Start-Up Eyes Web Services as Key to SO/HO Market

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As small businesses increasingly migrate to the Web, Internet start-up SmartAge has designed a business model it hopes will ultimately lead to an ability to offer marketers highly targeted online advertising in the small-office/home-office (SO/HO) market.


Market research firm Access Media International, New York, estimates that there were 900,000 small-business Web sites last December and that the figure will grow to 2 million by the end of this year.


SmartAge has its cross hairs set on this group -- and if all goes according to plan, it will end up with a network of niche sites that when put together represents a large and highly segmentable audience of Web surfers reachable through banners. SmartAge also plans to offer business-to-business advertisers a list of small-business Web-site owners through e-mail-newsletter and other sponsorships.


The cornerstone of SmartAge's plan is banner exchange service SmartClicks (www.smartclicks.com), which SmartAge acquired in February and like most banner-exchange services works as follows:


* Members agree to display two banner ads on their sites in exchange for credit to display one banner ad on another SmartClicks site (the ratio varies on other networks).


* SmartAge then sells the resulting excess ad inventory to advertisers outside the SmartClicks network for revenue.


As for other small-business-aimed services, for $6.95 a month, SmartAge will continually monitor member Web sites to make sure they're up and running and alert them to problems by e-mail. For $4.95 a month, SmartAge will track and provide weekly reports on where a site ranks on the seven top search engines using member-specified keywords.


SmartAge currently claims that SmartClicks represents in the mid-10s of thousands of sites and that it will represent 100,000 sites by year's end. Advertisers on SmartClicks can target sites in 35 categories like education, free offers, games, hobbies, travel and religion.


One pitfall of banner-exchange services, according to Internet advertising consultant Mark Welch (www.markwelch.com), is that they focus on Web publishers with little or no ad budget and tend to attract hobbyists and teen-agers who are thrilled if they get one visitor. Therefore, Welch said, banner exchange programs and any resulting e-mail list will "usually contain a lot of chaff."


SmartClicks, however, combats the dead-site trap using technology that automatically places banners on sites where they are drawing the highest click-through (response) rates. Advertisers can override the technology if it results in low conversion rates, said Anna Zornosa, president and chief operating officer at SmartAge.


"I think [chaff] is a concern more generic to banner exchanges than it is specific to what we're doing with SmartClicks," she said.


Zornosa estimated that there are 20 banner-exchange services in the United States and that they sign up about 2,000 sites a day. "None of those banner exchanges have dedicated themselves to making the Internet-enabled entrepreneur successful," she said, defining small businesses as those with less than 10 employees.


Zornosa, who is a former executive of push marketing firm PointCast, said that where most firms treat SO/HO as a single group, SmartClicks' registration process includes a series of qualifying questions (size, business type, purchasing intentions, etc.) similar to those on a controlled-circulation subscription form.


"We will be building the most dimensionalized profile of these Internet-empowered small businesses [available]," she said. "There is no group that is less homogeneous than these small Internet-empowered businesses."


Zornosa said SmartAge will use the information gleaned from registrations to offer members e-mail newsletters, seminars and special chat sessions, which in turn will result in targeted sponsorships to offer advertisers. The sponsorships will cost somewhere between $25 to $75 per thousand depending on the level of targeting.
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