

The service is for profit and Reuters is treating it like any other new business.  Key quote from the article:

"The brass at Reuters has approved money to operate Market Light for three years.  After three years, “it will be either a very healthy business, or it won’t exist,” said Amanda West, head of Reuters Innovation."

Better access to price and market data can greatly improve the efficiency of small businesses and small farmers in developing countries.  The article discusses one study on this topic and more information can be found at our post The Economist and NY Times on Mobility.

Disclosure:  We've done work for Reuters in the last year.   

eBay Sellers Express Their Unhappiness

eBay Live was last week and eBay sellers used the event to express their discontent - even to the extent of booing eBay executives.  This is quite a shift from just a few years ago when eBay execs were were treated like heroes.  Attendance was also way down from prior years, in part due to a boycott by eBay sellers. 

There are many reasons why eBay sellers are upset, with a big one being changes in eBay's reputation system.  For more on this topic see Kevin's Harmon's StartupNation blog post on this topic, which includes entertaining YouTubes of angry participants.  The UK's Online Times also has a good summary called eBay's Small Sellers Rebel.

It is a tough time for eBay.  Search engines have made it much easier to find good deals online and consumers prefer the simplicity and ease of buying fixed cost products over participating in auctions.  Because of these changes, auctions are a shrinking percentage of eBay's business and many eBay sellers are choosing to sell from their own websites or other online malls and marketplaces. 

Obviously it's never good to reach the point where your business partners are upset enough to boo you in public.  But anyone who shops on eBay knows they have to change to continue to thrive.  If anything the changes are overdue, and I hope they haven't waited too long. 

The Beer Industry and Small Brewers

The beer industry continues its global consolidation with Belgium based InBev making a $46 billion offer for US brewer Anheuser-Busch.  It is expected the bid will be rejected, but regardless of the outcome of this corporate battle, most beer industry analysts expect to see more mergers.

While the global beer giants merge, small craft brewers are having a greater competitive impact on the industry.  MSN has an interesting article on this topic called Will microbrews kill the King of Beers.  The gist of the article is the growth of craft brewers (small, independent brewers that produce less than 2 million of barrels of beer per year) is putting a lot of competitive pressure on big beer companies. 

In our most recent forecast report we use the beer industry as an example of an industry moving to a barbell structure comprised of relatively few global giants, lots of small firms and very few mid-sized firms.  In 1980 the US beer industry had fewer than 20 craft brewers with a negligible share of the US beer market.  Today there are over 1400 and combined they own about 6% of the US beer market. 

In 1980 there were roughly 35 national beer companies that controlled about 70% of the US beer market.  By the end of this summer, 2 companies (Anheuser-Busch and the combination of SABMiller and Molson Coors) will control over 85%. 

We're seeing this structure happening in almost all industries.  The need for global scale and investor and competitive pressures are driving big companies to get bigger (see our recent post Will Large Corporation Survive).  And small firms are exploiting the growing number of niche opportunities either too small, too specialized or not attractive to the giants.

We expect this trend to continue over the next decade with more industries having a barbell structure.

 

Big Companies Using Psychics?

Newsweek has an article on a corporate psychic who has a thriving practice advising large corporations.  The psychic's name is Laura Day and according to the article she charges $10,000 per month for "unlimited 24 hour access."  My favorite quote is about her 16 year old son:

""I don't want to see what he did with that girl until 2 a.m.," she says. "But I can.""

My personal experience with both my mom and watching my kids try to hide things from my wife is keeping things from a mom is pretty tough even if she's not psychic.  Imagine how hard it must be when she is.

As someone who does forecast and planning work, I often tell people that no one can predict the future.  I think I am right about this.  But based on this article, I may need a new line of work. 

