The New Normal’s Challenges to Developing a Downtown Entertainment Niche Based on Formal Entertainments: Part 2 the audiences; revised 041214

Posted on March 28, 2014 by DANTH

Posted by N. David Milder

Introduction

This is the second part of the third in a series of articles about the “new normal” for our nation’s downtowns. It focuses on the challenges many downtowns — especially those that are not very large — now face when they decide to bolster their central social district functions by creating and/or strengthening their venues for the performing and visual arts, e.g., performing arts centers (PACs), theaters, cinemas, concert halls, museums, art galleries, etc. Part 1 dealt with a general introduction of the challenges, a discussion of who can afford formal entertainments and changes in the ways governments, corporations and foundations are funding arts projects. Part 3 will discuss a number of formal entertainment venues as examples and then dive into an update of DANTH’s analysis of what’s happening with movie theaters.

Here, in part 2, the discussion will turn to changes in the ways Americans attend performing arts events and visit visual arts venues. Secondary analyses of two kinds of data will be employed: representative sample surveys done for the National Endowment of the Arts (NEA) and other arts related organizations and reports of admissions to various types of arts venues/performances that were obtained from a number of arts sector organizations.

While both types of data can potentially shed light on consumer demand for attending various performing and visual arts events, they are quite different in nature, much as beans differ from broccoli, though both are vegetables. For example:

While the surveys ask individuals whether they attended various arts events over the prior year, the admissions data report the number of people who attended events put on by arts organizations or visited their venues. The surveys report on characteristics of individuals; the admissions data are characteristics of the organizations or venues
Translating directly between the two usually is difficult because of a number of issues. For example, the NEA survey may ask about attending classical music concerts, but the best relevant admissions data are only about attendance at concerts done by our largest symphony orchestras. The NEA survey data reports do not detail how often an individual may attend a particular type of arts event, e.g., once to a museum, three times to an opera, six times to a ballet, etc., while the Culture Track report does. The admissions data reports do not detail how many admissions were accounted for by people who had attended multiple times, e.g., subscription ticket holders
The survey data also tell us, at least by implication and sometimes overtly, about the percentages of people who did not attend each of the arts events/venues asked about. However, memories about attendance over a prior year can lead to an unknown degree of erroneous reporting. The admissions data are not informative about those who do not attend. They simply indicate an important fact for those operating arts organizations and venues: whether admissions have gone up or down – and usually with a good deal of reliability
Population growth is also an important factor. It is entirely possible that the number of people who are buying tickets for a type of arts events, e.g., chamber music, stays the same over 10 years, but, because of population growth, their proportion of the population would decline.

In this article the survey data will be treated as providing evidence about the proclivities of individuals in the USA to attend various arts events/venues and for explaining why they do so. Though their availability are quite limited, the admissions data will be treated as the best data about actual attendance and ticket sales and as the best indicators of how arts organizations and venues are doing. Obviously, the former should have some impact on the latter, but the paths of that influence are often difficult to accurately identify and detail. However, when both show a similar pattern, e.g., declining attendance and admissions, they can help validate each other’s findings.

The Surveys

The potential audiences for formal entertainment venues are composed of people who “consume” art by attending performing arts events (plays, operas, concerts) or visiting visual arts venues ,e.g., museums, art galleries, etc. The 2012 NEA survey shows that only 49% of its respondents reported engaging in such attendance behavior in the prior year (see the table immediately below). Movie-going, in comparison, had a 59% attendance rate.

Looking more closely at specific arts, the NEA survey showed that in 2012 only relatively small proportions of respondents attended them: classical music 8.8%; jazz 8.1%; dance other than ballet 5.6%; ballet 2.7% and opera 2.1% (see table immediately below). This suggests that the potential audiences for such arts events are comparatively small, though they will be higher where they are geographically clustered, e.g. affluent neighborhoods.

Moreover, when compared to the findings of a 2002 NEA survey, it appears that there has been a general decline in attendance: classical music -24%; jazz -25%; dance other than ballet -11%; ballet -31% and opera -34%. This would indicate that the audiences for these performing arts are not just relatively small, but they are also dwindling when looked at on a percentage basis.

The National Arts Index Report 2013 (NAI) uses survey data gathered from 210,000 individuals by Scarborough Research to demonstrate that attendance at art museums between 2006 and 2011 was below 2003 levels, down by about 8% in 2011 (1). Moreover during the 2003-2011 period, museum attendance never regained their 2003 level.

Some have argued that the decline in arts attendance revealed in the NEA’s 2008 survey was a result of the Great Recession. However, 2012 is three years after the recession’s official termination, yet the decline continued. The economy is undoubtedly a factor, but probably through economic forces that were in play prior to the recession’s onset and continue to have impacts today. This view will be supported below when the admissions data of arts venues are discussed.

One reason for this decline may be the growing consumption of performing and visual arts through electronic media. For example, the 2012 NEA survey found that 61% of the respondents used TV, radio or the Internet to access art or arts programming (see table above). A closer look shows that 57% consumed music of any kind via the electronic media; 14% accessed ballet, modern or contemporary dance or dance programs or shows; 7% theater productions and 4% opera. The numbers for dance and opera rival those who attended such performances in person in theaters or other physical venues.

In the near future, technological innovations may increase this diversion to e-attendance. For example, Mark Zuckerberg posted the following comment to explain Facebook’s purchase of the maker of the Oculus virtual reality headset: “When you put (the headset) on, you enter a completely immersive computer-generated environment, like a game or a movie scene or a place far away. The incredible thing about the technology is that you feel like you’re actually present in another place with other people” (2). The potential for using a virtual reality headset to attend sports events, plays, concerts, operas, etc. appears real; the degree to which it will be realized remains unknown. If not Oculus or some other virtual reality device, then some other technology may emerge to drive more e-attendance. This Pandora’s box has been opened. Also, it should be remembered that technological impacts on arts attendance are not a new phenomena: back in the 1950s TV viewing drastically decreased movie attendance and changed the way that industry works, but we still keep going to movie theaters.

Other factors are also very important in determining attendance at arts performances. As the Culture Track 2011 report noted: “Decisions about whether to participate in the arts are driven primarily by cost, programming, and convenience. This is true at all ages and income brackets” (3). This report was also based on a large national survey with 4,000+ respondents. The NEA surveys also show that age, education and ethnicity can be factors, but it notably neglects to discuss the impacts of income. Education is probably acting somewhat as a surrogate variable for income in the NEA analyses because of their high correlation. In today’s economy, one might reasonably argue that admission cost is a major determining factor for persons who are not wealthy and who do not have heaps of discretionary dollars to spend.

The Culture Track 2011 study did identify a number of high arts consumers: the young cultural omnivores — likely the young hipsters with lots of discretionary dollars to spend — and the older seasoned cultural omnivores, who appear to be older and affluent. As the word “omnivore” implies, both like to attend a variety of arts/cultural events. However, together, they represent only about 10% of the Culture Track survey’s respondents. Then there are three segments that specialize in the type of cultural events they prefer to attend: the museum mavens just like to visit museums, the devoted theater goers just like to go to the theater and the family centrics prefer to attend mostly child friendly events. The specialist consumers’ attendance rate is about half of that of the omnivores. The specialists account for 30% of the Culture Track survey’s respondents. Forty-eight percent of the survey’s respondents are non-attendees and infrequent attendees, and 12% are in the rural history segment that basically is lives in very rural areas, far from major cultural venues.

