Tuesday, December 20, 2005

Online Marketing and Smaller Businesses

DECEMBER 20, 2005

About two-thirds of small and medium-size businesses (SMBs) use online marketing or plan to start in the next six months, according to a new report.

Frank N. Magid Associates surveyed a national sample of 1,060 for-profit small- and medium-sized businesses between September 12th and October 11th, 2005. A little over one-half of these respondents were from a registered users list of AllBusiness.com, an online resource for businesses that sponsored the study.

The data implies that only 22% of SMBs use the Internet for marketing. Of these, just over 60% employ e-mail marketing, while 56% use search engine optimization, 36% have banner ads, and 25% use pay-per-click advertising. Most of these organizations — 74% — are planning to increase their online marketing spending, although 43% of SMBs who are not using online marketing say they are planning to in the next 6 months.

However, a study by Interland indicates that SMBs rate other, non-Web related factors as more important, or just as important, when it comes to business success. For example, 55% of US SMBs surveyed said that community relations were critical, compared to 47% who cited a Web site. Public relations, direct mail and yellow pages were all deemed more important marketing tools than e-mail marketing. While converts to online marketing seem enthusiastic about it, it is clear that SMBs as a whole have not yet jumped wholeheartedly into the online realm when it comes to promoting their products.

Outside the realm of marketing, Magid found that over four-fifths of SMBs credit the Internet with improving communications in their company, while about three-fifths said that the Internet opened new markets for them, increased competition and lowered their costs. Interestingly, less than one-third said that the Internet improved employee performance, perhaps reflecting concern over employees being distracted from work by surfing the Web.


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