Customer Acquisition is (Still) King for Local Merchants

For many small businesses, the biggest challenge is acquiring new customers at an acceptable cost. And in 2011, we saw several new approaches to customer acquisition gain momentum: Facebook Ads and group deals.





According to our most recent Merchant Confidence Index survey of 2,500 local business owners across the U.S., while newspaper ads and direct mail – tried-and-true offline customer acquisition techniques – are still popular, with 25% and 24% of merchants using them, some 12% of merchants have offered a daily deal – up 33% compared to three months ago – and 24% bought targeted Facebook Ads.

Daily deals appear to be effective in driving customer acquisition tool for some small businesses.  According to the Merchant Confidence Index, 75% of merchants who have used daily deals in the past would do so again.  Of those who would use daily deals again, 61% of said they’d use them again because daily deals are “effective for customer acquisition.” While only 37% of merchants said the deals were “profitable”, it seems getting a new customer through the door makes daily deals worth trying again.

Local merchants are also acquiring new customers via Facebook Ads, the targeted paid ads offered by the world’s largest social network.  Some 38% of merchants said they’d use Facebook Ads again due to their effectiveness as a customer acquisition tool.  But for those who wouldn’t use Facebook Ads again, 66% said it’s because the ads did not work to acquire new customers – showing that customer acquisition is a top priority for small businesses.

Customer acquisition is so important to local merchants, the majority of respondents said they’d be willing to purchase qualified prospect information on a pay-per-lead basis. Over 60% of merchants in the financial services industry would pay for leads, while one-third of merchants in the automotive, construction, and home improvement industries would.  Look for this strategy to gain steam in 2012.

Marketing strategies that aren’t proven to bring in new customers are, unsurprisingly, not very popular with local merchants looking to grow their businesses. Mobile marketing, for example, has been slow to catch on with local merchants. Only 22% of merchants have tried mobile marketing, with 72% saying they’ve hesitated because they don’t have a good understanding of how to use it to reach potential customers.

With nearly a third of local merchants concerned about the high cost of marketing in the next year, it’s no wonder they prefer to use channels that deliver what they most need: new customers.

Sincerely,

The MerchantCircle Team

New Data on Small Business Adoption of Facebook Ads and Group Deals (Google Offers, Groupon and LivingSocial)

New marketing trends data from MerchantCircle's 7th survey of small business owners across the U.S. reveals that group deals are gaining popularity among small businesses and shows Google Offers and other niche deal providers are putting increased pressure on Groupon and LivingSocial. There’s also evidence of slowing adoption for Facebook Ads, although favorability for this new advertising medium remains strong among those who are using it.

Key insights from MerchantCircle's research include:

1. Group deals are experiencing steady growth among local merchants

• Nearly 12 percent of local merchants now report having offered a daily deal, up 33 percent since the last MerchantCircle survey in June 2011.

• About 75 percent of respondents say they would offer another deal in the future, citing its effectiveness for customer acquisition as their top reason (61 percent).  Deal profitability also appears to be on the rise: 37 percent now say solid profitability will lead them to offer another deal, up from just 24 percent in June.

• Among the 25 percent who said they wouldn’t offer another daily deal, 42 percent said it was not effective for customer acquisition, 36 percent said it was too costly and 34 percent said they lost money on the deal.

2. Cost is the most important criteria for selecting a deals provider.

• 64 percent citing cost as their top consideration when selecting a deals provider.  Local targeting (57 percent) and the ability to reach a large audience (52 percent) were the second and third-most important selection criteria.

• Businesses that plan to use Groupon in the future report that the ability to reach a large audience is equally as important to them as cost, with 62 percent citing reach and cost as key selection criteria.

3. Groupon and LivingSocial may face increased pressure from Google Offers in 2012.

• About 19 percent of local merchants who have offered a group deal have tried using Google Offers since its launch this summer, as compared to Groupon (26 percent) and LivingSocial (21 percent).  A large number of specialized deals providers have also entered the market; these services have been used by about 43 percent of local merchants who have offered a group deal.

• About 32 percent of merchants planning to use Google Offers for their next deals, as opposed to 26 percent who plan to use Groupon and 16 percent who plan to use LivingSocial.

• Google Offers enjoys the highest retention rate of all the large deals providers: 66 percent of its customers plan to use Google Offers again.  Just 41 percent of Groupon and LivingSocial customers report that they plan to use these services again.

• Before ceasing operations, Facebook Deals had been used by 22 percent of the respondents who’d offered a daily deal in the past.  More than half of these customers say they plan to use Google Offers for their next deal (53 percent).