The Culture Track survey also found that decreasing attendance was being influenced by the general economy and manifested in the reduced number of events culture consumers went to, not in a reduction of the number of people who are culture consumers.

These findings suggest that besides about half of all adults being hard or impossible to attract to cultural events, substantial portions of those who are culture consumers will opt out if a venue does not put on the particular type of cultural event/performance they prefer. They also show that the economy is having a negative impact on how often American cultural consumers attend cultural events.

It should be noted that the NEA’s 2012 survey did find art events that were attracting more people, e.g., 5.1% reported going to events where Latin, Spanish salsa music was played compared to 4.9% reported in its 2008 survey. The NAI report, again based on Scarborough Research survey data, shows that attendance at “live popular music,”– which includes country, R&B, rap, hip-hop and rock music performances — equaled or exceeded the 2003 level every year but one between 2004 and 2011. Indeed in 2011, attendance at live popular music events was 14% above the 2003 level (4). This reflects another pattern the surveys agree on: some arts forms are attracting stronger audiences. However, the “high brow” culture/arts forms, e.g., opera, ballet and classical music are not among them.

For those believing that the performing arts can be a silver bullet solution for downtown revival, the NEA and similar surveys indicate a changing and too often dwindling potential audience. They also suggest that the demographic characteristics of a market area and its prevailing lifestyle segments can have a big impact on potential attendance for each of the various types of performing and visual arts events. Formal entertainment venues are likely to be intensely challenged when they try to find and capture audiences for their programs and events. Consequently, the critical ticket and admissions sales portion of their revenues seem to have become more uncertain, just as have their government funding and grants from corporations and foundations.

REVISION 041214: Since the initial posting of this article DANTH has come across survey information released by the Broadway League, “The Audience for Touring Broadway: A Demographic Study 2011 -2012,” which had the following findings:

“Seventy percent of attendees were female.
The average age of the Touring Broadway theatregoer was 50.5 years.
Eighty nine percent of Touring Broadway theatre goers were Caucasian.
Seventy-eight percent of the audience held a college degree and 30% held a graduate degree.
Forty six percent of national theatre goers reported an annual household income of more than $100,000, compared to only 21% of Americans overall.
Thirty one percent of respondents were subscribers to the “Broadway Series” at their local venue.
On average, Touring Broadway attendees saw 4 shows per year.
Women continued to be more likely than men to make the decision to purchase tickets to the show.”

Performing and Visual Arts Admissions

To research annual levels of admissions at various types of performing and visual arts venues, DANTH reviewed relevant data posted online by such organizations as the League of American Orchestras, the Theatre Communications Group, the National Association of Theatre Owners (movie houses), The Broadway League, the American Alliance of Museums, Opera America, et al. Some of the reported data are not specific enough for the needs of the analysis in this article. For example, the Alliance of Museums surveys its museum members asking if attendance went up or down in the reporting year within specific percentage ranges. It does not collect anything like “counts.” Most of the other organizations survey their membership about admission counts and then on the basis of the reported data extrapolate out to the total number of organizations in their field. For example, the Theatre Communications Group, for its 2012 report, collected data from 178 theaters and then used those results to make an estimate of the annual admissions of 1,782 nonprofit theaters. Some of these organizations appear to have ceased publishing data about admissions.

The analysis below only covers five of the six types of performing arts for which we could find count-based admissions data: movie theaters; symphony orchestras; touring Broadway shows; opera, and nonprofit theaters . Although the desired data are available for Broadway shows staged in Manhattan’s theater district, they were not included because of their geographically confined relevancy.

One of the things to take away from the above table is the relative sizes of the absolute admissions numbers for each of the arts categories. Attendance at movie theaters, which is in the billion+/yr range, simply dwarfs the combined attendance of the other four arts categories. The opera admissions are far, far smaller than those for the symphony orchestras and nonprofit theaters. For downtown leaders who want performing arts to drive more traffic downtown, the implications seem obvious.

Attendance for symphony orchestras, opera and movies began their declines well before the onset of the Great Recession. This strongly suggests that other factors were influential. On the other hand, attendance for touring Broadway shows has certainly varied over the years, but usually has been strong. The non-profits theaters’ admissions did hit bottom during the recession, but they have since recovered and actually peaked in the most recent year for which there is data, 2012.

The above table helps to see historic trends more easily by indexing the attendance statistics for each category to the 2003 attendance:

Movies. Movie attendance had an average index score of .923 between 2000 and 2013. It topped out historically in 2002 at 1.03 and then followed a bumpy downward path to .84 in 2011. That is a percentage decline of about -18.4%. However, attendance bounced back with about a 6% increase in 2012 over 2011 and then ebbed slightly, 0.40%, in 2013 (5). That still left movie attendance about -14% below its 2002 high. As movie attendance has declined, research by Pew found that Americans watch five times as many movies at home than they do in movie theaters — and that study predated Netflix’s entry into the movie and TV show streaming business (6). To help stem the decline, Hollywood has increased its annual movie production by about 39%, from 478 in 2000 to 665 in 2012. Over this same period, the number of indoor movie theaters declined by 18.8%, the number of indoor movie screens increased by 9.4% and all distribution and projection functions went digital. Since movie house ticket sales only account for a fraction of movie studio revenues — under 15% — a growing number of movie moguls are pressing for new films to be released digitally at about the same dates as they are screened in traditional theaters
Touring Broadway Shows – Although this category shows about a -13% decline in 2013 from its peak year in terms of absolute attendance, the 2013 attendance is still 20% above the 2003 benchmark year, and it has the highest average indexed attendance score presented in the above table, 1.14. Its index scores exceeded the benchmark 1.0 in 12 of the 14 years for which we have data, peaking in 2010 at 1.39. The index scores were relatively high in the preceding 2006 and 2009 period, with scores of at 1.34 and 1.25 during the two recession years. Its index score has not been below 1.10 since 2004. Attendance is significantly impacted by the number of plays on the road and the lengths of their runs. For example, for Broadway shows there is a .69 correlation between the number of playing weeks in a year and attendance. That can statistically explain about 47% of the annual variation in attendance. From the data the Broadway League publishes about gross revenues of the touring shows, it appears that in 2013 the average revenue per admission was $64.01 (up 22% since 2003). If the average ticket price was around that figure, then a lot of folks probably cannot afford to attend touring Broadway shows. Not all downtown theaters can attract a touring Broadway play; they must have an ability to generate ticket revenues that are commensurate with the size of the production’s cast and costs.
NonProfit Professional Theaters. There were an estimated 1,782 of these theaters in the USA in 2012, and most were not very large– they averaged just 174 admissions per performance. For the 11 years that there is available data, the attendance index scores for this arts category are below 1.0 in nine of them. But, the most recent score was its highest, 1.07 for 2012, and it followed a 0.99 score in in 2011 that was a .09 improvement over 2010. These theaters get about 52% of their revenues from earned sources and 48% from contributions. Using the published expense data and dividing it by attendance indicates that there is about $54.11 in expenses associated with the average admission. The earned income, probably from ticket sales, would cover about $28.26 of the average admission cost, with contributions covering the remaining $25.85. Theater tickets in the $30 range are likely to be affordable to many more people than tickets costing $60+. But, needing this audience subvention certainly contributes to pushing about 50% of these theaters to operate in the red (7).
Opera. Between 2000 and 2011, opera attendance dropped off dramatically by about 40%. The decline has not been linear. Between 2000 and 2003, well before the recession’s onset, attendance fell by about 24%. It’s attendance index score then increases to 1.09 in 2004 and wobbles up to 1.14 in 2007. It then continues to decline down to 0.73 in 2011, the final year for which we could find data. The difference between the 2000 and 2011 index scores is a stunning 0.51. However, this decline was not linear: an important attendance decline occurred well before the recession, and another and stronger decline started when the pre-recession financial crisis began to emerge.
Symphony Orchestras. For the years the DANTH team was able to find relevant data, attendance at concerts of 187 symphony orchestras peaked in 2001 and 2002, with index scores of 1.14 and 1.07. It then dropped to 1.0 in 2003 and 2005, well before the Great Recession. Attendance actually rose to 1.04 in 2006 to 2008 as the financial crisis and the the recession set in, but then incurred a substantial drop in 2009 to its lowest index score, 0.89. Attendance recovered somewhat in 2010 and 2011 with index scores of 0.93 and 0.95, showing something of a recovery trend. But attendance in 2011 still was about 7% off the 2003 benchmark and about 17% below the 2001 peak. While the Great Recession probably had a significant impact on attendance, the drop in 2003 and 2005 suggest that other factors also might be at work. Within the field, there has been much heated debate about whether attendance has ebbed because the classical repertoire has become too limited, boring or inaccessible and whether substantial efforts are needed to expand its audience by attracting more people from a wider range of ethnic, income and age groups. However, a number of observers have argued that even if attendance may have fallen, the quality of the players and orchestral performances has been very high, and the popularity of classical music has grown in such places as college campuses (8). This raises the question: what, then, are the factors that have been pushing admissions at symphony orchestra concerts down, if it is not the quality of the performances and other than recessionary impacts?

