IS Google to Blame for the Decline of Small Business in America?
Starting and running a small business has always been a risky value proposition. The Small Business Administration tells us that 60 percent of them won’t make it past their first birthday. Historically, that failure rate was eclipsed by the sheer number of new business starts each year. More businesses opened than closed, until 2008.
That year, for the first time in more than 30 years, small-to-medium size business closings outnumbered openings by roughly 100,000. The obvious temptation is to blame ecommerce alone, but that misses the deeper shift. The real disruption came from how mobile search started reshaping the consumer’s path-to-purchase, while many local businesses were left without the time, budget, or clarity to respond.
That gap matters because offline spending still dominates most categories. But when the internet influences where people eventually buy, the businesses that cannot track cost, attribution, and conversion get squeezed from both sides. That is why raw traffic numbers mean very little without reliable ROI and a clear view of attribution.
⚡ Speed Run Notes
- Small business pain is not just about competition. It is about rising complexity in discovery, attribution, and conversion.
- Search changed the battlefield. The customer journey is now digital long before the transaction is physical.
- Most SMBs do not need more tools. They need lower friction, clearer economics, and less operational overhead.
- LuckyDiem’s promise is de-risking. If the platform really removes time, cost, and attribution guesswork, it solves a painful bottleneck.
Table of Contents
Author Credibility: Yu-kai Chou
Yu-kai Chou created the Octalysis Framework after studying gamification since 2003 — years before the term entered mainstream vocabulary. As a Human-Systems Architect & Behavioral Designer, his framework has been applied by LEGO, Microsoft, Porsche, Coca-Cola, Salesforce, and MrBeast, impacting over 1.5 Billion Users.
Chou has taught the Octalysis methodology at Harvard, Stanford, Yale, Tesla, Google, BCG, and IDEO.
His work has been cited by Harvard, Stanford, MIT, Forbes, Wall Street Journal, Wired, US Department of Energy, NIST, NSF, NCBI, US Department of Education, ClinicalTrials.gov, and Google Scholar — with 3,700+ more academic publications. Explore his books here.
So what’s happening?
A couple of things, from a more onerous regulatory environment to the Internet.
However, despite what the headlines might have you believe, e-commerce is not responsible for what ails retail, but rather how the Internet, specifically mobile search, has enabled large businesses to co-opt the consumer’s path-to-purchase.
Despite how much online shopping has become a part of our daily lives, e-commerce still only accounts for about 11 percent of consumer spending in the U.S. — the rest remains offline at brick and mortar establishments. Moreover, 37 percent, or $1.26 trillion of offline retail sales is influenced by the Internet.
Source: Forrester
Mobile search is it, but not for small businesses
Over 70 percent of consumers find local businesses through online search² and 4 in 5 mobile searches end with a purchase.³
Yet only 6 percent of small businesses advertise with paid search.⁴
If mobile search plays such a vital role in the consumer’s path-to-purchase, why are so few small businesses using it? The short answer: cost, complexity, and lack of attribution.
The level playing field…that never was
You may recall a time when online search and its patron saint Google were heralded as the great equalizer, enabling even the smallest of businesses to compete with global brands when it came to being discovered online.
That may have been true in search’s infancy, but ultimately the laws of supply and demand prevailed, turning online search and its pay-per-click model into an advertising medium that only companies with sufficient resources could afford to execute in terms of both cost and time.
Attribution, where art thou
Further exacerbating the problem, especially for retailers, is online advertising’s lack of attribution.
Despite its great promise to deliver efficiencies in delivery and measurement, online advertising, including search, still cannot accurately connect the money spent online for advertising back to retail sales. A survey of marketing executives by Street Fight cited online-to-offline attribution as the single greatest challenge the industry faces.
According to a report from eMarketer, “marketers shouldn’t expect the attribution issue to be completely solved next year. The holy grail would be a perfect understanding of all the touch points, online and off, leading to a purchase.”
Between its high costs, complexity, and lack of accurate measurement or ROI, it’s no wonder paid search advertising is used by so few small businesses.