4. Facebook Ads growth slows among local merchants.

• About 23 percent of local merchants report having tried Facebook Ads to date, which is only five percent more than six months ago.

• That being said, favorability for Facebook Ads remains strong among those who have tried them, with 62 percent saying they would use Facebook Ads again, citing ease of use (62 percent) and the ability to start and stop campaigns (55 percent) as the top reasons for continuing.

• Of the 28 percent who say they wouldn’t use Facebook Ads again, nearly two-thirds report that they didn’t acquire new customers (66 percent).  But more merchants now also cite high costs and low click-through rates as reasons not to advertise with Facebook again: 41 percent of merchants said the ads were too expensive (up from 35 percent in June) and 37 percent reported low click-through rates (up from 29 percent in June).

• While Facebook Ads growth may have slowed, general Facebook marketing continues to be extremely popular among local merchants, with 70 percent of people using the social network for marketing, up from 66 percent in June. 

A big THANK YOU to all our merchant members who participated in the survey.  Stay tuned for more insights into small business marketing in the coming days!

Sincerely,

The MerchantCircle Team

Small Business Survey: Group deals and "Pay-per-lead" poised for growth

The results from our latest installment of the Merchant Confidence Index survey are just in.  We received over 2,500 responses from our small business members and we'll be "crunching the numbers" over the next few days to share insights into: 1) small business owners' opinions of the current economy, and 2) the adoption of new marketing channels by these business owners.



As illustrated by the super-cool infographic below, newer paid marketing channels like Facebook Ads and group deals are now part of the small business marketing mix, with local pay-per-lead poised for some serious growth in the near future.



Also surprising is the quick adoption of Google Offers relative to the "big boys" in the group deal space like Groupon, Facebook Deals (no longer around) and Living Social.  Local business owners tell us that they plan to try Google Offers more than any other group buying service in the future.



Enjoy the infographic!



Sincerely,

The MerchantCircle Team

Big changes are coming (and we think you're going to like them)!

Our goal has always been to help busy people solve everyday problems.  Whether it’s helping local merchants promote their business online, or helping busy consumers get things done – we focus on connecting people with a vibrant network of local business owners who are eager to help. Our goal hasn’t changed, but the way we approach it certainly will.  In the coming weeks, we will be introducing a "beta" version of the new and improved MerchantCircle.



Most of the time, people need more than just online reviews to solve a problem.  Our network of 1.6 million local merchants makes MerchantCircle the one place to go to find trusted merchants, get great deals, find expert advice and get competitive quotes for real-life projects.  No more surfing the web for hours trying to find what you need – we have it all right here.



Here are some exciting new features being added to help both MerchantCircle Neighbors and our member merchants:



For MerchantCircle Neighbors:

• Deals - with enhanced search capabilities, promotions, coupons and offers will be easier to find


• Reviews - we're making changes to ensure that you get real reviews from people in your community


• Better search – find more relevant businesses and local advice

For our merchant members:

• Free member support - just call our US-based call center (more to come soon!) 


• New forums - same great discussions, but way faster and easier to use 


• Updated listing templates - we’ve freshened up and reorganized the look and feel of listing pages so people learn more about your business

So stay tuned – we’re excited about the new direction and we hope you like what you see.

Sincerely,

The MerchantCircle Team

AdWords Express- Did Google Get it Right?

Google is continually launching changes to its AdWords online advertising service, and it recently rolled out AdWords Express in an aim to help smaller businesses more easily create and run keyword-targeted ads on Google and Google Maps.



Many small business owners have dabbled in AdWords, only to find it costly and complex. So any move by Google to make it easier for merchants to master the complex art and science of keyword advertising is a step in the right direction. But the new AdWords Express service does not solve all of the challenges that small businesses have experienced with AdWords, including a financially-impactful lack of control and the ability to reach intentional, targeted customers.



AdWords Express does include a number of helpful features for small business users, such as a simple campaign setup and no ongoing campaign management. The promise is that business owners will not have to bid on keywords, but will instead simply provide a bit of information about their business, set a monthly budget, and let Google do the rest– setting up, running, and managing ads for the user.



The result, according to the Google AdWords Express site is the following: “When people search your area for the products or services you provide (”flowers in Dallas”, or if they’re already in Dallas, just “flowers”) an ad for your business will appear above or beside their search results. Your business will also be marked with a distinctive blue pin on Google Maps, helping it stand out to potential customers.”