The table immediately above takes the absolute admissions data from the table “Attendance in Five Performing Arts for Which There Are Admissions Data” and indexes/standardizes it to the national population in each of the years covered. It is, mathematically, something akin to turning them into percentages. The results are per capita admissions by year of each of the arts categories in the table. Some things to note:

Opera and a classical music subset, symphony orchestras, display strong reductions in attendance in the most recent years for which there is data from their peak years, -46.3% and -24.3 % respectively
These are significantly higher declines than those revealed by the analysis of the absolute attendance data, -40.7% and -17.2%
While the touring Broadway shows also show from this perspective a stronger decline, the per capita attendance is still well above the benchmark year
Movie attendance also shows a greater decline than the absolute attendance numbers, -21.7& compared to -13.9%; its most recent per capita attendance is well below that of the benchmark year
Non-profit theaters had their highest admissions ever in 2012, but the per capita admissions in 2003 were just barely higher, 0.1182 to 0.1169.

Take Aways

This analysis has looked from several perspectives at the issue of what has been happening to the attendance levels for various types of performing and visual arts venues over the past decade or so.
The contention that attendance patterns are changing significantly seems hard to refute.
The contention that forms of “high brow” culture such as opera, classical music and ballet have suffered attendance declines also appears to be supported by the numbers
Art forms associated more with popular culture, e.g., live popular music performances, are those that seem to be doing best. However, movie attendance is not what it has been, despite huge efforts to buttress attendance by by providing more movies per year on more movie screens and using 3-D and IMAX projection systems to substantially enhance the viewing experience
The impact of technology to provide new ways of e-attending performing arts events or visiting museum art collections (MoMA, the Met, the Louvre, the Smithsonian, the Whitney, etc. all have them) is undeniable, but the extent and pattern of that impact is still uncharted. However, what the movie attendance shows — remember we watch 5 times as many movies at home or on our e-devices than in cinemas — is that to a substantial degree we still want to watch/see arts events in person with other people. That does not mean that there will not be adverse impacts — just think of all the closed movie theaters, about 10% of them, some say, due just to the conversion to digital projection and distribution
Whether or not these audience churns and declines reflect a cultural dumbing down of our population or whether performing arts repertoires have become stale or their performance levels waned are irrelevant issues for downtown leaders who want to enhance their central social district functions by building a stronger entertainment niche
What is important are the changes in arts audience behaviors. They increase the uncertainty of existing arts organizations’ earned incomes and definitely will be affecting the economic feasibility of projects to create new formal entertainment venues. Creating such formal arts venues is seldom associated with cheap capital costs
Regarding the new projects, given the probable capital expense, the uncertainties associated with earned income and the inherent tendency to best serve an audience that has a significant amount of discretionary dollars to spend, some downtown leaders might do well by considering other types of projects to enhance their entertainment niches. These projects might take the form of new vibrant public spaces that are: open to all; where plays and movies can be shown, but focused mainly on maximizing informal entertainment opportunities; either free or low-cost; designed to capitalize on people watching; where participants are both the performers and the audience.

Endnotes

1. Americans for the Arts. National Arts Index: 2013 Report, pp.149, p.67

2. Ibid., p.64

3 See: http://www.businessinsider.com/zuckerberg-why-facebook-bought-oculus-2014-3#ixzz2x1lgtLVO

4.LaPlaca Cohen/AMS Planning & Research Corp, Culture Track 2011 Market Research Report, pp.87, p.7

5. http://www.boxofficemojo.com/yearly/

6. Pew study cited in:https://www.ndavidmilder.com/wp-content/uploads/2012/05/trends_p1_films_08.pdf

7. The data in this section are drawn from Theatre Facts. It has been published annually by The Theatre Communications Group since 2000. See the 2012issue at:http://www.tcg.org/pdfs/tools/TCG_TheatreFacts_2012.pdf

8. See for example: http://classicalvoiceamerica.org/2014/03/07/campus-concerts-rebuff-notion-of-classical-decline/ and http://www.city-journal.org/2010/20_3_urb-classical-music.html . Thanks to Andy Menshel for bringing them to my attention.

Quick Stats Website Pages

Posted on September 25, 2013 by DANTH

An essential part of a successful business recruitment program is making it easy for “walk-in” prospects to find the information they want about your downtown and its available business locations. Today, the first thing that these potential walk-ins probably do is conduct an information search on the Internet, looking at the websites of the municipality and local economic development organizations. Unfortunately, too many of these websites do not provide the information these business prospects need or they have it buried so many layers down that it is hard to find. The result is that many tenant prospects are turned off by their frustrating search experience and they then shift their attention to other communities where they can easily find the information they need.

DANTH, Inc.’s Quick Stats Website Pages can help your organization remedy this situation by:

Assembling the types of information downtown business prospects are most likely to look for, whether they are professional corporate site locators or small independent operators
Creating a single summary Quick Stats webpage where essential information points (e.g., population, income, office workers, parking, cinema patrons, traffic counts, etc.) are provided and can be quickly digested
Providing links on the summary Quick Stats page where the prospect can go to obtain more detailed information about a particular point
Providing types of useful information that goes beyond the usual census data and cannot be obtained easily elsewhere
Providing a “how to” guide for small independent operators
Formulating and providing your downtown’s business location value proposition.

