The EDA Center | at the University of Minnesota  
Commentaries on Greater Minnesota

Periodically we will present commentaries on topics of interest to community and economic developers across rural Minnesota. Below is a list of all commentaries with the most recent listed first.

 

Commentaries
Rural Minnesota and the Broadband Economy
June 2012
Jack M. Geller, Ph.D.
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There is little doubt that as a state Minnesota has embraced the broadband economy. A new report released last month by Connect Minnesota™ reports that online sales in Minnesota now account for approximately $6.2 billion annually, including more than $1 billion in sales for micro businesses with fewer than 5 employees. The report also notes that approximately 83,000 Minnesota businesses report having a company website and 45,000 Minnesota businesses report allowing some of their employees to engage in tele-work. Not surprisingly, they estimate that of those 45,000 businesses that engage in tele-work, 13,000 are located in rural Minnesota.

The incorporation of all these digital tools by Minnesota businesses over the past decade is truly remarkable when you consider that only 10 short years ago a Blackberry was still a fruit (i.e., the Blackberry™ was first introduced into the marketplace in 2002). Today approximately 1 in 5 Minnesota businesses report that they procure work by actively bidding on contracts online; almost 50,000 Minnesota employers use the Internet to advertise job openings and/or accept employment applications; and most importantly, median annual sales of those Minnesota companies that utilize broadband are approximately $200,000 higher than those that do not use broadband (Connect MN, 2012). As noted above, it is remarkable how far our business community has come in the span of 10 years.

While the economic benefits of broadband utilization are well documented, clearly not all Minnesota businesses have embraced this technology. For example, while 72 percent of all Minnesota businesses now report having a website, only 58 percent of rural businesses report having one. Further, as a new report disseminated by the University of Minnesota Extension Center for Community Vitality points out, it’s not just about the existence of a website, but rather it's about the overall "digital presence" of your business that really counts. What do I mean by a digital presence? Digital Presence is how a business presents itself and is visible via electronic media channels. This often includes the integration of a web site, social media channels, email marketing campaigns, a blog, digital signage or any other connected electronic touch point. And according to this new report, rural Minnesota has a ways to go.

Extension researchers Tara Daun and Hans Muessig assessed the digital presence of almost 14,000 rural Minnesota businesses through the examination of their websites; their use of social media such as Facebook; and their identification through GoogleMaps and GooglePlace. For those not familiar with a digital presence through Google, the idea is quite simple. When you search for a location in GoogleMaps, the map automatically identifies landmarks and businesses that have a GooglePlace page. So for example, if you zoom in on South Riverfront Street in Mankato, businesses such as "Neighbors Italian Bistro" are automatically identified on the map and if you place your cursor over that location and "click," information will be provided about Neighbor's, including its phone number, website and even restaurant reviews. Many Internet marketers will suggest that travelers and tourists are much more likely to patronize your business if you have a quality digital presence.
If it is true that more than 60 percent of purchase decisions today start with research on the Internet, then rural businesses that have no digital presence are at a great disadvantage. And according to this new study, just slightly over 40 percent of the businesses in the small rural communities they examined maintained a website. Only 13 percent of businesses were engaged in social media; and an equally small 13 percent of businesses were identified on GoogleMaps.

While there are many advantages of living in a rural community, trying to operate a business in rural Minnesota has two inherent disadvantages. The first is that the size of your market is small and the second is the distance one often needs to travel to reach markets that have critical mass is significant. Of course the good news is that these digital tools allow you to expand your market reach and closes the distance to reach regional, national or global markets.

A decade or more ago before the "dot.com" bubble burst, there was a belief that the Internet would change everything. While we know now with hindsight that wasn't exactly true, it is fascinating to observe how it has truly changed so much and how the Internet continues to integrate itself into our daily lives. But some things don't change; and as I think about how rural businesses without a digital presence may not realize the business opportunities they are missing, I am reminded of an old adage that while appropriate, far preceded the Internet: and that is "out of sight - out of mind."

Geller is professor & head of the Arts, Humanities & Social Sciences at the University of Minnesota, Crookston. He also serves as the director of the federally-funded EDA Center at UMC. He can be reached at gelle045@umn.edu

This document was prepared by the University of Minnesota, Crookston under award number 06-66-05709 from the Economic Development Administration, U.S. Department of Commerce. The statements, findings, conclusions, and recommendations are those of the author(s) and do not necessarily reflect the views of the Economic Development Administration or the U.S. Department of Commerce.

The University of Minnesota is an equal opportunity educator and employer.

 
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