Copyright © 2009 by Kenneth S. Sumerford,
All Rights Reserved
Article written by Kenneth Scott Sumerford in November 2009
2009 November through 2014 October
Introduction
This article explores some of the major events that are likely to occur during the
next five years. First, this period will provide great opportunities for astute
individuals in small business, Internet marketing and Web site development.
Huge profits are waiting for wise and hard-working entrepreneurs in the United States and
many other countries. Possible scenarios will be presented here, with detailed examples
of potential gains. Second, this will be a period of fierce competition. The
last 24 months have been brutal, especially with the deep recession beginning around
March 2008. Third, individuals in small business and other sectors who do not “get it right”
in Internet marketing and Web site development during the next few years will be
in a very bad position in 2014. Business strategy, Internet marketing, competitive
analysis and market analysis will be keys to success.
Opportunities in Internet Marketing
The race to get profitable Web sites and presence on the Internet is like homesteading. Stake your
claim and get inexpensive “Internet real estate.” Wouldn’t it be nice to get valuable land
for $10 per acre? Now (2009) is the time to stake your claim.
Here is a detailed example. A customer list could be worth $7 per name in 2010 so a list of 20,000 customers
would be worth $7 x 20,000 = $140,000. You could do a special Emailing to the list and perhaps get $ .50 per name (from another company) and earn $ .50 x 20,000 = $10,000. Do 10 per year and earn $100,000—most of which would probably be profit!
What should a person pay to obtain a customer for a productive list? That depends on the revenues
from other companies and the sales margins to your business. Suppose you did an Emailing to the list above and the conversion rate (to sales) was 5%. And a product was sold for $10 that cost $7. The number of sales would be .05 x 20,000 = 1,000. The revenue would be 1,000 x $10 = $10,000. The dollar sales margin (revenue minus cost-of-goods minus direct marketing expenses) would be $10 – 7 = $3 per unit. The total sales margin is $3 x 1,000 = $3,000. If this sales campaign was done 10 times per year with the same variables, then the yearly sales margin is 10 x $3,000 = $30,000. Dividing the yearly sales margin by the number of customers is $30,000 / 20,000 = $1.50 per customer. One estimate is that each customer on the list is worth $1.50 so you could pay that much to obtain one customer.
But suppose a product or service was sold for $72 that had a cost of $22. The yearly sales margin
is $50 x 1,000 x 10 = $500,000. The yearly sales margin (not including direct marketing costs) from each customer is now $500,000 / 20,000 = $25 per customer name. So a small business person could easily afford to pay $15 to acquire each customer. If you paid $10 per name then your new sales margin would be: $500,000 - $10 x 20,000 = $300,000. Most of the $300 K will probably be profit!
The above is only one example that shows the potential profits of a customer list and a well-positioned Web site. Such a Web site will
pay high dividends during the next five years.
Customer and prospect retention is important. Suppose the retention rate for each person or company on
the list was 95% or .95 per month. The percent retained after 10 months would be .95^10 (.95 to the tenth power) = .60. The number remaining on the list is 20,000 x .60 = 12,000. (Marketing could be used to ad new members to the list.)
Fierce Competition
There are millions of Web sites on the Internet and getting into the top 5% of an online market or
market niche is difficult. It seems that most small companies have Web sites and are working at Internet marketing. Old pros, experienced warriors and beginners are using Internet marketing methods to increase revenues, boost sales margins and profits, cut service costs, and enhance company image.
This is the chief point: Most old pros and experienced warriors probably know the stakes. The Internet
is expanding in number of customers worldwide, revenues, profits and influence. Internet marketing and great Web sites are now essential ingredients in branding. There is often fierce competition between companies to establish and enhance their brands. For example, Google is now an overall brand that includes many services that prosper from the brand name and image of Google.
It is very likely that competition on the Internet will be brutal in 2010 in most markets and profitable niches.
This includes competition in the following: Web sites; Email marketing; social media, including Facebook; ads on Web sites; ads in search results; off-line marketing, including TV and radio ads to get the audience to visit certain Web sites; and marketing strategy.
Marketing strategy will be a crucial factor in long-term success. Having a nice-looking Web site will do little good
if the other factors are mediocre.
Dangers in Small Business Internet Marketing
The small business owner who does not have a good Internet Marketing and Web Development strategy in place
by the end of 2009 is in danger. Some of these dangers have been mentioned.
SEO (Search Engine Optimization) is composed of on-site and off-site optimization. The on-site SEO involves
Keywords in the domain name, Web page name, any sub-directory names, and places in the Web page such as Title and header tags. These items can be changed somewhat quickly.
The SEO off-site optimization is made of items off of the Web site that affect rankings in the search engines
and directories. One critical item is in-bound linking. These links go from other Web sites and Email to a certain Web page. It often takes a moderate amount of time to get these links to the Web site, unless the company pays for in-bound links. Paid in-bound links may not be profitable. Some Internet marketers believe that Google and the other major search engines ignore these paid links and sometimes penalize the whole Web site for getting these in-bound links. Older links probably have more power to influence search engine ranking. Therefore, the Web site that does not get good in-bound links in 2010 may be in a very difficult position later. For example, getting 50 good in-bound links may take several months. And some competitors are adding in-bound links each month.
Good content attracts high-quality traffic. Visitors to a Web site do not want low-grade content. Attractive content
includes: articles; photos; videos; and text on the Web pages, including links. This content must be relevant, valuable and affordable. For example, a long article of 4,000 words when 1,200 would be enough is not of high value. (A short article of less than 800 words may not be comprehensive enough. Here again, you have to know your market.) “Don’t waste my time,” says the hurried visitor. Good content cannot be made quickly without spending a lot of money. So one danger is: the small company or professional will get behind in the race to build a lot of high-quality content.
Build Your Internet Territory for the Long-term
Sacrifices in time, effort and money now will yield a slice of Internet territory in 2014. By the end of 2011 it may be almost impossible for most small businesses to start a set of Internet sites and make substantial money.
Now is the time to build a practical, far-sighted Internet marketing strategy. This strategy should have small strategies with tactics for success. It should also be in the business plan of the enterprise. Then Internet marketing and Web site development must be pushed and worked with passion and long-term thinking.
There is a window of opportunity in the next five years. That window may shut and stay closed for a long time. Now is the time to capture the great opportunities on the Internet.
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