Source: Reuters


While data on Thursday also showed manufacturing activity rose in the nation's mid-Atlantic region in May, new orders and employment slipped. A separate gauge of the economy's prospects dipped for the first time in 13 months in April.

The reports showed more weakness than financial markets expected and contributed to a selloff on Wall Street, but analysts said the economy's recovery was largely on track.

"There are worries that the market turmoil will eventually trigger some weakness in the economic performance, but to date I don't really see that. What we are seeing in the data is pretty steady decent rates of growth," said Stephen Gallagher, chief U.S. economist at Societe Generale in New York.

Federal Reserve Governor Daniel Tarullo warned Europe's debt troubles, if not contained, could cause financial markets to freeze and spark a global crisis akin to the market meltdown of late 2008.

Initial claims for state jobless benefits increased 25,000 last week to 471,000, the highest level in five weeks, the Labor Department said. Markets had expected a drop to 440,000.

The claims data fell in the survey week for the government's closely watched employment report for May, and would normally be seen as suggesting weak jobs growth.

However, some analysts said the relationship between claims and payrolls had weakened, and they continued to look for a healthy pace of job creation in May.

"There hasn't been a particularly close relationship, we still expect employment growth to be fairly brisk in May. But there is a bit of a downside risk given the number this morning," said Peter Newland, an economist at Barclays Capital in New York.

Separately, the Philadelphia Federal Reserve Bank said its index of mid-Atlantic business activity rose to 21.4 from April's 20.2, a touch below market expectations for 22.0. A reading above zero indicates expansion in manufacturing.

Subindexes, however, showed weakness in employment and new orders.

In a third report, the Conference Board said its index of U.S. leading economic indicators, which aims to gauge the economy's future strength, slipped 0.1 percent last month, surprising analysts who had looked for a 0.2 percent gain.

It was the first drop since March 2009.

STOCKS TUMBLE

The reports added to pressure on U.S. stocks, already reeling on concerns Europe's debt crisis could hold back the domestic economy's recovery as governments in Europe cut spending. Major indices ended down more than 3 percent.

The Standard & Poor's 500 index .SPX is now down over 10 percent from its April's closing high, indicating a correction and marking the most significant break in the rally from March 2009's 12-year low.

Prices for U.S. government debt rallied, with the yield on the benchmark 10-year note touching a 5-1/2 month low. The U.S. dollar fell sharply versus the yen.

The debt crisis, stemming from Greece's fiscal troubles, pushed consumer confidence in the euro zone to a seven-month low in May.

Though analysts remain optimistic about the U.S. economy's recovery from the worst recession since the 1930s, they worry a prolonged decline in share prices could curb consumer spending, which rebounded strongly in the first quarter.

"The stock market has a fairly strong relationship with consumer spending in the U.S., so a sustained drop in the stock market could lead us to soften our forecast for consumer spending, we are not at that stage yet," said Newland.

The Fed's quarterly "central tendency" forecasts released on Wednesday showed greater optimism on the U.S. growth outlook among policymakers, who predicted gross domestic product would rise around 3.2 percent to 3.7 percent this year.

But the manufacturing-led recovery has been plagued by stubbornly high unemployment, creating a political headache for President Barack Obama and his fellow Democrats. The near 10 percent unemployment rate could cost the Democratic Party its majorities in both houses of Congress in November's elections.

New applications for unemployment benefits have been falling only slowly, even though payrolls have now grown for four straight months. Analysts believe this implies only a gradual improvement in the jobless rate once it peaks.

But there was some good news in the claims report. The number of people still receiving benefits after an initial week of aid fell to its lowest level in since late March in the week ended May 8. And for the first time since November 2009, the number of people receiving benefits fell below 10 million.

"The ongoing reduction in the total number of benefit recipients is consistent with continued hiring," wrote economists at Goldman Sachs.

Sometimes the most important small business marketing tools and technologies start out as expensive enterprise solutions exclusive to big brands and agencies; only much later do they become affordable and accessible to small businesses.

During a recent trip to San Francisco, I stopped by the tradeshow floor at Ad:Tech and found myself staring into the not-too-distant future of small business marketing
. I didn't have a chance to see everything Ad:Tech had to offer, but I did have time to talk with a few innovative companies offering solutions that are sure to influence the way small businesses approach marketing.

Here's what I found that's worth sharing along with some tips for getting ready to adjust to new trends.

Innovation No. 1: Online Display Advertising
Banner ads may sound like an antiquated way to get noticed, but actually display advertising is becoming much more interesting due to two important trends.