But while the nuts-and-bolts of Google AdWords Express may be simple, even for non-savvy advertisers, there are disadvantages to the program. For one, targeting is based on a searcher’s IP address – which is, at best, 20 miles around a zip code and in the worst case, hundreds of miles away. Someone searching for flowers 100 miles from Dallas may get ads for florists in Dallas – not very helpful to that searcher and not very useful to the florist in Dallas, either. IP-based geo targeting is often wrong or inaccurate, and even when it is accurate, it may only reflect the location of the consumer and not where she would like to have the service rendered.



Additionally there are issues with intent and return on investment. Without a method for vetting who will see a given add, business owners could lose hundreds of marketing dollars in wasted paid traffic at the hands of casual, click-happy Internet surfers who may not represent the intended target audience or aren’t interested in the offerings presented. If Express isn’t producing the right return on investment, what does an advertiser do? They don’t know their bid and can’t optimize geography, making cancellation the only option left.



Advertisers still need to develop and optimize ad copy to maximize click rates. Remember, just because Google makes this process simple, doesn’t mean they are giving up on maximizing yield (revenue) per search.



The bottom line is that Google AdWords Express is a step in the right direction to serve the needs of the small business community, but it doesn’t go far enough to meet the needs of local merchants. The service is almost too simplistic; local businesses need robust, targeted location-based marketing, not just a one-size-fits-all approach. What Google has launched will make it easier to advertise on the site. But they’ve also just made it easier for local business owners to spend a significant amount of hard-earned money resulting in discouragement coupled with little to no ROI .

We're really proud of our CEO!

In Silicon Valley, meeting brilliant, innovative, business-minded people is as common as traffic on 101 or overhearing happy hour hot-dogging about upcoming IPO's...



But. Meeting brilliant, innovative, business-minded people who are as focused on the world around them, as they are on their portfolios is, well, not so common.



The MerchantCircle team is honored to have one of these unique individuals at our helm. Payam Zamani, CEO of Reply! Inc, is one of those charismatic Valley personalities with an incredible story of perseverance and a contagious passion for helping others. And because we know that Payam himself wouldn't self-promote, we're proud to share the news that he's a GQ Gentleman's Fund nomine for the Better Man Better World Search.



We'd love to see Payam as one of the finalists and welcome your support! Head on over to the nomination page and cast your vote. Then check out the great company he's keeping in this group of world-changers and get inspired.





Cheers!

Can Group Deals Work for Sole Proprietor Businesses?

Small businesses such as restaurants, salons, auto repair shops, and fitness centers are becoming adept at using daily deals from services such as Groupon, LivingSocial, and Facebook Deals to attract new customers, but what about sole proprietors?



According to our most recent quarterly Merchant Confidence Index survey of nearly 5,000 local business owners across the U.S., only 8% of companies with less than five employees had tried offering a daily deal.



While group deals can work for sole proprietors, it just takes a bit of legwork and a clear understanding of the risks involved. Though the costs of doing a daily can be high – with small business owners turning over up to half of all revenues on already steeply-discounted deals to Groupon or another provider – the results can be worth it, if you manage the deal correctly. Some 77% of small business owners who’ve done daily deals said they’d be likely to do another – citing things like effective customer acquisition and profitability as benefits.



One MerchantCircle sole proprietor who successfully used Groupon to build his business is SchaOn Blodgett of Psinergy, a self-proclaimed “Tech Warrior” who offers computer diagnostics, repair, and upkeep in the St. Paul, Minnesota area. He offered a $99 system optimization and cleaning for $49 on Groupon and sold 50 of them in one day. But the best news was, of those 50 buyers, 37 redeemed the coupon and 12 became repeat customers. So many of the customers were happy with the service that Psingergy believes 95% of the Groupon buyers will eventually return for more services.



Why did Psingergy’s offer work so well? The bottom line is that he used Groupon to get them in the door, but then wowed them with customer service once they redeemed.



“I wasn’t that surprised that the Groupon customers came back, because I pride myself on fantastic customer service, guaranteed work, and reasonable pricing,” said Blodgett. “I treat all of my customers like human beings and answer any questions - even ones like ‘how do I turn on my computer’ – without making the person feel stupid or that it is beneath me.”



Sole proprietors that want to offer a group deal should think before they leap – because a deal done badly can cost owners a fortune without bringing in high-quality customers. Here are some tips from Mashable to get sole proprietors started with daily deals.



1. Shop around.



Groupon and LivingSocial may be the most well-known daily deal sites, but there are now a wide range to choose from. Yelp, Facebook, and Google have all tossed their hat in the ring, as most daily newspapers. Now there are also many vertical and niche deals sites focused on certain sectors, such as Daily Gourmet for foodies, Yuupon and TripAlertz for travel, and even a deal site for dog owners: Doggyloot. There are also business-to-business deal sites like RapidBuyr. These niche daily deal sites are often the right choice for sole proprietors because they reach a targeted audience interested in particular products or services instead of just “everyone in the local area.”