You can view the Quick Stats Page we did for the Morristown Partnership here.

A Quick Stats project is affordable and provides a big bang for your buck. For more information, contact David Milder at 718-805-9507 or [email protected].

Small Downtowns Succeed Not By Growing A Lot Bigger, But By Becoming A Lot Better

Posted on August 8, 2013 by DANTH

Posted by N. David Milder

Introduction

My work, a few years ago, on two small towns with populations under 2,800 has reinforced my feeling that our understanding of what makes a downtown successful is dominated by a paradigm that, while suitable for large districts, just does not seem to be as applicable to small or medium-sized downtowns. I fear that attempts to impose that paradigm on smaller downtowns have led to many dreadful revitalization strategies and plans. In this article I will work toward formulating my view of what the paradigm for a successful small downtown might be, hoping this exercise will stimulate other economic and community development professionals to follow suit.

The Successful Large Downtown Paradigm

Successful large downtowns, according to my understanding of the dominant paradigm, which I described in my 1987 article on downtown crime, have the following characteristics (1):

High Multi-functionality. They are multi-functional with a mix of attractive retail shops, restaurants, bars, coffee houses, professional offices, corporate offices, government offices, hospitals, courts, rail and bus stations, hair and nail salons, gyms and spas, museums, cinemas, concert halls, theaters, public spaces, residences, hotels, residential buildings, etc.
High Density. These functions are clustered in a dense, compact area and a lot of the development is vertical
High Pedestrian Traffic. The multi-functionality sparks a lot of multi-purpose visits and pedestrian trips. The district’s density and compactness help make them comparatively short and easy
High Energy and Fast Pace. The density and wide choice of activity venues combined with the strong pedestrian flows, stimulates a sense of high activity and fast pace that at times is even deemed electric or exciting.

Trying to Apply It to a Small Downtown

Size is the defining difference between large and small downtowns. Since multi-functionality and density have almost definitional associations with size, they may be expected to be lower in smaller downtowns. Similarly, pedestrian traffic may be expected to be much lower in smaller downtowns because of reduced multi-functionality and density as well as probably smaller trade area populations. Levels of energy and pace can also be expected to be low in small downtown since they are dependent on multi-functionality, density and pedestrian traffic. However, saying all that leaves little or no basis for explaining why a small downtown is successful and not just small: it has, almost by definition, far less density, multi-functionality, pedestrian traffic, far less energy and a much slower pace that the largest downtowns. What is it then that makes a small downtown successful? Applying or trying to tailor the large downtown paradigm to the small certainly does not seem to get anywhere meaningful.

The Importance of an Attractive Downtown Setting with Fewer People

Searching for a better approach to understanding the major characteristics of a successful small downtown, I happened upon the results of a large national survey done for the National Association of Realtors that showed 18% of the respondents preferred living in small towns and 22% preferred living in rural areas (2). That means that very significant portions of our population prefer living in towns and areas that are not densely populated or developed. They do not like crowds or living close to other people. To me, these facts suggest that whatever the economic needs of a small downtown, if they are met with too much population growth and increased development density, then the downtown probably will not be considered a success in the eyes of its local user population. Of course, too much density and growth can also be of great concern to large downtown user populations. Where they are very likely to differ is in the definitions of how much is “too much.”

The Importance of an Attractive Downtown Setting with Low Energy and Slow Pace

Why else do people prefer the less populated towns and areas?

The streets of the smaller downtowns I like and want to return to have a charm and slower pace of activity than the large downtowns I enjoy. Visiting them I do not see the high volumes of pedestrian traffic or feel the frenetic pace and electric energy that I often get on streets of Manhattan, Chicago, Boston, Philadelphia, London or Paris.

Instead –leaving festivals and special events aside– the setting is more languid, devoid of passing platoons of pedestrians, while filled with charmingly attractive buildings, shops, landscapes and public spaces. It is easy to walk on uncrowded sidewalks and safe to cross the streets/roads. There is always at least one good and popular place to eat and drink. Finally, the people we encounter in the shops, restaurants and public spaces are friendly – and often interesting characters. In these likeable small downtowns we feel comfortable and relaxed, yet entertained and/or amused.

Moreover, my experience suggests I am far from alone in having this viewpoint. Most of the reasons I’ve heard people give for visiting a small town or a rural area are on the order of “getting away from it all,” or enjoying a slower and more relaxed pace in a scenic setting. I do not think many people go to a small downtown in search of a lot of “action!”

Furthermore, my numerous, if admittedly non-systematic conversations over the years with residents in the small towns I have either visited or lived in, suggests that they highly value the low energy and slow pace of the communities in which they reside.

Energy and pace can be thought of as continuums with strong and weak manifestations that are displayed in inverse patterns in large and small downtowns. Though larger downtowns are better known for their fast pace and the sense of excitement that their users enjoy, they also often have charming public retreats where people can go to engage in a more comfortable, languid and relaxed pace. For example, in New York City are the famous and adored Central Park and 250 much smaller “pocket parks,” among which Paley Park is perhaps the best known. Conversely, we sometimes find an air of excitement and a faster pace in these small downtowns, not on the sidewalks, but in a public space and/or inside a bar or restaurant that functions as the community’s “village well,” its gathering spot.

Walkability

My field visits across the country, conducted over many years, suggest that:

In many small and medium-sized downtowns, pedestrian counts may be just a few hundred, or even far less, per day. Without doubt, even if these downtowns are completely revitalized, they can never potentially reach the pedestrian counts or waves of walking platoons that can be attained in denser urban downtowns. (Tourist downtowns might be exceptions.) Density provides an upper bound on a district’s potential pedestrian traffic, but does not in and of itself guarantee the achievement of those levels. This was amply demonstrated by the barren sidewalks of too many downtowns in the 1980s and 1990s that used office development as their engine of economic revitalization
In many small and medium -sized communities, even if all the shops were attractive and interesting, there still would not be enough of them to generate lengthy pedestrian trips or a lot of strolling and window-shopping. As Bill Ryan, a well-know downtown analyst at UWEX’s Center for Community and Economic Development, has noted: ”Most rural small downtowns are anchored by a c-store, a couple of bars and a couple of restaurants, beauty salon, accounting/tax/insurance, and other services. Not much to stroll through” (3)
Many of the successful stores I have observed in these small downtowns, even though they may be relatively small, function as retail destinations – they are not “found” by shoppers strolling through town. Instead, shoppers know them and go directly to them, usually with a specific type of purchase in mind. The pedestrian parts of their shopping trips are often largely confined to walks from and back to their automobiles. This importance of the automobile should not be surprising in rural environments where 50-minute auto trips to jobs and regional shopping centers are normal and where getting to local schools, churches, friends and neighbors usually require the use of a car.

Kaid Benfield’s makes an important distinction between walkability and density. (4) Following that line of thought, it seems to me that density can facilitate and stimulate pedestrian traffic, but walkability plainly entails other people friendly dimensions such as the ease, pleasantness and safety of walking. Walkability is required by downtowns large and small, dense or less dense, whether the pedestrian flow is large or small.