One such trend is better local ad targeting. Several companies, such as Local.com, LinkedIn and Facebook, have announced that they're getting into the local targeting game by offering geography-based advertising along with the standard demographic or keyword targeting you'd expect. Local targeting is already prevalent in search engine marketing and it's good to know that display ads are heading in the same direction.

The other noticeable trend to get excited about is the movement toward ad pricing based on cost-per-action rather than cost-per-click. Paying for ads based on CPA means that you don't pay the publisher until you get the action you want from the ad. For example, if you want your online display ad to drive someone to an online store to buy the advertised product, you won't have to pay until someone actually clicks the ad and completes the purchase. Several companies--such as Hydra--have announced an emphasis on CPA tracking and billing.

* How to get ready
Get to know your acquisition costs on an intimate level. If cost-per-action advertising sounds attractive, you'll need to have a firm understanding of what you're willing to pay for each new customer or action your advertising obtains in order to know how to bid. If you're interested in the possibilities of targeted display advertising (and you're interested in getting sophisticated with your targeting) start building a profile of your best prospects and customers--including geography, demographic information and typical buying behavior. If you need help figuring out how to analyze your customers to get that information, online advertising company Ad Buyer offers a set of free audience profiling tools.

Innovation No. 2: Online Retail Promotions
Selling physical goods has long been about driving traffic to your e-commerce store so prospective customers can see and buy your products. That trend seems destined for a giant turn in the opposite direction, because it won't be long before smaller retailers have the ability to sell more of their products on other highly targeted consumer websites. One such website is Milo.com, where the CEO announced the company's intention to enable anyone to search real-time availability and local product information on every product, on every shelf, in every local business in America.

Another outstanding innovation for online retail comes from Pixazza. Pixazza is changing the way consumers shop by allowing people to browse and buy products that appear in any photos. For example, let's say you're reading an article in an online entertainment magazine and you see a photo of Jennifer Lopez wearing earrings that are to-die-for. Getting yourself a similar pair is easier than ever; as you hover over the photo Pixazza recommends earrings at suggested prices far below what Jennifer Lopez probably paid for hers.

* How to get ready
It's time to get your inventory database
in shape. Selling products on websites owned by other companies will likely require you to conform to their database and information technology standards. There's no need to get overly sophisticated here. If your company has the ability to publish real time inventory and product information to your own website, you probably already have enough technology to quickly enable a feed of that information to other online databases.

Innovation No. 3: Social Media Advertising
Social media is arguably the most innovative internet tool to emerge since, well, the internet. There are definitely good reasons to advertise on social media sites (this includes your own fan pages and networks). The challenge for a small business is the same challenge facing any business: How do you get enough people to pay attention to your ads while they are busy uploading photos or conversing with friends?

There are a number of companies working to make social media advertising more engaging and even fun, and it won't be long before there are a plethora of choices for small budgets. At the show, NTB Media announced an interesting video advertising product with built-in games and quizzes to get people to pay attention and remember the content in the videos, and Fan Appz announced access to an integrated suite of social media applications designed to attract attention and engagement in exchange for a subscription of just $50 per month.

* How to get ready
Test before you invest. Social media advertising is already accessible and affordable to small business, but affordability isn't the only reason to invest in a particular form of advertising. Don't invest in a new social media tool or advertising strategy until you are sure you have the ability and the time to track your results and compare them against other opportunities. As a small business, you can't afford to invest in everything. If you don't track and compare your results, you won't have the information you need to make budget-wise choices.

Innovation No. 4: Mobile Marketing
Advertising and messaging to mobile phones is definitely a hot topic among marketers. In the past, most mobile marketing tools focused on only one aspect of mobile marketing, such as text-messaging, application development or mobile websites. Those tools are now converging as integrated solutions. One such company, 2ergo, recently announced plans to offer a comprehensive suite of marketing solutions that include SMS, MMS, e-mail and mobile websites. Be on the lookout for companies offering comprehensive mobile solutions priced for small businesses in the not-too-distant future.

* How to get ready
Make sure at least a portion of your website is designed to display and function properly on mobile devices--especially the pages that contain contact information for your business. If you have a location-based business, start making your communications more mobile friendly so people can respond to your offers and information while they are on-the-go. Sending text-messages and e-mails with mobile coupons and snack-sized bites of product information are great places to start. Also, social media users are more likely to become mobile savvy than the average internet user, so make sure you have a presence on the most common social sites.