Lessons From the Inc. Fast Company SMB Market Summit

I had the opportunity to participate in the Inc./Fast Company SMB Summit last week. The summit was a highly interactive event focused on exploring ways to reach and communicate with small and medium sized companies.  What made the event so interesting was the group combined executives from both big and small companies in a format designed to encourage discussion and interaction.  While lots of good stuff was covered, two key lessons jumped out at me:

1.  Defining and segmenting the small business market is key.

The summit started with Mansueto (the publishers of Inc. and Fast Company) providing an overview of their detailed, quantitative research on the small business market.  This was followed later by a great discussion between the small business CEOs and the larger company marketing executives around how well big companies understand small business needs.  The view from the small business CEOs was that their businesses and business needs are not well understood by big corporations.  The big company execs did not disagree.

No great surprise here, but a lot of the issues seemed to come down to segmentation.  As the Mansueto data showed, the SMB market is very diverse.  But it seems to the small business execs that too many big companies offer undifferentiated "small business" products and programs without thinking through the needs of the wide variety of small business segments and types.   

2.  The increasingly quantitative nature of marketing.  Execs from Netsuite and Intuit presented on how they market to SMB's.  Both companies use a mix of quantitative methods to design, test and track their on and offline marketing programs with a strong focus on clear, measurable results. 

Online marketing in particular allows for the use of analytics and Jay O'Connor, SVP of marketing for Netsuite, provided some great examples of how they test advertising and marketing offers to improve campaign results.  They do this, of course, using their own Netsuite product line.

We're constantly amazed by the number of small businesses we see using advanced marketing analytics.  The Internet provides the opportunity to take advantage of marketing analytics, and companies like Netsuite are providing increasingly sophisticated marketing tools to small businesses.

It was a great event and look forward to the next one.

   

 

 

 

Escape From Corporate America

The book Escape from Corporate America by Pamela Skillings is a What Color is My Parachute for the new economy.   It is focused on helping disenchanted corporate workers find jobs, careers and work options that better fit their life goals and aspirations.  While the book covers a wide range of career options, it stresses leaving big company jobs for entrepreneurship and small business. And like “What Color is My Parachute,” it is full of advice and exercises that help the reader plan for their new career.

The book is positive and upbeat about self-employment and small business, but without the over the top sugar coating and hyperbole that usually comes with “how to” entrepreneurship books.   Skillings even points out that there are a lot of good corporate jobs and corporate employers. This is good because the decision to leave a corporate job and head out on your own should not be made lightly.  And not everyone is cut out for and/or ready for entrepreneurship. 

Escape from Corporate America does a nice job of helping the reader think through and plan career change decisions.  While targeted at unhappy corporate employees, the book is useful for anyone thinking of changing careers.  I also think corporate execs and HR managers should read this book.  It does a great job of describing why so many corporate employees are unhappy.

Spending on Pets Continues to Grow

We have 4 dogs and 1 cat in our family.  How this happened is a long story, but between food and health care (2 of the dogs are old) we spend a lot of money on our pets.

According to the Yankelovich Monitor Minute, we are not alone.  Key quote:

"In 2007, Americans spent $41.2 billion on their pets, an increase of 142% from the $17 billion spent in 1994."

Some of the more interesting pet related small businesses mentioned by Yankelovich:

• Dogcars.com - a blog on pet friendly cars and travel.
• Eddies Wheels for Pets - wheel chairs for handicapped pets.
• The Barkely Pet Hotel and Day Spa - exactly what is sounds like. 

The Yankelovich Monitor Minute is quite interesting and covers a wide variety of consumer research and trends.  Well worth reading and/or subscribing to.   

U.S. Services Exports and Small Business

The Dallas Federal Reserve Bank has an essay called "Opportunity Knocks - Selling our Services to the World" in their annual report.  Lots of good data, insights and case studies on U.S. services exports.  Key quote:

"We export more services than any other nation—by a long shot. Better still, most of what we sell abroad are highly valued services—industrial engineering, entertainment, health care, and the work of architects, lawyers and other professionals. Our growing services trade supports many well-paying jobs."