According to an article in Inc., only 3 percent of small business owners found paid search to be an effective lead generation tool. A survey of hundreds of local merchants by Street Fight confirms that their top two pain points are SEO and paid search.
Huge problem…huge opportunity, right?
Indeed, with more than 25 million small businesses in the US and a trillion-dollar market in play, solutions abound.
Several startups have developed great products, but to their detriment, in following the sage advice of “do one thing really well” they are missing the biggest pain point of small business owners — time.
Survey after survey reveals that small business owners want their marketing efforts to be as streamlined and consolidated as possible. Even the strategies from some of the largest companies in the space such as Facebook and Yelp continue to lose the support of small businesses, with their core business offerings not working for them.
The small business market has always proven a challenge to sell into for service providers.
Business owners barely have the resources to manage the core needs of their business such as staffing and inventory. Marketing is a luxury that few small businesses can afford — both literally and figuratively.
A simple solution emerges
LuckyDiem is a New York-based startup that built a platform that completely removes time and money from the digital marketing equation.
The company provides businesses with a turnkey marketing platform that includes mobile search, variable promotions, social media, and even a gamified customer loyalty program. The platform takes less than five minutes to set up, and businesses don’t have to add any new hardware or software to their operations.
De-risking digital marketing
The company’s business model is 100 percent pay-per-sale, which means businesses only pay LuckyDiem when customers pay them.
For retailers, this is the first time they’ve ever had a digital marketing solution that is completely turnkey and guarantees full online-to-offline attribution. The holy grail of marketing that industry pundits say is years from reality appears to be happening sooner than they thought.
Make it fun and rewarding
For users, LuckyDiem offers two things consumers love — gaming and savings.
All of LuckyDiem’s business listings integrate instant prizes and discounts that can be increased through game-based engagement. These upgradable rewards serve two purposes that on the surface seem paradoxical: giving consumers discounts while improving margins.
LuckyDiem accomplishes this through the application of behavioral economics’ endowment effect, which can effectively shift the consumer’s perceived value of a reward — i.e., a 10% discount felt like 20% or more.
Through gamification, LuckyDiem provides businesses with a free yet effective customer loyalty program that sustains engagement first initiated through search.
Since LuckyDiem’s platform turns any retailer into a closed-loop system, the company enables businesses to identify and reward their best customers not just on the value and frequency of their own purchases, but on their social influence as well.
LuckyDiem is an ambitious initiative in both the breadth of its offering and the size of the market it seeks to serve.
To date, no one company, not even Google, has developed a marketing solution that efficiently or cost-effectively works for small business. LuckyDiem’s risk-free platform is potentially a game changer for the digital marketing industry, and can hopefully serve as a catalyst for small business to once again thrive in America.
SOURCES
- SOLVING RETAIL’S SMALL BUSINESS CRISIS BY KAREN WEBSTER, PYMNTS, FEBRUARY 13, 2017
- LOCAL-SEARCH-ASSOCIATION, 2016
- COMSCORE, 2016
- MANTA RESEARCH, 2017
Andrew is the founder and CEO of LuckyDiem, a local search platform that provides businesses with a turnkey, game-based promotion and loyalty solution that removes time and cost from the digital marketing equation.
Andrew has founded two other startups: FotoLinks, one of the first online photo sharing sites; and EP Ventures, recognized as one of the most profitable event-based photography businesses in the country. Between 1992-1998 Andrew was a Senior Analyst at Sony, responsible for identifying, incubating and launching new businesses. Andrew was a key advisor and strategist on many of Sony’s digital initiatives including the launch of Sony.com.
Andrew speaks at national conferences on subjects focused on mobile marketing, payments, gamification and behavioral economics.
Related Reading
- The Octalysis Framework for Gamification & Behavioral Design
- What is Gamification?
- Top 10 eCommerce and Shopping Gamification Examples
- Core Drive 5: Social Influence & Relatedness
- Top 10 Enterprise Gamification Examples
- Books by Yu-kai Chou