2. Set time parameters.



With most group deal services, you won't have much control over when your deal hits, and this can make it tough for sole proprietors to manage a sudden surge in demand. This is a big problem for “one-person shops” as your time is your most precious resource. Taking on too many new customers or clients all at once could leave you overwhelmed and lead to unhappy customers and bad reviews. The way to solve this problem is to put time constraints on your deal when possible – spelling out a fairly short time period during which the deal can be redeemed. You can also set up your deal so the value of the discount is greater on your slowest days or during off-peak times. If your business has significant seasonality, try running deals during your slowest months.



3. Understand the costs.



Group deals don't always result in an immediate profit – and may even result in a net loss to the business.



To do the math on what a Group deal will cost you, here’s the basic formula. People only buy group deals offered at a steep discount to the regular price – let's say somewhere around 50 percent off. You then need to share revenue from the deal with your service provider, at rates as high as 50 percent or more. So if you’re offering a $200 interior design consultation for $100, and you have to pay $50 of that to your service provider, you'll end up with $50 for your $200 service. If it costs you more than $50 to provide the service, you'll lose money on the deal. In fact, the better the deal does, the more it will cost you.



Still, since your company's name gets in front of thousands of local consumers and you hopefully acquire many new repeat customers, a daily deal can be well worth the immediate “loss”.



4. Make the most of each customer visit.



According to recent Rice University study, less than 20 percent of group buyers return again to make a full-price purchase. To improve these odds, most of each new customer visit by turning on the customer service charm, offering add-ons, and giving them a reason to come back. Think about potential up-sells for people who redeem your coupon. A party planner could offer customers a $10 giftcard to an online party supply store, or a personal fitness coach could offer a discount for new patrons who book a series of sessions.



And don’t forget to stay in touch with your new customers. Ask for their email address and/or encourage people to leave reviews of your service on Yelp, MerchantCircle, and other local sites. You could also remind people to follow you on Facebook or Twitter.



As a sole proprietor, you are a one-person band. But that doesn’t mean you can’t benefit from the same group deal services that larger businesses – and even national brands – use regularly to acquire new customers. Just play it safe and set up guidelines ahead of your offer, and this could be your chance to build your customer base.

Facebook Ads: Small Businesses are Fans

Local businesses early on recognized the potential to market their products and services on Facebook. With a free Facebook page, businesses could offer special deals to customers, build an online fan base, and publish information and promotions – all for free. But local merchants are increasingly also early adopters of paid Facebook Ads.



According to our newest MerchantCircle survey of nearly 5,000 small businesses, some 94% of small business owners are aware of Facebooks Ads. Some 22% of small businesses are already using Facebook Ads, and nearly two-thirds of those who have used them would do so again. And while Facebook Ads have been lambasted for “abysmal” clickthrough rates, small businesses are finding value in the paid placements.



Why are small businesses satisfied adopters of Facebook Ads?



First, Facebook Ads are affordable – something very important to small business owners. While brands can afford to spend millions buying keywords on Google, cash-strapped small businesses must make every marketing dollar count. In a recent Inc. Magazine article, a New York-based small business owner said she gets great results buying Facebook Ads – at a cost a fraction of what it would cost to buy the same keywords on Google.



The below chart illustrates that cost-per-click of $0.67 for Facebook Ads in the “local services” category, and $0.53 in “restaurants” category. While that’s not cheap, it’s better than the $1-$2 per click small businesses can pay for competitive keywords on Google.

Secondly, small businesses are highly adept users of Facebook. They were avid early adopters of Facebook, with about 70% of local merchants using the platform to market their businesses, and may feel more comfortable taking the plunge to buy “experimental" ads than their larger business counterparts, whose marketing departments must justify every ad buy as part of a larger pre-defined budget.



Lastly, Facebook Ad are easy to use. Small business owners don’t have VPs to run their marketing programs for them. Most merchants run marketing as just one of the many hats they wear every day, and they don’t have weeks or months to master complicated advertising platforms. In the MerchantCircle survey, 67% of small business owners said that “ease of use” was the number one reason they’d use Facebook Ads again, with 65% saying they appreciated the ability to easily start and stop campaigns.