According the report, U.S. services exports have grown substantially over the last few decades and should continue to grow.  From the report:

"Goods still account for the bulk of U.S exports, but services have gained ground, rising from 19.6 percent of total exports in 1980to 29.8 percent in 2007."

The report is much more positive about service jobs than the popular press, stating:

"Services are often dismissed as the provence of dead-end jobs and low wages.  Nothing could be more wrong.  Many of our services workers and well educated, commanding high pay because of their ability to add value to what they produce."

This is good news since services make up 4/5ths of the U.S economy.

Small service businesses are increasingly exporters.  For example our mom and pop small business, Emergent Research, is a services exporter.  As the report points out, the Internet and other technologies greatly enable service exports.  And strong overseas economic growth provides growing markets.  Add in a weak dollar it is a good time to be a small services exporter.   

Healthcare Costs Will Continue to Increase

Emory University has both a top rated business school and an outstanding medical complex, so it is not surprising that the Knowledge at Emory site would have a good article on health care costs.  Key quote:

"...total U.S. healthcare spending in 2007 was $2.3 trillion, or 16% of the country’s gross domestic product (GDP). By 2016, that number is expected to reach $4.2 trillion and represent 20% of the GDP. The U.S. Labor Department recently reported that healthcare benefits make up 30.2% of employers’ compensation costs. Last year, employer health insurance premiums increased over 6%—twice the rate of inflation—and the annual premium for an employer health plan topped $12,000 (for a family of four)"

Health care costs also contribute significantly to consumer bankruptcy.  From the article:

"A recent study by Harvard University researchers not only found that 50% of all bankruptcy filings were partly the result of medical expenses but that nearly 70% of those who filed for bankruptcy had health insurance."

Scary stuff.  The article goes on to discuss a number of options for improving care and/or reducing health care costs but makes it clear solutions won't be quick or easy. 

For small businesses health costs will continue to be a major issue.  The National Association for the Self Employed recently released a study on this topic.  Key quote from the study press release:

"..high cost continues to be the most significant barrier to offering health insurance.."

 

Will Large Corporations Survive?

Our view is yes, or at least yes for the the next couple of decades.  Despite the growing role small businesses are playing in the U.S. and global economy, size and scale will continue to provide competitive advantage in many industries.

Two interesting posts on this topic last week.  PSFK - one of my favorite trend watching blogs - has a post called "How Long Can P&G Last?"  The post questions whether or not large consumer products companies like P&G and Unilever can continue to compete when consumers increasingly are attracted to local brands and brands that reflect consumer values.  Key quote:

"Travel through Europe looking at new ‘local’ brands made the team at PSFK wonder about modern brands and whether ‘holding companies’ like P&G and Unilever can really last doing business the way they are."

The other related post is from Always On and is called "The Studios are Back."  Key quote from the CEO of online video start-up company Quarterlife on the role big media companies play in online video:

"...the days of user generated video success, with a hit on YouTube, are essentially over.  The real power for online video success comes from the studios and big media companies who produce and distribute viable content."

The death of large corporations has been a popular prediction since the early days of the Internet.  In the mid to late 90S it was commonly believed the Internet would quickly kill both large retailers and large brands.  A decade later Walmart, Pepsi, P&G and other big retailers and CPG companies are doing just fine.  And as PSFK's post points out, big CPG companies are not going away anytime soon.   

The death of large media companies is another popular prediction. Many claim they will be replaced by user generated content.  While the media industry is clearly going through substantial change, it seems from Quarterlife's perspective that big media companies are not quite dead yet. 

In almost every industry we track we see consolidation resulting in fewer, but much larger, global corporate giants.  At the same time, in most industries we are also seeing growing numbers of small businesses and declining numbers of mid-sized businesses.  This industry structure will likely become increasingly common over the next decade (we cover this in more detail in The New Artisan Economy research report). 

While somewhat counter intuitive, very large corporations will continue to grow in size even as we move to a more decentralized economy with growing numbers of small businesses. 

