Written by Main Street Hub Intern, Yin Li
Our company was founded on the belief that social media is vital to the health and growth of local businesses. From working with thousands of local businesses, we know firsthand that social media websites like Yelp and Facebook are powerful websites through which local businesses can attract and build loyalty with new customers. That is, if these websites are managed correctly. Recent industry data continues to prove what we have already seen. According to Bill Gurley, a partner at venture capital firm, Benchmark Capital, the locally- focused social media companies that Benchmark has invested in (Yelp, GrubHub, Open Table and others) will generate $735 million combined revenue in 2012. Gurley attributes the success of these websites directly to spending by local businesses on these and other social media websites like Facebook, Twitter, and Foursquare. Moreover, according to advertising consultancy BIA/Kelsey, online and digital local advertising spend is estimated to almost double from $21.2 billion in 2011 to $38.5 billion by 2016. On the other hand, dollars spent on traditional media local advertising (direct mail, newspaper, radio, etc.) is expected to remain flat through the same period. According to Gurley, Yellow Pages in particular is a traditional local business advertising category that has rapidly declined – spending on Yellow Pages is now just half of what it was in 2007.
Why are local businesses moving their dollars from traditional channels to social media? The simple answer is that “word of mouth,” the most powerful marketing tool there is, has moved online. As Gurley notes, 71% of US Internet users are Facebook users, and savvy local businesses want to be where their customers are. Additionally, smart phones have fueled the fire, allowing consumers to find businesses, get deals, and recommend a business to their friends on the fly (see our previous blog post on foursquare and Google+ Local). Given these powerful trends, investing in social media is a step that we think local businesses must take.
To see Gurley’s entire article click here: http://abovethecrowd.com/2012/06/25/social-mobile-local-local-will-be-the-biggest-of-the-three/