Of course, not every small business has seen successful with Facebook Ads. Of the 35% of merchants who said they would not advertise with Facebook again, nearly 70% said that the ads did not help them acquire new customers. While Facebook Ads may be easy to use and fairly affordable, if Facebook doesn’t introduce improved local targeting and other value-ads for small business advertisers that result in higher customer acquisition over the longer term, they will undoubtedly lose their luster with local merchants. After all, local business owners may be willing to experiment with different types of advertising, but, at the end of the day, they’ll only reinvest in methods that bring customers through the door.

Shotguns and Chardonnay... (In that order)

Brilliant sunshine and blazing temps provided the perfect backdrop for MerchantCircle's 3rd Annual Shotguns and Chardonnay Event, taking place yesterday afternoon at the Los Altos Rod and Gun Range.



Over 150 of the Vally's best and brightest turned out to fire off some rounds in between networking and noshing on sweet BBQ bites provided by former Google chef turned local business owner, Dontaye Ball.



Silicon Valley investors and entrepreneurs are known for being straight shooters- we had no idea how true this was! At any given moment one could turn his/her head and see exploding clays in every direction. From tech to targets, we're a well-aimed group.



As the afternoon moved from firearms to Fruit-forward, the staff at Savannah Channelle Vinyards graciously welcomed us into phase 2 of this day-long event. With sweeping views of the Valley and chilled Chardonnay in hand, we compared sunburns and start up stories.



The day wrapped with a visit from the famous Mis Anajitos taco truck and our satiated guests left with full bellies and great business ideas.



Thank you to everyone who attended for making this event such a successes!

New Data on Small Business Adoption of Facebook Ads and Group Deals (Facebook Deals, Google Offers, Groupon and LivingSocial)

New marketing trends data from MerchantCircle's 6th quarterly survey of small business owners across the U.S. reveals that Facebook Ads are gaining popularity among small businesses and provides new insights into the group deals market, including increased pressure on Groupon and LivingSocial from Facebook Deals and Google Offers.



Click here to download the full report.



Key insights from MerchantCircle's research include:



1. Facebook Ads are gaining popularity among local businesses.



• 66% of local merchants are using Facebook for marketing.



• 22% of local merchants have used Facebook Ads, and 65% would use Facebook Ads again.



• Top reasons to use again include ease of use (67%) and the ability to start and stop campaigns (65%).



2. Merchants are warming to group buying, but adoption is still slow.



• Just 9% of local merchants having offered a daily deal using a service like Groupon or LivingSocial.



• While three months ago, only 50% of merchants who had tried offering a group deal said they would do so again, 77% now say they would be willing to offer another daily deal.



• Top reasons for offering another deal include effectiveness in customer acquisition (58%), favorable deal structure (30%) and profitability of the deal (24%).



• Among those who wouldn't offer another daily deal, 42% said that it was not effective in customer acquisition, 25% said it was too costly and 24% said they lost money.



3. Small business familiarity with Facebook and Google may help them win market share from Groupon in daily deals market.



• 52% cited familiarity with Facebook and Google as a reason they might choose Facebook Deals or Google Offers over competitive daily deal offerings.



• Other reasons for choosing Facebook Deals include bigger audience size (26%) and better local targeting (21%).



• Those more likely to use Google Offers cited Google's bigger audience size (42%) and Google's brand reputation (34%) as top reasons for preferring Google.



4. Relevant Charts:

Adoption and repeat usage of Facebook Ads

Perception of Facebook Ads amongst users

Adoption and repeat usage of daily deals sites

Perception of Daily Deals sites amongst users

Reply.com Announces Completion of MerchantCircle Acquisition

The deal is done!



The last several weeks have been as exciting as they have busy, but today we're happy to announce that Reply! Inc has officially completed the acquisition of MerchantCircle.



Our MerchantCircle Founder and CEO Ben T Smith IV is now President of Reply! Media, comprised of MerchantCircle.com, Contractors.com, Bloglines.com, iMotors.com, and other consumer-facing destinations and mobile products.



Our teams have worked quickly to close this deal and we're looking forward to a bright future as one powerful family, focused on delivering the very best marketing and business-building solutions available on the web.

Local Business Merchants Warming up to Daily Deals

Daily deals on the rise?



Small business owners are definitely interested in trying “daily deals”, but few have actually taken the plunge. Despite a plethora of daily deals services, from the big pure-play companies Groupon and LivingSocial, to Facebook Deals, Google Offers, and dozens of other local alternatives, only 9% of small business owners have offered a daily deal via one of these services. This finding is part of the most recent quarterly Merchant Confidence Index survey of nearly 5,000 local business owners across the U.S., published by MerchantCircle.



