By Ann Meyer
— Kristen and Chris Conn didn t set out to launch a technology business.
But when the Evanston husband-and-wife team wanted to help other parents find and buy safe, nontoxic merchandise, they immediately turned to the Internet.
The result is MightyNest.com, an online business launched in October 2009 that marries content and commerce to cost effectively reach its target of busy parents. Thanks to consumers growing use of search engines and social media, MightyNest expanded its presence and more than tripled its holiday sales this year, said Chris Conn, chief executive officer. With 17,000 Facebook friends, he said, We ve built up a really strong community.
Increasingly, entrepreneurs are tapping the World Wide Web global reach, which the U.S. Commerce Dept. pegged at $10 trillion transactions annually, according to a Dec. 16 government report.
By pushing down the cost of launching a startup, the Internet power as a business development tool also is growing with no end in sight. “I can use the cost advantages and the scale of the Internet to build a nice business online with a few people, and that’s pretty cool,” Conn said.
Lowering the barrier to entry
As Internet technology lowers the barrier to entry for many entrepreneurs, new business concepts are emerging that previously wouldn t have been viable. All you need is a Web site and something to sell, said Jeb Ory, chief executive of The App House, a Chicago-based mobile software application development firm.
While the Web has helped launch countless businesses, Ory and others expect the continued growth of mobile phones to create new opportunities in apps. More than a third of all mobile subscribers downloaded apps in October, up 2.3 percentage points from July, according to data from comScore’s MobiLens service.
Besides creating its own mobile apps, The App House is developing a software platform for so-called appreneurs and other businesses that want to create apps without writing their own code. It plans to sell the service for a monthly subscription fee in 2011.
We are looking at what the Web has done for small and medium businesses and we think mobile apps are going to do the exact same thing, Ory said.
Chicago startup Drink Deck recently launched a mobile version of its core product, a deck of playing cards with each card describing a Chicago bar and offering $10 off at the establishment when consumers show the card, said Will Glass, founder and chief executive.
While Glass deliberately created a product that consumers could touch and feel, and that he could sell at retailers like Pastoral cheese shops and Binny liquor stores, he also created a Web site and drives traffic to it using Twitter, Foursquare and Facebook. Now, Drink Deck’s new mobile app containing the deck of discounts makes the product more convenient. People always have their phones with them, he said. At $20, the Drink Deck app pays for itself after use at two bars.
Web 2.0 marketing
Adding technology to nontechnology businesses often pays off in multiple ways. Nine out of 10 companies responding to a recent McKinsey & Co. survey said they received a measurable business benefit, such as more effective marketing or faster access to knowledge, by incorporating Web 2.0 technologies in their businesses. As a result, businesses that use some form of social networking are more likely to be market leaders and achieve higher margins than those that don t, the McKinsey survey indicated.
Still, making effective use of Internet technology requires a new mindset for some businesses. On the marketing front, increasingly it means shifting from an outbound focus where sales reps make cold calls to building relationships with prospective customers through virtual networking. Marketing is about positioning yourself to be found. It about providing value, said Mark Goodman, chief executive at e-Conversation Solutions, speaking at a recent SCORE workshop for small business owners. No one wants to be sold anymore, he said.
Instead, prospective customers are looking for answers, Goodman said. Many start by typing a question into a search engine or social media platform. Companies that can anticipate the questions and create appropriate content are more likely to have users visit their sites, where they can continue the conversation, he said.
Often consumers turn to the Internet to learn what products are available for the best price, Goodman said. Companies that provide the best answer generally get the sale. If you re not there and your competition is, who are they going to call?
But the challenge for small businesses is making it to the top of the search list, said Govind Kabra, chief technology officer at Cazoodle, a Champaign startup founded by University of Illinois computer scientists. The process of clicking on links and wading through Web sites is so tedious that most users never look beyond the top few results, Kabra said. Stop giving me lists of Web sites. Give me answers, Kabra said during a recent Innovate Illinois presentation, where the company was one of 10 finalists to compete for top honors.
To improve the search process, Cazoodle is using innovative data modeling technology to build vertical search engines that aggregate data from thousands of Web sites to better answer consumers search queries. For example, the technology can help people find apartments according to their exact specifications, which might include location, price range and willingness to take pets. Instead of getting a list of sites, the user will see actual rental listings.
Cazoodle is generating revenue from online advertising, which is on the rise.
Outpacing newspaper advertising
A December eMarketer.com report suggests Internet advertising surpassed newspaper ad sales for the first time ever this year, when online advertising hit $25.8 billion, up from $22.7 billion in 2009. By 2014, eMarketer is forecasting online advertising will hit $40.5 billion. “That describes a real major shift,” said David Hallerman, principal analyst at eMarketer in New York.
“The Internet in the end is the world’s biggest library,” Hallerman said. Businesses that position their sites as the go-to place for information in a given niche will see sales follow, he said. “Being trusted means you have to be part of a larger conversation.”
Increasingly, that means companies like MightyNest are focusing their efforts on social media to build relationships with customers and become known as a trusted source for information.
Krista Conn uses an approach she says is working. With an eye on stocking non-toxic products families can trust, Conn carefully reviews every product MightNest carries. We go the extra mile to find verify this is the safest option, she said. Then Krista posts the findings the Web site.
People said we were crazy to have so much content, but my framework was the opposite, Chris Conn said. The content came first for our customers for them to believe in us.