Disclosure:  I've done work for P&G in the last year.   

   

Enterprise Software & Small Business Globalization

Good interview on the future of enterprise software with SAP's Americas CEO Bill McDemmott at Knowledge at Wharton.  I found several points related to small business globalization and innovation quite interesting. 

1.  The view that businesses of all sizes are rapidly globalizing.  Key quote:

"Any customer, whether small, mid-size or large, is thinking beyond their geographic boundaries, beyond their current markets. They have to innovate."

2.  The role of global and cross border small businesses innovation:

"...some of the best business practices that we have now for small and mid-size customers actually came from our Asia Pacific operation... And then we brought those ideas and syndicated them in places like the U.S. where you could better serve the small and mid-sized customer over here.

So, innovation is fascinating, because it comes from every part of the world. The big idea is [that] the best ideas exist somewhere in the world at all times. The art form is aggregating them and scaling them across the world at all times."

Traditionally small businesses were somewhat protected from potential competitors and disruptive innovation by geography.  But today's highly networked world is in many ways border less.  Innovation and good ideas can come from anywhere.  So can new opportunities and competitive threats. 

Pew Time Series Data on Internet Usage

Pew Internet recently released a study on the role the internet plays in how people conduct product and service purchase research.  Like all Pew Internet work, the report is well worth reading. 

While digging through the study questionnaire I noticed it contained time series data on Internet usage.  So in a single PDF there is extensive data showing how U.S. Internet usage has changed since 2000.  If you are interested in Internet usage data, take a look. 

Entrepreneurial Artists

Entrepreneur Magazine has an article on artists increasingly selling their works directly and bypass the gallery system.  Key quote:

"...new crop of artist-turned-entrepreneurs who forgo the gallery system by starting their own businesses.  These artists create products--prints, T-shirts, stationery--to sell online, at craft and art fairs, and wholesale to boutiques. They might hook up with a manufacturer and put out a line of limited art toys, or license their designs to other companies."

A growing trend, we call this group next gen artisans and discuss them more extensively in The New Artisan Economy research report. 

Baby Boomers and Social Media

Marketing Charts has a good article on a survey of online baby boomers (born 1946 to 1964) social media usage.  The survey was done by ThirdAge and JWT Boom.   Key quote:

"People over age 40 participate heavily in word-of-mouth and value personal recommendations and expert opinions, but they have not embraced social networking or blogs despite being heavy users of other online services..."

The survey said only 22% of the respondents used social networking.  It also found their boomer respondents expressed "little or no interest" in the following activities:

• 67% writing blogs
• 63% in participating in general social networking
• 55% listening to podcasts

I find the survey results credible and roughly consistent with other studies on this subject.  I also see this data as "half full."  By that I mean I think it is impressive that 22% of online boomers are using social networking.  Given the short period of time online social networking has been around, this indicates that boomer social media usage is growing very rapidly. 

But it also means that while growing rapidly, online social media usage is not yet mainstream for baby boomers.

I saw this on the Masterful Marketing blog via MyVenturepad.

ADP Says Small Business Employment Continues to Grow

Payroll provider ADP released their May employment report last week.  According to the report, U.S. small business employment (fewer than 50 employees) increased by 61,000 in May.  Their survey also showed overall employment up by 40,000, with larger employers shedding 21,000 jobs.

While the ADP data tends to mirror the official government statistics over the long run, they often have very different monthly results and May was example of this.  The official BLS stats had overall employment falling by 49,000.  The BLS does not break out their monthly employment data by firm size.

ADP data has consistently shown small business employment outgrowing large business employment since 2001. 

I saw this first on Matt Banyk's Risky Business blog.

Reinventing the SBA

Bizjournals has an in-depth story looking at the role of the Small Business Adminstration in today's world.  The question the article asks is "can an agency created during the Eisenhower administration serve the needs of small businesses in the 21st century?" 