Economic Viability: The Need for a “Right Fit” Strategy and Its Challenges

Any successful downtown will need to be economically healthy. Economic strength generally does correlate with variables connected to size. Consequently, small downtowns are caught in a conundrum: they need enough economic strength to be attractive, viable and successful, but not so much that it threatens the small town and small downtown characteristics that attract its user population. This requires a kind of careful calibration that meshes easily into a “right fit” type of growth strategy.

This means that there is probably some opportunity for growth, but it will be limited in terms of the new buildings and their associated roads, employees and residents.

Of probable greater importance is the improvement of the attractiveness and functionality of existing downtown spaces, making current merchants better business operators and recruiting new capable business operators. This will probably entail:

Stronger brick and mortar convenience operations
Local merchants learning to be more e-commerce capable
Looking for and realizing opportunities to recruit or grow local e-merchants who can sell in a national or international e-marketplace.

Here are two firms that sell to historical reenactors, movie companies, etc., that are good examples of firms located in small towns that have Internet and catalog sales that are far above what their trade areas could support:

Jas. Townsend and Son is located in Pierceton, Indiana, a town with a population in 2010 of 1,095. They help “historical reenactors, movie makers, theatrical companies, pirates, and regular people find items including clothing, tents, books, knives, tomahawks, oak barrels and lots of other goods appropriate for 1750 to 1840 – especially the American Revolutionary War and War of 1812.”
Schipperfabrik is located in Columbus, WI, population 4,991. It “is the world’s largest and most diverse manufacturer and supplier of WW1 Uniforms, equipment and insignia. We pride ourselves on our world class, museum grade reproductions, all made based on original specifications and original pieces.”

Of note is the fact that both firms manufacture much of the merchandise they sell online. While retail and restaurants often take center stage in small downtown revitalization efforts, firms providing blue collar jobs have usually been the economic cogs of small towns. It’s time for more attention to be paid to them.

Creating and implementing an effective right fit economic development strategy will probably be very challenging tasks for small downtowns. These tasks will require an array of sophisticated skills in both planning and execution as well as a level of financial resources that are well beyond what most small towns can afford. This is further evidence that, as Andrew Dane and I argued in a previous article, revitalizing small town downtowns can be very difficult because the challenges they face are often surprisingly complex, while they have meager financial and personnel resources to spend on their resolution or amelioration. (5)

My Take Aways

Based on the above analysis, I’ve come to the following take aways from my reflections about successful small downtowns:

There are no linear relationships between greater density, more multi-functionality and higher pedestrian counts and having a successful downtown. Small downtowns succeed not by getting a lot bigger, but by becoming a lot better
Critical to the success of a small downtown is its ability to comply with its user population’s preferences for attractive places with relatively few people, lower energy levels and a relaxed activity pace
Successful revitalizations of small downtowns may strengthen and increase the densities of various economic functions and its consequent foot traffic, but not to anywhere near dense urban levels and, most importantly, not to where the downtown’s relaxed and languid pace of activity is significantly altered or endangered
This is the nub of the challenge in small downtown revitalization efforts: how to right fit increased economic activities and development so that they meaningfully strengthen the downtown, while not violating all the things that its user population values about it, e.g., its charming appearance, slower pace, lower energy, and uncrowded ways of doing things
In small communities, strong pedestrian activity is neither to be found nor valued in the local culture, nor easy to generate. A walker friendly downtown is still needed, not to stimulate highly increased pedestrian flows, but to maintain the downtown’s easy and relaxed pace of activities
Of course, a small downtown might indeed become much stronger economically through a lot of growth, but then the question of whether it is still small is likely to emerge… and generate political conflicts

I do not think I have provided here the full answer to the question of how, besides the dimensions associated with size, successful small downtowns differ from successful large downtowns, but I feel confident that I am on the right road.

Acknowledgements: I would like to thank Mark Waterhouse, Bill Ryan, Andrew Dane and Laura Krakoff for their helpful comments and edits on an earlier draft of this article.

Endnotes

N. David Milder, “Crime and Downtown Revitalization,” Urban Land, Sept. 1987, pp. 16-19 DT Crime Article
Belden Russonello & Stewart LLC, “The 2011 Community Preference Survey: What Americans are looking for when deciding where to live”, Analysis of a survey of 2,071 American adults nationally conducted for the National Association of Realtors. March 2011, p. 17
In a telephone conversation and comments on an earlier draft of this article. See also: Bill Ryan, Beverly Stencel, and Jangik Jin, “Retail and Service Business Mix Analysis of Wisconsin’s Downtowns,” Center for Community & Economic Development, University of Wisconsin – Extension Staff Paper, Sept. 1, 2010
Kaid Benfield’s Blog, “For walkable cities, it’s not about the density – it’s about finding the right kind of density,” Posted March 4, 2013 on Green Enterprise, Living Sustainably
N. David Milder and Andrew Dane, “Some Thoughts on the Economic Revitalization of Small Town Downtowns,” The Downtown Curmudgeon Blog, Blog article link

Helping Independent Downtown Merchants Engage Effectively In E-Marketing: Part 2

Posted on March 1, 2013 by DANTH

Introduction

This is the second of a two part article. Part 1 can be found at http://tinyurl.com/bxhdx8a

Over the past year, DANTH Inc. has experimented with such social media as Facebook, LinkedIn, Twitter and Pinterest and revamped our website, blog and email program. To support this effort we did a lot of research on what the various e-marketing tools do best and the challenges small firms like ours have in using them. In this two-part article I would like to share with the downtown revitalization community what we learned from our e-marketing overhaul, so that more independent downtown merchants (e.g., retailers and restaurateurs) might make an effective transition to e-commerce.

What we learned was the importance of an analytical process able to identify the e-marketing tools that will most effectively use an organization’s scarce resources to achieve critical marketing objectives. This process:

Starts off by looking at and prioritizing the organization’s marketing objectives
Then matches them with the e-marketing tools (e.g., website, emails, Twitter, Facebook, blog, etc.) that can best achieve each of those objectives. These two topics were covered in Part 1
And next selects those objective-matching tools that can be implemented, because the organization has the required financial resources and either has or can acquire the needed skilled employees. This topic will be covered here in Part 2.

Selecting the objective-matching tools that can be implemented, because the organization has or can hire the required resources

The types of resources required to use a particular e-marketing tool will vary by the package of objectives it is targeted to achieve and the amount and complexity of the usages that are required to achieve them. In my field observations, this is the second area where small merchants are likely to encounter problems — or have them made by consultants who just focus on the mechanics of using the e-marketing tools with which they are enthralled.

In Part 1, I argued that “being found” online is probably the e-marketing objective most independent downtown merchants should focus on first. The initial inclination of these merchants – or their formal or informal “consultants” – might be to create a complex website with many pages, a full catalog of its merchandise, a matching e-store purchasing capability and to fill the site with lots of short marketing movies. Nonetheless, many small firms plainly lack the resources for such a robust effort and, more importantly, they probably do not need it to accomplish their e-marketing objectives.

