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Survey Highlights the Challenges of Marketing to Smaller SMBs

Survey Highlights the Challenges of Marketing to Smaller SMBs

This article was originally seen in StreetFight: Inside the Business of Hyperlocal

A survey recently released by Bright Local tells an important, though not always easily interpreted, story about SMB attitudes toward internet marketing and local search as we head into 2015.

Understanding SMB perceptions is, of course, critical for marketers who want to win and retain business. The key findings of the Bright Local SMB Internet Marketing Survey 2014, conducted in collaboration with ChamberofCommerce.com, are that SMBs tend to be small or very small businesses with modest budgets who often prefer to do as much marketing work as possible themselves. They are aware of the availability of marketing service providers, but providers face a challenge in convincing SMBs to part with their limited budgets. Marketers must offer concrete demonstrations of success, and must be cautious about bombarding SMBs with solicitations.

The size of the SMBs surveyed was weighted toward the very small, with 58% of all businesses surveyed having 0-3 employees and 85% having 10 or fewer employees. As might be expected, marketing budgets are correspondingly modest, with 70% allocating less than $500 to both online and offline marketing per month and 83% allocating less than $1000.

The percentage of this limited budget that is spent on online marketing varies quite a bit among survey respondents, but fully half of respondents spend less than 30% of their marketing budgets online. This is somewhat counterintuitive given the fact that SMBs also rated various forms of internet marketing quite highly in terms of effectiveness, with 20% finding SEO the most effective means of gaining new customers, second only to word of mouth at 28%. Overall, 51% of SMBs rated online methods more effective than offline.

So why the disparity between perception and spend? Perhaps SMBs feel that certain forms of offline marketing, such as print advertising and local print directories, though costly and less effective than they were in the past, are still critical and cannot be ignored. So too, offline word of mouth may be getting disproportionate credit, especially from businesses that get a lot of foot traffic or are well known in their communities. Henry Grabar, whose recent Guardian article includes some comments of mine as well as quotes from local expert Mike Blumenthal, notes that neighborhoods like Jackson Heights, in Queens, contain lots of businesses that can’t be found in Google Maps at all, a fact that leaves business owners unfazed as long as their shops are full of customers.

At the same time, SMBs overall appear to perceive internet marketing as effective, and many of them plan to increase their online spending in the next year. In the Bright Local survey, 75% of SMBs said they believed online marketing was either “effective” or “very effective,” and 37% planned to increase spending.

Where then does the service provider enter the equation? On this point the Bright Local survey is at odds with some other studies, such as the 2014 Small Business Advertising Survey released about a year ago by Thrive Analytics, which found that 76% of SMBs would prefer to leave internet marketing in the hands of one trusted service provider, with 57% of SMBs currently using 2-5 providers. In other words, the Thrive respondents were looking to pare down their dependence on multiple providers, having already accepted the assumption that service providers were a necessary component of the internet marketing process.

In contrast, the Bright Local survey finds that 64% of SMBs handle all of their internet marketing themselves, with only 18% currently using a consultant or agency. This despite the fact that SMBs are pestered with constant solicitations from providers, with 35% receiving some kind of sales pitch every single day, 77% hearing from providers at least weekly, and 90% getting contacted at least once a month.

Perhaps the difference in adoption has to do with the relative sizes of the businesses surveyed. It would stand to reason that smaller SMBs with correspondingly small budgets, the focus of the Bright Local survey, will have been less likely to take a chance on providers, some of whom may be going overboard with telemarketing and the hard sell approach.

So too, smaller SMBs are likely not fully aware of the value search marketers can provide. Thinking they can do everything themselves, their lack of expertise may cause SMBs to miss out on important opportunities. Aside from top of mind activities like claiming one’s Google My Business/Google+ Local profile, businesses stand to benefit greatly from more esoteric practices like citation building that can easily pass under their radar.

Regardless, marketers must meet businesses on their own terms, focusing on value statements that are demonstrable and easily understood. Across all businesses surveyed in the Bright Local study, the most important measure of internet marketing success was phone calls to the business at 31%, with website traffic and search engine ranking trailing behind at 20% each. All of these metrics represent hard evidence of the success of marketing efforts. The evidence suggests that marketers who can tell a simple and compelling story tying ROI to hard evidence will stand the greatest chance of winning SMB confidence. The trick is doing this at sufficient scale to be profitable, given the comparatively tiny budget available to the smaller SMB. The greatest opportunity lies in the least expensive service that can demonstrate effectiveness in a concrete manner.

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