However, merchants are warming up to the idea of using daily deals on a repeat basis – provided they find the right partners to make these offers effective. According to the Merchant Confidence Index, 77% of merchants who have tried daily deals said they would be willing to offer another daily deal in the future. Just three months earlier, only 50% of merchants who had tried deals said they wanted to offer another one.



This rise in “deal confidence” shows that merchants are becoming savvier with daily deal offerings – finding the right products, price points, and offers to acquire customers at an acceptable cost. Of those merchants willing to offer another deal, 58% cited effective customer acquisition as the reason to try again, while 30% said a favorable deal structure was the reason. Just 24% said profitability was a driver in offering a repeat deal.



Unfortunately, many merchants continue to be disappointed with the results of the daily deal offerings. Among those who wouldn't offer another daily deal, 42% said that it was not effective in customer acquisition, 25% said it was too costly, and 24% said they lost money.  Due to the high costs associated with daily deals via big sites like Groupon and Living Social (which take upwards of 50% of all proceeds on already discounted sales) many merchants feel they cannot “afford” to do them.

Even though less than 10% of small businesses have ever offered a daily deal, it’s not for lack of aggressive sales and marketing efforts on the part of big deals sites. More than a third of respondents who offered a daily deal did so after being contacted by a sales rep (34%) or seeing an ad for the service (31%).



Daily deals may feel omnipresent – what with the number of “deals” that land in most peoples’ inboxes daily and the recent news of Groupon’s proposed mega-IPO topping headlines – but the reality is only 9% of merchants have ever offered one. That may change as more competitively-priced deals partners enter the space. New offerings from Google and Facebook are catching on quickly with small business owners and may take a bite out of Groupon and LivingSocial’s businesses.



The Merchant Confidence Index shows that 52% of small business owners are considering using either Facebook Deals and Google Offers, citing their familiarity with these two mega-brands as the main incentive to choose them over competitors. Other reasons for choosing Facebook Deals include larger audience size (26%) and better local targeting (21%) compared to Groupon, LivingSocial, and other pure-play daily deal competitors. Those merchants likely to use Google Offers cited larger audience size (42%) and Google's brand reputation (34%) as top reasons for preferring Google.



Whether you run a hair salon, a dog walking service, a restaurant, a gym, or any other small business,  the reality is most merchants are working with very small marketing budgets. Daily deals may get new customers in the door, but at what price? With consumers reaching daily-deal overload, many people use the coupons to visit a business one time, then move onto another offer – never becoming a regular customer.



The draw to try Facebook Deals and Google Offers is not at all surprising. Because many merchants already buy Google ads and use Facebook, testing the daily deal waters with these familiar giants seems like, familiar one-stop shopping for what could otherwise feel like a risky expenditure of limited marketing resources.



However, unless Facebook Deals and Google Offers address some of the lingering concerns merchants have about daily deal services – high costs and few repeat customers – merchants may use them a few times, but not return. After all, small business owners are driven by one goal: grow their businesses profitably and sustainably. They don’t have time for gimmick marketing that doesn’t deliver.

Q2 2011 MerchantCircle Merchant Confidence Index Survey Results

Below are the results of our quarterly Merchant Confidence Index (MCI) survey for Q2 of 2011. The Index is designed to track trends in small business sentiment over time.



This sixth Merchant Confidence Index survey was fielded online, between April 30th and June 6th, 2011, and sent to a random sample of MerchantCircle's member base of over 1.6 million local business owners. There were 4,942 total responses from local business owners across the United States and no incentive was offered to complete the survey.



Merchant Confidence Index tracks track four key questions designed to synopsize the prevailing trends among local business owners.  The overall index score is based upon a standardized five-level Likert scale. 



78.2% of responses from merchants with 1-4 employees

12.5% of responses from merchants with 5-9 employees

7.4% of responses from merchants with 10-49 employees

2.0% of responses from merchants with 50+ employees

State of the U.S. economy

How would you rate today’s economy compared to the past twelve months? (n=4,942)

Expectations for the future revenue

How do you expect your sales revenues to change over the next three months? (n=4,942)

 

Marketing expenditures

How do you expect your marketing/advertising expenditures to change over the next three months? (n=4,170)

Hiring expectations

How do you expect your company’s headcount to change over the next three months? (n=4,942)

Merchant Confidence Index Calculation

Marketing Budget

What is your annual ad/marketing budget? (n=4,170)

Adoption of specific online marketing services

Most effective marketing channels

Select the top THREE most effective marketing or advertising methods your business uses or has used. (n=4,170)

Adoption and repeat usage of Facebook Ads

 Perception of Facebook Ads amongst users.