Here are three brief case studies DANTH encountered over the past few years to demonstrate this point

The High Effort E-Store For A Fast Food Shop. Last year, in a NYC neighborhood that had sustained impressive economic growth through the Great Recession, I interviewed a fast food operator in the 6-10 employees category, who was very interested in penetrating the rapidly growing nearby office worker and high rise residential markets. Though both market segments were strongly represented within a 5-minute walk of the eatery, neither accounted for many of the pedestrians passing by or entering its doors. The owner was interested in creating a website where office workers and residents could find and learn about the eatery and its menu, order from the menu and daily specials, have their orders charged to their credit cards, and have their food delivered to their workplaces or homes.

This small merchant was unaware of the intricacy and full costs of such an operation. He was expecting to pay consultants to set-up his website, merchandise basket and credit card charging. However, he did not foresee that he would also need:

Someone to update the “specials” daily on the website and to periodically keep the overall menu up to date. Updating and maintaining a website can easily eat up far more resources than creating it
Additional part-time employees to process the lunchtime orders
Additional part-time employees to deliver the ordered food
Someone to provide the copy for his website pages
Someone to provide the photos and other graphics for the website pages
To spend a lot more of his time and money putting together the needed new team and then managing a complex new operation.

A year later, this small operator has no website, but has affiliated with a telephone-based service that takes orders and delivers food if customers know about the delivery service and call them. The eatery also does have a simple “name, rank and serial number” page on its BID’s website, a Facebook page with one like and no postings and is listed on a few special websites such as Foursquare. Right now, not much info is to be found on the web about this eatery. It still needs a much stronger “being found” on the web capability.

This could be accomplished by a modest website, without the e-store. It would successfully provide name and contact information as well as information about the menu and reasons to patronize this eatery. Such a website would provide an affordable and acceptably better, if not optimal, penetration of the office worker market. Website visitors, for example, could see the full menu and be invited to visit or phone the eatery to learn about and order the daily specials. An even simpler solution would be a substantial improvement of the information provided on the eatery’s BID web site page, combined with a campaign to get it listed on more special web pages.

The prime take aways from this case study are that:

Small merchants should be wary of complex uses of e-marketing tools that are beyond their resources
More modest deployments of these tools are often more viable and ultimately more effective
BID/SID web pages can be very useful for a small merchant if they do more than just provide the store’s name, contact information and business category. They need to also provide space for information about the shop’s merchandise and to tell the merchant’s story. This is the prime way that BIDs can help their merchant members gain a viable e-commerce presence.

The Low Effort Ice Cream Parlor. In Part 1 of this article, I mentioned a very popular ice cream parlor in a New York City neighborhood. It is a unique and highly regarded operation that has been around for over 50 years and, for decades before that, it was an ice cream parlor under a different owner and name. Today, it is “a functioning antique,” with an old soda fountain, tin ceiling and marble small tile floor. It makes its own ice cream and is famous for its fresh home-made whipped cream.

When I spoke to the owner about his e-marketing activities, he smiled, reporting that he knew nothing about such things, but his workers, most of whom are high school or college students, had created a Facebook page that gathered 8,000+ likes. He felt Facebook definitely had helped generate some additional sales. The shop occasionally offers special flavors only to its Facebook page visitors, with the young workers doing the postings, and they are always quickly sold out. The owner said, with another smile and shrug of his shoulders, that he would like to do more with Facebook, but…. My guess is that the shop was doing well enough that there was no great need now to do more online marketing.

Googling the shop’s name showed that this ice cream parlor had a lot more going for it than just its Facebook page.. The search showed that its authentic, old time story and favorable customer reviews and contact information were available on a whole slew of specialty web sites such as: google.com, plus.google.com, www.yelp.com, www.facebook.com, patch.com, newyork.seriouseats.com, www.zagat.com, www.urbanspoon.com, newyork.citysearch.com, untappedcities.com, www.tripadvisor.com, www.delivery.com, www.menupages.com, www.bridgeandtunnelclub.com, events.nydailynews.com, newyork.grubstreet.com, www.scooponcones.com, chowhound.chow.com, www.flickr.com. That these positive reviews were coming from customers and not the parlor’s ownership enhances their credibility and power. Aside from the Facebook page, all the other listings, came about organically without any effort by the ice cream parlor owners or employees.

The net result is that this ice cream parlor, with little effort on its part, can be very easily found on the Internet and its story is certainly being told. The very nature of its limited menu means that people do not really need to know much about all the flavors to be convinced they should visit the shop. Consequently, it probably can do fairly well without its own website. On the other hand, given its ability to easily attract a significant number of Facebook likes, it also might easily garner many Twitter followers and also use Tweets to inform followers of special flavors or coupons. It might then also use its Facebook and Twitter capabilities to further cultivate its existing store apostles –frequent customers who advocate a shop within their social networks– and garner new ones.

This ice cream parlor had very substantial name recognition and a bevy of store apostles well before or separate from any of its e-marketing activities. The strength of this non-electronic customer network substantially eased the challenge and costs of collecting 8,000 Facebook likes. A new ice cream parlor would need to expend a lot of resources to get enough Facebook likes to make its use worthwhile. The same is true of using Twitter. Indeed, one might ask if the use of these social media is cost effective for small merchants with say 30 transactions or less a day. Might they achieve the relationship building and customer service functions much more effectively and efficiently by focusing on face-to-face interactions? However, they still would need to be found online.

One thing the ice cream parlor owner probably should do is to have his young, Internet capable, employees check their listings on the special web pages to make sure they are accurate and up to date. Research has shown that this is where most small businesses are apt to fall down (1). Another thing he certainly needs to do is to keep hiring young employees who know how to use Facebook.

The prime take aways from this case study are that:

Strong small businesses that have been around for a while probably will have strong assets that can make their entry into e-marketing a lot easier than start-ups or weaker operations
A robust easy-to-be –found on the Internet capability does not always require a complex website if the merchant has sufficient positive listings and reviews on the special website pages and a narrow range of products are offered
These special website pages are too often overlooked, especially by the food related operations that they so frequently cover and that account for such a high proportion of downtown businesses
Young, internet savvy, employees can often be a source of the internet related skills a small merchant lacks, but needs.

A Well-Calibrated Retail Website. A toy retailer has two brick and mortar stores in the Chicago suburbs and a very interesting website. The retailer quickly appears at the top of searches for toy stores in its two towns. Its website does not present a catalog of all of its toys, but has a page that shows all the toymaker brands it sells with their logos. It does not have an e-store that sells scads of different toy products online. Its e-store is limited to selling just one new toy a week. Customers can sign up to get the “new toy” newsletter each week via email. The website has short movies, one to two minutes long, for each of the new toys. The website shows that the “new toys” are sold out every week. That they are sold out so often strongly suggests that the retailer is building up a core of repeat purchasers. Repeat customers are the makings of a band of store apostles, a solid revenue stream and a strong word of mouth network.

The website reportedly was put together and is maintained by a relative of the store’s owner who is skilled in developing websites.

It also has a Facebook page that has garnered 604 likes. People in the 35-44 year old age group are its most frequent visitors and they are most likely parents.

I do not know what this merchant’s e-marketing objectives are, but I hope to connect with him in April, when I am again in the Chicago area. I am particularly eager to find out about their website’s impact on their brick and mortar store’s customer traffic and sales.

The important take aways from this case study are:

The one new toy a week strategy is a great example of how calibrating a small firm’s deployment of an e-marketing tool to its level of available resources can help assure its successful use
The site appears to be meeting all of the “being found” challenges, while also building a core of store apostles and making significant online sales
Family members can often be a source of the internet related skills a small merchant lacks, but needs.