According to the article many, including the vast majority of small businesses, don't see the need for the SBA.  Key quote:

"The SBA is irrelevant to many small businesses. In a 2006 survey of small business owners by the National Federation of Independent Business, 85 percent said the SBA had no direct impact on their businesses over the past three years. "If the SBA were to go away tomorrow, would anybody really notice?" asks Susan Eckerly, vice president of federal public policy for the National Federation of Independent Business. NFIB's indifference toward the SBA is noteworthy because the Republican-leaning group is the most powerful organization lobbying for small businesses in Washington."

The article goes on to talk about 5 changes that could be done to make the SBA more relevant. 

I'm not surprised by the NFIB survey data.  In our research on small business the SBA is rarely mentioned.  But as the article points out, the SBA does a lot of great things that the average small business does not see or is not aware of.  Key quote on the the SBA Office of Advocacy:

"Even SBA skeptics like the NFIB are strong believers in the SBA's Office of Advocacy. The office makes sure federal agencies consider the impact regulations have on small businesses, and conducts and compiles research on small business issues."

In our work we often refer to and use SBA research and information.  Their work is a great resource and plays a key role in helping us all to better understand the role of small businesses in the U.S. economy. 

I also think the importance of their advocacy role cannot be overstated.  Small business needs a strong voice in Washington - particularly with federal regulatory agencies.  The reality is other groups (big business, unions, etc.) have better funded lobbying efforts.  The SBA provides a balance to these groups.  So while I'm all for improving the SBA, let's make sure we do it in a way that maintains the good the SBA provides.

Disclosure: We regularly use SBA data and research in our work and consider the SBA an important information resource.   We have never done work for the SBA, or directly or indirectly received funding from them. 

http://www.bizjournals.com/edit_special/66.html?page=1

Blogs Go Mainstream; Advertisers Follow

eMarketer has a report out saying that blogs have gone mainstream and will continue to grow rapidly over the next 5 years.  Key quote on the growth of blogs:

"The number of people creating blogs in the US will also grow, reaching 34.7 million people by 2012—16% of the Internet population. By contrast, there were some 22.6 million US bloggers in 2007, a number that correlates to 12% of Internet users."

Blog related advertising is also expected to grow:

"Buoyed by these massive levels of consumer engagement, US blog advertising will reach $746 million in 2012, up from $283 million in 2007."

Duct Tape Marketing on Social Media Marketing

The always excellent Duct Tape Marketing blog has a post on social media marketing called The Ultimate Social Marketing Question.  According to the post, the ultimate question is:

"What do I want the relationship with my customer to look and feel like?

I would add to this "what do my existing and future customers want our relationship to look and feel like?" After answering these questions you can (quote from the post):

"...determine if you can enhance and amplify that relationship by setting up a Facebook group, finding and being found on LinkedIn, installing Twhirl to keep up with your Twitter world, creating and promoting company videos on YouTube, building networks within StumbleUpon or, lest we forget the obvious, blogging."

You can also decide not to use social media marketing if it doesn't fit your needs or the needs of your customers.    

I've posted recently on the debate around whether or not to use social media marketing methods.  Duct Tape's post provides a simple and concise framework for deciding. 

eBay Auctions Going Away?

Businessweek has a story called Auctions on eBay: A Dying Breed that discusses the shift away from online auctions.  Key quote:

At the current pace, this may be the first year that eBay generates more revenue from fixed-price sales than from auctions, analysts say. "The bloom is well off the rose with regard to the online-auction thing," says Tim Boyd, an analyst with American Technology Research. "Auctions are losing a ton of share, and fixed price has been gaining pretty steadily."

According to the article, search engines have made it much easier to find good deals online and consumers prefer the simplicity and ease of buying fixed cost products over participating in auctions. 

The article ends with a somewhat ominous quote from a long time eBay seller who has recently stopped selling on eBay:

"Many auctioneers may have no choice but to close shop, says Hershenson, adding, "Their latest changes will have the result of ending auctions as we know it on eBay.""