37% of SMBs Plan to Spend More on Internet Marketing in 2015
- 37% of SMBs plan to spend more on internet marketing in 2015
- 32% say internet marketing is 'very effective' at attracting customers
- 50% of SMBs spend less than $300/month on internet marketing
- 31% – Phone calls are the most valued success metric
- 64% of SMBs surveyed handle their internet marketing in-house
- 35% of SMBs are contacted every day by SEO agencies
Welcome to the results of the BrightLocal SMB Internet Marketing Survey 2014.
With this research we want to gain a better understanding of the attitudes & usage of internet & mobile marketing by small & medium sized businesses (SMBs).
We conducted the survey in partnership with ChamberOfCommerce.com, and we’d like to thank them and all of the participating businesses for their time & assistance. Without them this survey & insights would not have been possible.
About the SMB Internet Marketing Survey 2014
The survey was conducted in October / November 2014. 736 SMBs completed the survey with 95% located in North America (Europe 4%, RoW 1%). In follow-up to this survey we will publish further insights comparing Company Size and Company Type.
This survey has been split into two distinctive parts:
- Engagement & Opinion – this part explores the current usage of internet marketing by small & medium sized businesses. We find out what works for them and their opinions on how this might change in the future.
- Marketing Support – this section explores how many SMBs use internet marketing consultants / agencies and how effective these working relationships are.
Engagement & Opinions
Q1. How many employees do you have?
- 58% of those surveyed had between 0-3 employees
- 16% of those surveyed had between 11-50 employees
In this survey, we invited small and medium businesses to take part. For the purposes of the survey we pre-defined ‘SMB’s as having 0-50 employees and as can be seen in the chart above, 97% of respondents fall into this bracket. The majority of businesses surveyed, have between 1-3 employees, including the business owner.
Q2. How much money do you allocate to marketing your business each month?
- 70% are spending less than $500 on marketing per month (vs. 73% in 2013)
- 83% are spending less than $1,000 on marketing per month (vs. 85% in 2013)
- Just 16% are spending more than $1,000 on marketing per month (vs. 16% in 2013)
The results show very little change year on year, with 70% of SMBs spending less than $500 on marketing each month. For a company with an average of 0-3 employees this is not surprising as you expect revenue & service capacity to be limiting factors on marketing.
Looking deeper at the assumption that ‘Bigger Business = Bigger Budget’, this chart explores the correlation.
So we can see that there is a correlation between size & budget. Although looking into the raw data I can see that some small businesses have much bigger budgets, and some larger businesses claim to have no budget at all. So there are exceptions that disprove the rule which is important to bear in mind.
I think this insight is useful for both SEOs and SMBs reading this write-up:
- SEOs – you can use this to guide your own sales strategies and target businesses who are more likely to spend more $$.
- SMBs – you can benchmark your marketing spend against similar sized businesses (although this doesn’t take business type into account)
Q3. What percentage of your marketing budget is spent on internet or mobile marketing?
- 34% allocate less than 10% of their marketing budget to online channels (vs 33% in 2013)
- 50% allocate less than 30% of their marketing budget to online channels (vs 49% in 2013)
- 29% allocate more than 70% of their marketing budget to online channels ( vs 28% in 2013)
In similar results to 2013, half of all SMBs spend less than 30% of their marketing budget online. We’ve already learned that 83% are spending less than $1,000 a month on marketing, which means that 50% are spending less than $300 a month on internet marketing.
Key Stat: 50% of SMBs spend less than $300/month on internet marketing
In fact, 61% of those surveyed spend less than half of their marketing budget online. The question that we don’t answer here (sorry!) is if this is a considered marketing strategy or simply a continuation of old habits / tried & trusted tactics which determines where marketing $ are spent.
Q4. In the next 12 months do you plan to increase the money you spend on internet marketing?
- 37% do plan to increase their internet marketing spend over the next 12 months (vs 21% in 2014)
- 47% are unsure (vs 47% in 2013)
- 16% have no plans to increase their internet marketing spend in the next 12 months (vs 32% in 2013)
Here we can see the first obvious change in usage & attitudes from 2013. There has been a 16% rise in SMBs that plan to increase their internet marketing spend over the next 12 months, giving those of us involved with local search/marketing a positive indicator for our businesses in 2015.
47% of businesses are unsure about whether they will change their spend level in 2015 – so maybe this figure of 37% will actually increase if business conditions are positive in 2015.
Q5. How effective is internet marketing at attracting customers to your business?