How Can Downtown Organizations Help?

The transition to e-marketing calls upon small merchants to innovate, something most of them feel very uncomfortable doing. DANTH’s experience with trying to get them to improve their facades suggests that many more – but not most – would innovate, if innovating can be made easier for them to do (4). This means providing them with needed information in easy to digest terminology and helping to bring the costs of their innovation down to affordable levels.

Some questions to which they may need answers are:

What can they do and accomplish with e-marketing, what are the benefits and how much will it cost?
Are there local merchants who have made this transition who they can talk to?
Which types of skilled people will they need help from to get into e-marketing? Where can they find them? Or who can do a whole package for them?
How can they afford to create and maintain the e-marketing effort?

Here are some actions downtown organizations and other EDOs might take:

Post a 20-minute webinar or podcast on the organization’s website — that the merchants can access at their discretion, when they have sufficient time — focused on what small merchants can do with e-marketing, its benefits and costs
A tie-in to SCORE or other free or low cost consulting assistance to help clarify the connections between the e-marketing tools and the frm’s overall marketing objectives
A mentoring program that connects e-marketing “newbies” to local merchants who have successfully made the transition
Provide a vetted list of technical assistance providers
Most importantly, offer each merchant who lacks a website a web page on the organization’s website that can provide name, contact information, information about products or services sold and the firm’s story.
Perhaps the downtown organization can charge a fee for an “enhanced page”, i.e., updating, writing copy, supplying graphics, creating movies, etc., that would be meaningfully lower than what the merchants would have to pay if they did it by themselves
Provide website consultants to merchants at a lower than market rate cost, because the downtown organization can aggregate member demand and “buy in in bulk”
Provide an expert, on a reduced fee basis, who can help merchants get listed on special web pages. This is something different than search engine optimization
Use a downtown organization’s strong Facebook and Twitter presences to help the merchants get sufficient likes and followers to be able to effectively use them. It is getting followers, not setting up and using the Facebook or Twitter page that now impedes most small merchants from effectively using these e-marketing tools
Set up an “e-department store” where merchants, like the toy store described above, would only sell a few items. A dedicated and limited e-department store may be a good way to strengthen a downtown niche.

N. David Milder

Acknowledgement: Thanks to Mark Waterhouse of Garnet Consulting Services for his input and editorial assistance.

Endnotes

MarketingCharts staff, “1 in 2 Small Businesses Fail to Update Their Online Listings, Find Inaccuracies” February 6, 2013, http://tinyurl.com/atexhky
Mitch Lipka, “These Big Companies Are Abandoning Twitter And Facebook For Customer Service” Business Insider 1/18/13 http://read.bi/11EbziS
Findings of a survey of small businesses conducted for the Center for the New West as summarized in an email by the center’s former CEO, Phil Burgess
N David Milder, “BEING A DOWNTOWN CHANGE AGENT: Facilitating Change for Downtown Business Operators” June 3, 2007, https://www.ndavidmilder.com/category/formats-facades-signs

Invitation: Please join me at Session S681: Integrated Small Town Planning at APA’s 2013 National Planning Conference in Chicago, April 17, 2013, at 10:30 a.m. I will be presenting along with Andrew Dane of SEH.

Helping Independent Downtown Merchants Engage Effectively In E-Marketing: Part 1

Posted on February 19, 2013 by DANTH

Introduction

Starts off by looking at and prioritizing the organization’s marketing objectives
Then matches them with the e-marketing tools (e.g., website, emails, Twitter, Facebook, blog, etc.) that can best achieve each of those objectives. These two topics will be covered here in Part 1
And next selects those objective-matching tools that can be implemented, because the organization has the required financial resources and either has or can acquire the needed skilled employees. This topic will be covered in two weeks in Part 2.

Where Not to Start

In the years preceding DANTH’s entry into the social media, a slew of e-marketing consultants and downtown management types had suggested that we do so because:

These e-marketing tools were popular
They were chic
The astronomical number of people on Facebook and Twitter
Most importantly, their purported and vaguely evidenced ability to attract new customers and drive sales.

For us, such “follow the pack” reasoning was plainly inadequate. DANTH is, like many independent downtown merchants, a small establishment, with fewer than five employees. There are limited financial resources available for our e-marketing activities. We long have hired consultants to set up and technically maintain our website and email blasts and guide our entry into the social media. However, most of DANTH’s e-marketing activities fall directly into my hands, where they compete with many other demands for my time and attention. It was essential to know, when we used an e-marketing tool, that it would be consistent with our overall marketing strategy, effective and affordable in terms of money, my time and the skills sets of the current DANTH team as well as any other skilled professionals we could afford to hire.

Possible Downtown Merchant E-Marketing Objectives

Our field observations strongly suggest that one of the biggest mistakes independent downtown merchants make is to not identify the specific marketing objectives they want their e-commerce activities to achieve. It is essential for them to do so, if they want to effectively use e-marketing tools. Typically faced with a scarcity of money, skills and time, a small operator: a) needs to have objectives in order to make any judgment about the effectiveness of the e-marketing tools the firm invests in, and b) cannot hope to achieve all of the possible objectives. Therefore, prioritizing them and then focusing on the most important are essential.

There are a wide range of marketing objectives that a small merchant can try to realize through the use of the right e-marketing tools. Here is a brief list of some potential e-marketing objectives:

Reaching target market segments
Being found on the Internet
Finding new customers
Branding
Making direct sales: setting up an e-storefront
Advertising: information about new merchandise, sales , discounts, fun events; driving customers to brick and mortar stores
Relationship building with customers; grooming “store apostles”
Customer service.

I would argue that when considering e-marketing, for the small independent downtown merchant, the most important of these objectives, the one that all should focus on, is “being found on the Internet.” Here’s why. The most significant impact the Internet has had on retailing is that, today, most shoppers first go online to research the merchandise or service they are interested in and the stores that sell them. For example, a 2010 Pew survey found that “58% of Americans research online about the products and services they buy,” with 78% of Internet users engaging in this online researching (1). Merchants who are not in on the search, consequently, are unlikely to be in on the sale!

“Being found” is complex and entails several components, such as:

Name recognition – shoppers can learn who you are
Contact info – shoppers can learn where you are
Info about merchandise offered – shoppers can find what they want to buy
“Why this store” info – reasons why the shopper should buy what he/she is looking for in this shop.

Merchants in different situations may vary in their needs for each of these components. For example, a new downtown merchant or a pure Internet retailer needs to be concerned about all four components, but a longtime downtown merchant may already be fairly well-known and found with relative ease. If the number of downtown merchants and the trade area population are small and/or relatively stagnant, then more merchants are likely to be in this situation. As a result, in many small and medium-sized downtowns, shoppers are probably more likely to want to know which merchants are offering the goods and services they want to buy and the reasons to make that purchase in that store. The websites of too many downtown merchants and downtown organizations that provide member merchants with a web page usually just focus on the shop’s name and contact information. Actually, the merchants usually have the stronger additional needs to display their product information and make persuasive appeals to patronize their shops.