Adoption and repeat usage of daily deals sites

Perception of Daily Deals sites amongst users

Perception of Facebook Deals and Google Offers

Awareness of group buying sites

How did you find out about the group buying site you used (n=366)?

Tablet adoption

Do you use a tablet device for your business (e.g., iPad)? (n=3,786)

Tablet adoption

Do you use a tablet device for your business (e.g., iPad)? (n=3,786)

Respondent Profiles

Size of business

How many people does your business employ?

Business categories

Which single business category best describes your business?

MerchantCircle and Reply! Thank You.

We've been overwhelmed by the response to yesterday's announcement and wanted to once again thank all of our friends, family, former colleagues, investors and advisers.



As shared in Ben's blog, we recognize that it's because we've been surrounded by such fantastic support, great people and brilliant minds that MerchantCircle is the platform you see today. The needs of our merchant base have driven the products we've created and we've been proud to serve them in the capacity that we have. And now, we're very much looking forward to delivering an even better customer experience!



The market response to this new combination has been fantastic. Thank you for tweeting, digging, facebooking, and emailing the many news clippings.  Each of your encouraging notes, texts, and phone calls were proudly shared with the rest of our MerchantCircle team. We've loved that you have been celebrating with us.



In case you missed some of the coverage, we're proud to pass it on.



And while you read, know that we're back to doing what we do best.. It's GSD time!



Cheers!

Payam Zamani and Ben Smith 

-Two Bay Area players in the increasingly competitive local online advertising space are hooking up as Reply Inc. announced plans Thursday to acquire MerchantCircle for $60 million. (San Francisco Chronicle.)



-When Wienbar and the rest of the team at Scale Venture Partners combed through a proposal for local ad network Reply to acquire local business directory MerchantCircle, they decided the companies were “more valuable together than apart.” (Wall Street Journal)



-MerchantCircle's Smith expects overall traffic to grow significantly as a result of the pairing... (ClickZ)



-Clearly, MerchantCircle brings Reply an inventory of small businesses. Reply says the combined company projects revenues of over $100 million in 2012. (TechCrunch)



-MerchantCircle itself has shaped up to be a strong, search-driven Internet Yellow Pages player — although it prefers to characterize itself in broader terms, having added a Q&A platform, appointments, leads widgets, etc. (BIA Kelsey)

The MerchantCircle Board in the voting room

-MerchantCircle has long targeted merchants in small locales versus catering towards the consumers, as sites like Yelp and CitySearch do. (Washington Post)

MerchantCircle acquired by Reply! Inc. (And we're really excited!)

When MerchantCircle launched in 2006, our mission was simple: to build a network of millions of local business owners to help them market themselves to nearby consumers. We had visions of creating a powerful network for local businesses everywhere...

At the time, we were watching as billions of local marketing dollars were being spent on dying media like the Yellow Pages. We knew the web held significant promise for small business, but nobody had yet figured how to make it work on a local level. Determined to change that, we created a plan and started building.

Now, over 1.6 million local business owners have joined MerchantCircle, and are getting connected with 20 million consumers every month. For many of these users, MerchantCircle has been their first introduction to the power of the web.

Today, we're excited to announce that we just got better. MerchantCircle has been acquired by Reply! Inc., the leading marketplace for the acquisition of locally-targeted consumer traffic. (You can read all the details in our press release.)

“As the first investor in MerchantCircle, I can say it's been an incredible ride since Ben and I first incubated the company in our conference room back in 2004”, says Mark Menell, a Venture Partner at Maveron, LLC and the initial investor in MerchantCircle when he was a general partner at Rustic Canyon. “This is a big win for the MerchantCircle team and an even bigger win for local businesses and consumers."

So what's all this mean?

For our merchant members, we're thrilled to assure you that this deal will result in an even more powerful network. It will mean more effective web marketing tools, more connections with local consumers, more inbound customer phone calls, appointments, request for quotes, and business leads for YOU.  For consumers, this means even more meaningful connections to businesses in your area. We'll be more capable of empowering mutually beneficial, productive local relationships.

The team at Reply!, led by CEO Payam Zamani, shares our passion for giving businesses the best place on the web to reach local consumers. The MerchantCircle team will become the Reply! Media division of Reply! Inc. and will continue to work in the interests of our merchant customers. If you’re worried that we’re going away, don’t! You can rest assured, because our dedication to growing and improving the MerchantCircle platform still remains true

Every small business owner needs someone to believe in them – we are no different. For our investors, this merger represents an excellent opportunity to achieve our vision.  Scale Venture Partners, Steamboat Ventures, and Rustic Canyon  believed in MerchantCircle from the beginning. They understood our passion and desire to make the local web scalable and profitable. We were determined to succeed where many dozens of other start-ups had failed. Even when we didn’t know exactly how we’d turn that vision into reality, they supported us with funding and great advice. We are very grateful for their help in getting to this point.

