News From the
Committee on Small Business
Subcommittee on Regulations, Healthcare and Trade
Charlie Gonzalez, Chairman

For Immediate Release
June 25 , 2008          

CONTACT: Shripal Shah (Gonzalez) – (202) 226-7524
Jaime Zapata – (202) 226-3636

Subcommittee Examines Role of Online Advertising
in 21st Century Small Business Economy

WASHINGTON, D.C.— Ninety-two percent of adults shop online, which makes the Internet a veritable 21st Century “mall without borders.” Customers are now as likely to come from local communities as they are from thousands of miles around the globe. Consequently, effective Web advertising has become a defining factor in the success of U.S. entrepreneurs. The Subcommittee on Regulations, Healthcare and Trade today held a hearing examining the role of this increasingly important use of technology. Members of the Congressional panel heard from small business representatives who discussed both challenges and areas of opportunity related to online advertising.

“American entrepreneurs have always been at the forefront of innovation, and to keep pace with today’s consumers a great number of them have become savvy online advertisers,” said Chairman Charlie Gonzalez (D-TX). “Today’s Web-based searches can make the difference between firms whose products and services grab the attention of the public and those that see market share dwindle.”

With an average of over 61 billion customer queries per month, online retail transactions are expected to grow to $171 billion by 2011. Online advertising revenue, meanwhile, has already topped $21 billion—eclipsing sales of radio ads.  Most experts also predict Web-based advertising will overtake television in the near future. The secret to successful online ads lies in carefully determined keyword searches, which allow companies to target consumers based on specific interests and demographic characteristics.

“The Internet made it possible for a customer surfing the Web to buy shoes as easily from a rural company in Texas as they can from Nike,” said Chairman Gonzalez.  “With proper planning and a solid understanding of the underlying technology, the Web can continue to serve as a leveling force for small firms.”

A principal challenge for small businesses is gaining prime spots on the Web pages of search engines. Because media giants such as Google and Yahoo dominate the online advertising field, their policies can dictate online strategy for small companies. For instance, because the bulk of entrepreneurs can’t rely on their firms being listed at the top of Google’s search results pages, many must invest in the paid keyword ads that line the sides and tops of the familiar Google screen. Witnesses said federal officials should consider whether existing market dynamics warrant new laws that would allow small firms to compete on more equal footing with their larger counterparts.

 “In the midst of the current economic downturn, it is especially important to keep in mind the role of the small business sector.  After all, when these small companies are given a chance to compete on equal footing, our entire nation benefits,” said Chairman Gonzalez.

Click here to view witness testimony.
Click here to view video of the hearing.

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