Regarding online sales, although they accounted for an estimated 7% of the USA’s 2010 total retail sales, a study by Mckinsey & Company estimated that by 2011 the internet had played a role in 45% of the nation’s retail sales(2). So the vast majority, around 80+%, of the internet’s impact on retail is not via direct sales. E-marketing’s impact is primarily indirect, but still critical. Also, many observers have noted that e-retail stores demand a lot of complex and expensive infrastructure related to storage, shipping and payments. While this barrier that has kept more firms from competing with Amazon, it also is a major reason that more independent downtown merchants have not attempted e-stores and why so many that did have failed.

Some Examples of Matching E-Marketing Objectives to Appropriate E-Marketing Tools

Research on e-marketing tools is still unfolding, with many issues yet unanswered, but this much is clear: e-marketing tools differ in their ability to achieve various marketing objectives. It is critical to select those e-tools that are best able to achieve your firm’s objectives. For example:

The social media differ substantially in their penetration of the online audience: according to a 2012 Pew report, 66% of online adults use Facebook, 20% use LinkedIn, 16% use Twitter and 12% use Pinterest (3).
The social media will also differ in their ability to penetrate specific market segments. Some illustrative findings by Pew: “African-Americans, young adults, and mobile users stand out for their high rates of Twitter usage” (4); 19% of online women use Pinterest compared to 5% of online males (3); LinkedIn attracts the most educated and male audience (5).
E-commerce tools also vary in their ability to enable a downtown merchant to be found in Internet customer research efforts. The Pew Research Center studied the sources that people rely on to get news and information about local restaurants, bars, and clubs. They found that 38% used a search engine and 17% specialty websites (e.g., zagat.com, urbanspoon.com, tripadvisor.com, etc.), while only 3% relied on a social networking site or Twitter. For finding information about other local businesses Pew’s survey had similar findings: 36% of respondents relied on a search engine, 16% on specialty websites and just 1% on a social media (4).
The most searched for online categories, when shoppers seek information about local businesses, are restaurants, financial services and beauty services (8). Firms in these sectors definitely need an easily findable online presence
Research also suggests that social media do not drive online sales. For example, one study found that the average order value of e-commerce sales sourced from social media is 25% lower than the average sale coming from emails and 35% lower than those sourced from Internet search. (5). Another study in 2012 by Forrester Research found that only about 1% of e-retail transactions could be traced back to “trackable” social media links. Consumers making a first-time purchase with an e-retailer were far more likely to originate their purchase by first making a direct visit to the vendor site (20%), or finding it via an organic or paid search (16% and 11%, respectively). For repeat shoppers, e-mails and direct site visits are the keys: 30% of their online purchases are sparked by an e-mail from the retailer, while another 30% of repeat customer searches start with a direct visit to the retailer’s site (6).
For downtown retailers, the more important question is can e-marketing tools drive customers into their brick and mortar shops and increase sales. We could not find a reliable systematic survey of consumers that addressed this question. However, we did come across numerous anecdotal reports of special product and discount offers distributed via emails, Facebook and Twitter that did bring more customer traffic and sales into traditional retail shops and eateries. For example, one ice cream parlor we visited in a New York City neighborhood reported occasionally offering special flavors only to people visiting their Facebook page and they are always quickly sold out. But, this ice cream parlor has been around for about 50 years and has 8,000 Facebook likes
Many e-marketing experts claim that e-marketing tools, especially the social media, are very effective at building customer traffic and sales indirectly through stronger branding, relationship building and better customer service. For example, a 2012 survey of business to consumer marketers by Webmarketing 123 found that the top objectives of their digital marketing programs were increasing brand awareness 33%, increase sales 26%, generate leads 22%, generate site traffic 11%, build online community 6% and other 3% (7). It is interesting that only about a quarter of these marketing professionals were focusing on directly increasing sales. Among these marketers 49% reported search engine optimization had the biggest impact on lead generation compared to 26% reporting it was pay-per-click advertising and 25% the social media.

What About the Personal and Professional Service Operations? This question was posed by a reviewer of a draft of this article who noted that these firms are so strong in many downtowns. My expectation is that most of the above applies to them too, but that there may be some important differences. For example, I suspect that the potential for effectively using the social media is greater among hair and nail salons, gyms, spas, etc., because they do not primarily sell merchandise and personal relationships are so important in the delivery of their services. Also, as DANTH found, LinkedIn will be very important for professional service firms.

N. David Milder

ENDNOTES

Jim Jansen, “Online Product Research: 58% of Americans have researched a product or service online,” September 29, 2010, Senior Fellow, Pew Internet Project http://pewinternet.org/Reports/2010/Online-Product-Research.aspx
Steve Noble, Amy Guggenheim Shenkan, Christiana Shi, “The promise of multichannel retailing”, McKinsey Quarterly, October 2009.
Lee Rainie, Joanna Brenner and Kristen Purcell, “Photos and Videos as Social Currency Online,” Sept. 13, 2012, Pew Research Center’s Internet & American Life Project, http://pewinternet.org/Reports/2012/Online-Pictures.aspx
Aaron Smith and Joanna Brenner, “Twitter Use 2012,” May 21, 2012, Pew Research Center’s Internet & American Life Project, http://pewinternet.org/Reports/2012/Twitter-Use-2012.aspx
Keith N. Hampton, Lauren Sessions Goulet, Lee Rainie, and Kristen Purcell “Social networking sites and our lives” June 16, 2011, Pew Research Center’s Internet & American Life Project, http://pewinternet.org/Reports/2011/Technology-and-social-networks.aspx
The Forrester report, The Purchase Path of Online Buyers, is reported in Brad Tuttle, Study: Posts on Facebook Almost Never Lead to Retail Sales” TIMEMomneyland Sept 27,2012 moneyland.time.com/2012/09/27/study?posts?on?facebook?almost?never?lead?to?retail?sales/ and Zak Stambor, “Social media posts don’t lead to sale,” Social Media, Sept 25, 2012, www.internetretailer.com/2012/09/25/social?media?posts?dont?lead?sales
Webmarketing 123, 2012 State Of Digital Marketing http://go.webmarketing123.com/rs/webmarketing123/images/DMR%202012%20FINAL.pdf
YP.com, “The YP Local Insights Digital Report” http://i2.ypcdn.com/radiant/radiant_assets_47482_YP-Local-Insights-Q3.pdf

N. David Milder at DANTH, Inc.

Downtown Revitalization Specialist

Category Archives: E commerce

The New Normal’s Challenges to Developing a Downtown Entertainment Niche Based on Formal Entertainments: Part 2 the audiences; revised 041214

Introduction

The Surveys

Performing and Visual Arts Admissions

Take Aways

Endnotes

Quick Stats Website Pages

Small Downtowns Succeed Not By Growing A Lot Bigger, But By Becoming A Lot Better

I do not think I have provided here the full answer to the question of how, besides the dimensions associated with size, successful small downtowns differ from successful large downtowns, but I feel confident that I am on the right road.

Acknowledgements: I would like to thank Mark Waterhouse, Bill Ryan, Andrew Dane and Laura Krakoff for their helpful comments and edits on an earlier draft of this article.

Helping Independent Downtown Merchants Engage Effectively In E-Marketing: Part 2

Helping Independent Downtown Merchants Engage Effectively In E-Marketing: Part 1