As with most great success, this milestone could not have been reached alone. It's only because we've been surrounded by such intelligent investors, advisors and team members that MerchantCircle has grown into the organization your see today. And we think it's time to call some people out…

Joey Levin, Kara Nortman, Rob Angel and Jay Herratti at CityGrid Media have been invaluable partners and friends of MerchantCircle and are very much appreciated. Ron Conway (the Silicon Valley Angel), Michael B. Aronson of MentorTech , Alex Lloyd of Accelerator Ventures , Auren Hoffman of Rapleaf, Patrick Grady of Rearden Commerce , and Chris Tolles of Topix  have provided direction, support, and contributions that for which we are more than thankful.

This announcement also offers a tangible victory for our dedicated Board of Directors:  Ben T. Smith, IV, Scott Hilleboe, Peter C. Horan, Mark Menell, Neal Hansch, and Sharon Wienbar. The MerchantCircle team cannot thank you enough for giving us your trust, offering us direction, and executing on decisions that weren't always easy.

Even with 1.6 million users on the MerchantCircle network, several individuals have continued to stand out. Making significant impacts in their communities while sharing their small business stories, Community Leaders like Michele Gorham , Gino Orfitelli  and Monte Tareski  keep the MerchantCircle team fired up. We do what we do because of merchants like them. They've been our evangelists in their local neighborhoods and they've reached across the web to offer community to new MerchantCircle members. We cannot tell you enough how deeply we appreciate your loyalty.

This is very much a team win.

For MerchantCircle employees, the success we’ve had to date in building a major force in local is due to your hard work, creative thinking and consistent dedication to producing the best products possible. 

There have been countless cubicle meetings, more pizza than we'd like to admit, and many long walks around the block- just to brainstorm. We've become real friends… and somewhere along the way, we've built a family. You've launched some brilliant products, weathered some frustrating storms and exercised excessive amounts of innovation and creativity. MerchantCircle exists because of you.

Former team members like Ryan Osilla, Daniel Swartz, Jennifer Lin, Irit Epelbaum, and David Creemer have left a significant mark on MerchantCircle and while they're no longer in the office, their contributions continue to permeate how we operate. Jason Culverhouse and Wayne Yamamoto were both essential elements in building MerchantCircle from the ground up. We see and appreciate their work everyday. And though they've moved on to a new venture, together, they're still very much a part of our everyday lives.

Thank you. You've each poured yourself into MerchantCircle and now we're excited to join the Reply! Inc. team together. This acquisition means even more opportunity to be a part of an innovative, growing organization with an incredibly bright future.

It's time to celebrate!

Cheers,

Your MerchantCircle and Reply! Media Division Team

Another Quick Review of This Week's Small Business Trends

What a week it was! Here's a quick recap.



(And make sure you're following us on Twitter for great tips, news, and articles throughout the week!)



Celebrate small business every week (USA Today)



What? You've never heard of Small Business Week? You're not alone. It's not exactly like Hallmark is cranking out cards with sentiments such as "To my favorite entrepreneur -- glad those years of eating peanut butter and jelly finally paid off!" (Read more)





Recession Brought a Small-Business Boom (Portfolio.com)



There are actually more small businesses now than there were in 2006, when the recession began. That’s according to Dun and Bradstreet which released a report on the state of small business this week. The trend follows a deep trough through the recession, but a steep climb as the economy has slowly recovered. (Read more)





Top Five Tips For Women Small Business Owners (Forbes)



Women-owned firms account for 40% of all privately held firms, employ more than 13 million people, and generate $1.9 trillion in sales, according to the National Association for Women Business Owners <http://www.nawbo.org/> . However, most of these businesses (97%) have revenues below the million-dollar mark. (Read more)





Google Keeps Brands, Marketers 'Inside Search' (Media Post)



Google announced the launch of an official search blog Thursday, sending a message to marketers and those searching for content on the importance of search engine marketing and search activities across its portfolio of Web sites. (Read more)





Foursquare, LivingSocial eye local ad dollars (Reuters)



LivingSocial and Foursquare are both fighting for local ad dollars from mom and pop stores, neighborhood restaurants, and even big box retailers as online social media companies set their sights on a largely untapped pool of revenue. (Read more)