As recently as last year, Donna Jasper had little Internet marketing experience and virtually no online presence for her business, Nite Winds Kennels, a Lake Geneva, Wis. dog kennel. Then she was introduced to Web 2.0 technologies. She started a blog and used the popular Web-based application, Google Analytics, and suddenly customers found her in cyberspace.

"She has spent under $500 and had 913 ads clicked through," says Kathleen Gilroy, CEO of the Otter Group, a Cambridge, Mass. consultant, who helped bring Jasper's business to the digital age. "She has no advanced computer experience, but the blog allows her to have full control over her site, where she can easily add photos and posts."

Jasper isn't alone when it comes to exploring what Web 2.0 has to offer. According to a recent AMI Partners' study, more than 40 percent of small and medium businesses in the U.S. are already using Web 2.0 applications -- and this despite what the study says is lingering confusion about what exactly Web 2.0 is.

Web 2.0 includes social networking and collaboration

The phrase "Web 2.0" was reportedly coined by O’Reilly Media in 2004, referring to second-generation Web-based services. These include social networking and communication tools that weren’t possible with the first-generation Web technologies. One reason small and mid-size businesses are turning to Web 2.0 technologies is that they allow a website to do something that couldn’t be done in other mediums. Another reason is because it can impact the bottom line.

“Web 2.0 is allowing small businesses to take advantage of technology and solutions that would otherwise have cost them a lot more money,” says Jackie Chan, director of Global SMB Primary Research for AMI Partners. Chan says that solutions such as Internet phone software, hosted applications, and Webtops -- virtual desktops that let employees access applications via a Web browser -- are really helping these small businesses cut cost while still running efficiently.

Web 2.0 also has allowed for rich Internet applications such as Ajax, Flash, and OpenLaszlo to improve the experience within the browser. These technologies can allow parts of a website to be updated without a user needing to refresh the whole page. This feature allows shoppers at a clothing site, for example, to select a different color or style without the time-consuming process of reloading the entire page -- during which they may give up and go to a different site.

In the past, small and mid-size business websites had been very static sources of information, but with the help of Web 2.0 technologies these websites now can receive contributions from multiple sources. That's why many businesses are now deploying collaborative Web 2.0 tools -- such as Wikis, blogs and Mashups. With the help of these tools, employees in remote locations can all contribute to the same files or work on projects together.

Enabling new business functions

Small and mid-size businesses are finding that not only can they use Web 2.0 tools internally to increase functionality at a fraction of the cost of other collaborative technologies, but that they can also offer customers new products or functions from their websites.

Web 2.0 technologies allow MeeVee, a Burlingame, Calif. company that brings together traditional TV listings and online video from multiple sources on one website, to allow customers to personalize the site. “Web 2.0 is all about the personalized. Other technologies don’t offer the personalization,” says Neil Kjeldsen, vice president of marketing and content for MeeVee. Without Web 2.0, MeeVee and other sites such as just wouldn’t be possible. MeeVee deploys a personalized discovery engine that matches keyword interests with meta-tags and recommends personalized content to users. "This is important because the Web has made so much content available," Kjeldsen says, "but the beauty of 2.0 is that we have the tools to easily find what we want from all this content.”

For small and mid-size businesses, Web 2.0 can also mean increased productivity at a lower cost than other technologies, says Chan. Many Web-based tools allow small businesses to accomplish the same goals for free that a paid, packaged solution would cost them a bundle. Webtops, which are “virtual desktops” and offer access to a personalized interface from any Internet enabled device, require no installation to run applications. Google Docs & Spreadsheet is another free Web-based word processing and spreadsheet program that allows users to share and update files from their Internet-connected computers, without the cost of software programs or the headaches about whether you're working on the right version. “Because these are Web-based solutions," Chan says, "collaboration can occur from users anywhere simultaneously.”