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May 25, 2004

New Research by The Kelsey Group and ConStat Indicates Small Business' Ad Mix Greatly Influenced by Stage of Development

Online research findings to be highlighted along with data and analysis from two other original research initiatives at The Kelsey Group's annual Yellow Pages conference in July.

Princeton, NJ (May 25, 2004) – A recent online research initiative, conducted jointly by The Kelsey Group and ConStat, Inc., among online small-business advertisers, suggests clear differences in the way this segment allocates its advertising and media budgets compared with more established small businesses.

The research indicates that small businesses that have been in operation for over 20 years are statistically much more likely to rely on traditional local media such as print Yellow Pages (78 percent of those surveyed). At the same time, newer businesses – in operation less than 10 years – are more likely to use emerging digital local media including Internet Yellow Pages, e-mail marketing, search engine optimization and pay-per-click advertising (only 52 percent of those surveyed are using print Yellow Pages).

Those businesses in operation less than 10 years have considerably smaller advertising budgets ($4,753 on average) as compared to businesses older than 20 years, which spend on average over $9,300 per year. This parallels the self-reported estimates of annual revenues with the newer companies averaging over $765,000 in annual revenues, while the older established businesses average over $2.8M in annual revenues.

"What is interesting is that the newer businesses are spending twice as much on advertising as compared to the older businesses relative to their annual sales volume," said Neal Polachek, senior vice president of The Kelsey Group. "This tells us that the newer businesses should be drawn to advertising and marketing solutions that can clearly demonstrate positive returns on investment."

The data for this research was collected in mid-May through an online survey of 289 online advertising decision makers in small businesses. Any interpretation of survey results should be seen as directional and not reflective of the current behavior of the U.S. small-business population as a whole.

This online survey will be among several research initiatives highlighted during The Kelsey Group's Directory Driven Commerce conference (DDC2004), taking place July 21-23 at the Omni Hotel at CNN Center, in Atlanta, Georgia. Day 1 of the conference features two important research-based sessions:

  • "How Local Advertisers Are Changing Their Spending in a Competitive Media Environment," in which data from Wave VII of The Kelsey Group's Local Commerce Monitor (LCM) study will be presented by analysts from The Kelsey Group and ConStat.

  • "The Advertiser Perspective: Rating the Yellow Pages Experience," will feature video excerpts from a recent focus group of small-business Yellow Pages advertisers, as well as a panel of directory industry thought-leaders, who will react to the video and discuss the implications of what these small-business advertisers reveal about their views of the medium.

About DDC2004
Since 1988, The Kelsey Group's annual Yellow Pages conference has been recognized as the definitive conference on the future of the industry. It is truly a global event, where directory leaders converge to hear the objective perspectives of Kelsey Group analysts regarding the key issues facing the global Yellow Pages industry.

DDC2004 sponsors include Acxiom Corporation, Amdocs, Aptas, i411, Interchange, Information Services Extended, Inc. (ISX), MapQuest Business Solutions, Verizon Information Services, YellowPages.com and YP Corp. For information on sponsorship opportunities, contact Nanci Karas by phone at (609) 921-7200 Ext. 21 or by e-mail at [email protected] To register for DDC2004, contact The Kelsey Group by phone at (609) 921-7200 Ext. 10, or register online at www.kelseygroup.com/ddc2004/.

About ConStat, Inc.
ConStat, Inc. is a research firm that specializes in the Yellow Pages and information technology industries with offices in San Francisco and Denver. ConStat has served clients in the telecommunications, media, advertising, wireless and high-technology communities for more than 10 years. For additional information, ConStat can be reached at (510) 267-3100.

About The Kelsey Group
The Kelsey Group is the leading provider of strategic research and analysis, data and competitive metrics on Yellow Pages, electronic directories, small-business advertising and local search. Beginning in 1986, the company has built a reputation as the leading analyst firm covering the directory publishing community, providing advisory (The Kelsey Report® and Interactive Local Media), publishing (Global Yellow Pages™ and Local Media Journal™), consulting (more than 300 individual assignments) and conference services (60 events).

For more information contact:

Eileen Pacheco
(781) 556-1026
[email protected]

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