Interland Survey Finds Web Sites, Search Engine Keywords Beat Traditional Marketing Tactics as Critical Tools for Small Business Success

U.S. Small Businesses Are Increasingly Dependent on OnlineServices as Both Business Channel and Business Resource

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Thursday, May 20, 2004; 12:00 AM

ATLANTA--(BUSINESS WIRE)--May 20, 2004--Interland (Nasdaq: INLD), a leading provider of Web hosting and online services for small and medium-sized businesses, is celebrating National Small Business Week by announcing the results of its Spring 2004 Business Barometer of Online Activities, a nationwide survey of online usage by small businesses with Web sites. The findings revealed a clear preference for online marketing tools over traditional marketing methods, and a strengthening of the use of online capabilities among small and medium businesses.

The group of small business owners surveyed was asked to select three marketing tools critical in driving business for their companies. Topping the list were Web sites (69 percent) followed by search engine keywords (36 percent) and then community relations (35 percent). Email marketing (24 percent) just beat out direct mail (22 percent) and the Yellow Pages, a long-time small business marketing tool, was seen as "critical in driving business" by only 12 percent of the respondents. At the bottom of the list were newspaper advertising (5 percent), outdoor advertising (4 percent) and print coupons (2 percent).

When asked how important to their business various online capabilities would be in the coming year an overwhelming majority of respondents indicated that online resources are critical for business success. In fact, of those responding:

-- 99.5 percent rated an online presence as very or somewhat
important,

-- 67 percent said enabling online interactivity (i.e. web-based
business forms, blogs, interactive maps and e-newsletters) is
very or somewhat important,

-- 62 percent rated executing online promotions (i.e. search
engine optimization, keyword advertising and email marketing)
as very or somewhat important, and

-- 55 percent said conducting online transactions (i.e.
e-commerce, online catalogs and coupons, and selling via
third-party sites like Amazon or eBay) is very or somewhat
important.

"We were not surprised to see small business owners rank nearly every online marketing tool asked about as more critical in driving business than the Yellow Pages and other traditional media," said Joel Kocher, chairman and CEO of Interland. "Clearly, more small businesses are starting to embrace the changing marketing algorithms that favor the results generated by online marketing tactics above those offline tools once used to market small businesses."

Of those surveyed, 34 percent said they sold products or services online. Among that group, 71 percent sold through both online and offline methods (retail stores, catalogs, telephone sales, etc.). In fact, 57 percent of respondents said shoppers who purchased online - either solely or in combination with offline purchases - were seen to generate more revenue than offline only shoppers.

As part of the survey, respondents were also asked about online sales during the 2003 holiday shopping season. An overwhelming majority (77 percent) said online sales over the holiday season met or exceeded their expectations.

The group was also polled on media consumption habits. When asked to compare the amount of time spent collecting "industry and business information" using different media sources during 2003 versus 2002, online outlets won hands down. Of those responding, 45 percent said they spent more time in 2003 gathering information through e-mails/e-newsletters and 36 percent through industry/business Web sites. Industry trade publications only saw an 8 percent up tick in usage last year, but fared better than the remaining media sources. Daily local newspapers and magazines saw the largest drop in usage, both 18 percent, between 2002 and 2003.

Daily national newspapers seem to be of little interest to the group as sources for industry/business news, 40 percent said they don't use them. Radio and TV fared only slightly better with 39 percent and 38 percent respectively saying they don't turn to these media outlets either.

"As small business usage of the Internet for finding relevant business information climbs so too does the group's understanding of how the Net can help them grow their business," said small business expert Kim T. Gordon, president of National Marketing Federation Inc. "From using complex e-commerce Web sites to ongoing e-mail communications with customers and partners, use of the Internet is vital to small business success."

Other interesting data points show that 88 percent of small and medium-sized businesses who have a Web site, include their Web address on business materials (i.e. business cards and letterhead), 70 percent include it on their business collateral (i.e. brochures), 54 percent feature their URL on receipts or invoices, and 53 percent include it in offline advertising. When asked about e-mail usage in daily business activities, 85 percent said they use e-mail to communicate with customers, 80 percent said they communicate with partners and business associates via e-mail, and 67 percent e-mail potential buyers. Of the respondents, 34 percent say they've never heard of the recently introduced CAN-SPAM Act and 28 percent say they have heard of it but don't know if it applies to them.

More information about the survey, including downloadable findings, can be found at http://www.interland.com/about/news/.

Conducted in February, Interland's Spring 2004 Business Barometer of Online Activities was an invitation-only, online survey conducted among a sample of Interland's shared hosting customers. Of the 171 participants, 71 percent had been in business for five years or more. Company size ranged from less than $250,000 in revenue to more than $5 million, with 71 percent reporting under $1 million in annual sales. Thirty one percent said their company Web site has been online for two or fewer years, 30 percent for five or more years. Sixty three percent of respondents reported having five or fewer full-time employees.

About Interland

Interland, Inc. (Nasdaq: INLD) is a leading Web hosting and online services company dedicated to helping small and medium businesses achieve success by providing the knowledge, services and tools to build, manage and promote businesses online. Interland offers a wide selection of online services, including standardized Web hosting, e-commerce, application hosting, and Web site development, marketing and optimization tools. For more information about Interland, please visit www.interland.com, email moreinfo@interland.com or call 1-800-336-9883.

All product and company names herein may be trademarks of their respective owners.

EDITOR'S NOTE:

Camera-ready charts and graphs of the findings from Interland's Spring 2004 Business Barometer of Online Activities are available by contacting Mike Neumeier by phone at 404-260-2649 or by email at mneumeier@interland.com.

CONTACT: Interland, Atlanta
Mike Neumeier, 404-260-2649
mneumeier@interland.com

SOURCE: Interland, Inc.