SMALL BUSINESS TECHNOLOGY

Online Marketing Mix for Small Businesses

When there is an array of marketing channels in the Web-driven business world, most small and medium outfits are mostly at sea while selecting the right channel to promote their businesses. The selection of these channels becomes a severe headache, as smaller companies operate on shoestring budgets but they still expect quick bang for each invested buck. Want advice to bring your brands in the B2B cyber marketplace? David Wei, chief executive officer, Alibaba.com is here to help you by expressing his views through My Techbox Online. 

Going global has never been easier and more affordable for a small to medium size enterprise (SME), especially from the relative comfort of one’s own factory, shop, or home office. While traditional marketing channels have included trade shows, catalogs, and trade associations, the Internet has brought new tools to bring trading partners together using search engines, portals, and online marketplaces.

But which channels should a small business with a limited marketing budget choose? Should it buy keywords from search engines or establish a storefront on e-marketplaces, or both? What is the right online marketing mix for an SME?

Having a company profile online and being found by search engines is certainly the first step for any company engaging in e-commerce. Search engines are good for mass marketing to a wide audience and addressing the so-called ‘long tail’ of the Internet.

But for sellers there are pitfalls. A search engine is more consumer traffic driven with no budget guarantee, so costs can accumulate without any reasonable assurance of sales. There is also a serious global issue of click fraud whereby competitors click repeatedly to increase your pay-per-click advertising costs. At this time, there is no known solution that can eliminate 100% of click fraud. A separate problem is the need to build and maintain a website, which can be an additional heavy burden for small companies that might not have the resources or budget for this.

Buyers need to be aware that search engines have no authentication and verification, so they can never be sure if a site they have found is from a legitimate company or a phish website until they do their own investigation. Professional buyers often find search engines less helpful because the wide variety of website formats found makes it hard work to compare one seller to another.

Search engine results can cover virtually anything available on the World Wide Web. This includes information from businesses as well as associations, governments, institutes and even individuals. The value of an ‘online business card’ is decreasing as companies now must compete with millions of other sites for a favorable search result ranking. Virtual marketplaces have emerged to fill the need of suppliers for targeted brand exposure.

Online marketplaces target a highly specialized group of people who are interested in global, business-to-business (B2B) trade. They offer features and support services that are customized for this special group and provide an efficient way for SMEs to promote products directly to potential buyers.

Online marketplaces provide SMEs with a web presence and many of the same functions as a corporate website. Their standardized supplier storefronts give businesses a professional and easy-to-navigate template that can be updated anytime by the registered member. In China, for example, only an estimated 700,000 SMEs have websites, yet Alibaba.com has more than 2 million supplier storefronts on its China marketplace. For an SME, an online marketplace takes the hassle out of maintaining a corporate website and, unlike a simple search engine, it provides a like-minded sourcing community as well.

Search engines crawl the Web but their keywords are usually bought on a per country basis. If you are a supplier in India wanting to sell your goods in the UK, you could buy a few keywords on a search engine targeting the UK. But if buyers in the US, Australia, or Europe are also your potential customers, you will have to allocate a separate budget for each market. Suppliers advertising on online marketplaces can rest assured that for the same price, buyers from all over the world can find them, as long as they can access the Internet.

EverFast Rechargeables, a French company, posted a new battery charger on Alibaba.com and literally overnight the buzz and excitement about the product spread to blogs and technology websites worldwide. The company had to upgrade its server to cope with the huge number of visitors and shipped 200,000 chargers in the first 30 days. The speed and global reach offered by online marketplaces is unprecedented.

The benefit of the Internet is that you can easily measure the effectiveness of your online marketing spend based on the number or inquires you receive. Since online marketplaces usually charge an annual subscription fee for storefronts, SMEs can budget for the fixed fee structure and pay the same price no matter how many clicks they get from potential customers.

LPI Technology International Ltd, a Hong Kong-based supplier of 3D printing equipment, recently shifted its entire online marketing budget to Alibaba.com from search engines. The company likes the user-friendly website and fixed fee payment terms of the marketplace and the quality sales enquiries it generates worldwide.

I would advise SMEs getting started with online marketing to keep it simple and outsource what they don’t understand. To use search marketing it is best to have someone in-house with keyword marketing expertise. Otherwise you should consider using marketing firms, which have a proven success rate of getting companies to rank higher in search results.

The right mix of search marketing and B2B websites can really help a business take off but small companies need to balance return on investment with manageability. Make sure your business maximizes the benefits of e-commerce by marketing through the right channels. For a small business new to e-commerce, an online marketplace may be the easiest way to start its online promotion.

David Wei is CEO of Alibaba.com, which is the world's leading online B2B marketplace.

This article first appeared in the old version of My Techbox Online on Aug. 11, 2008.