- 32% find internet marketing to be ‘very effective’ at attracting new customers (vs. 27% in 2013)
- 75% believe that internet marketing is ‘effective’ or ‘very’ effective at attracting new customers (vs. 68% in 2013)
- 4% don’t do any internet marketing (vs 8% in 2013)
Attitudes towards internet marketing have brightened over the last 12 months. 75% of SMBs are now positive about the effects of internet marketing compared to 68% in 2013. Only 4% do not do any internet marketing vs. 8% last year.
It is this increase in trust towards internet marketing that has persuaded 37% of SMBs to up their spending levels over next 12 months. It shows that if more SMBs can be convinced about the effectiveness of an internet marketing campaign, then it is likely that they too will spend more of their budget in online channels.
Q6. Which of the following marketing channels are most effective at bringing you new leads & customers?
- 28% find word of mouth to be the most effective channel at attracting new customers (vs. 26% in 2013)
- 20% find SEO to be the most effective channel at attracting new customers (vs. 19% in 2013)
- 51% say online channels are the most effective at attracting new customers (vs. 49% in 2013)
NB – word of mouth is considered as an offline medium/channel in this survey.
Online vs Offline:
Similar to last year, the majority of SMBs find word of mouth to be the most effective channel at bringing in new leads & customers.
In Chart 3 we learned that 61% of SMBs spend less than half of their marketing budget online. This looks likely to change in 2015 (37% plan to increase spend) but with word of mouth considered such a powerful means to reaching new customers, some SMBs may continue to rely on WoM rather than open their wallets and spend additional budget on online marketing.
But I think this represents a solid business case for consultants / agencies who offer Reputation Management services. This is an extension of WoM with customers sharing their experiences online as opposed to verbally. The impact of a great reputation which is shared widely online can earn businesses lots more customers.
More good news for search consultants & agencies is that of the top 4 most effective marketing channels, 3 of them are online; SEO, Online local directories & Email marketing. These 4 channels make up 73% of the total results.
The perceived effectiveness of SEO has marginally increased year on year, whilst there is slightly less faith in PPC.
Q7. Which of these success metrics are you most concerned with?
Respondents were asked to select 2 options from the 5 choices provided.
- 31% – Phone calls are the most valued success metric
- 20% – Both website traffic & Search Engine rankings
Different types of businesses will be concerned with different KPIs as success metrics. An Ecommerce business for example, will be more concerned with online metrics, whilst a local bakery might be more concerned with customers walking through the door.
In this survey we had a wide-range of small & medium businesses take part; from plumbers, event planners and private investigators, to locksmiths, mechanics and party entertainers. It’s fair to say that the participants don’t come from any one industry alone, and so the results should be treated as such.
For the majority of SMBs, the amount of phone calls to a business is considered the most important metric. A call is considered a more solid lead because the customer has taken the time to track down a phone number and make a call. There is more friction in taking this action than in searching-clicking-completing an online form. So if a customer is prepared to take this step then they are more committed to using that business. And it gives the business owner / manager / sales guy the chance to provide more information and close the deal.
The results also show us that SMBs are concerned with their online presence. 20% said that traffic to their website was the most important metric for success, while 20% also said that their position in the SERPs was very important.
This continued focus on Search Ranking as a KPI will no doubt frustrate some search consultants who want to move to more concrete metrics, but it shows the appetite that business owners have for this which can’t be ignored.
*NB – we didn’t ask this question in 2013 so don’t have Y-on-Y comparison data.
Q8. Do you have a mobile ready / mobile optimized website?
- 66% do have a mobile ready / optimized website (vs. 59% in 2013)
- 19% do not have a mobile ready / optimized website (vs. 26% in 2013)
In 2013 we highlighted the fact that many SMBs were falling behind in mobile marketing. We can now see that to an extent this has been addressed in 2014.
In November 2014, Google officially launched the mobile-friendly label in mobile search results. The added benefit of receiving such a label is that sites which are considered mobile friendly may receive a ranking boost. The importance then, of having a fully mobile optimized site cannot be underestimated.
Q9. Which of these statements best applies to your feelings about Google+ Local / Google My Business?
- 41% find Google+ Local / GMB clear & easy to use
- 20% know that it is important but do not understand it
- 17% are frustrated by the amount of changes
The majority of those surveyed find Google+ Local / GMB clear & easy to use, and almost 1 in 10 think it’s great for their business – although it’s clear that there is still some confusion about these products.
17% state that constant changes make Google+ Local / Google My Business confusing. On 11th June, Google rolled out Google My Business – a significant upgrade to Google Places /+Local – with the hope that a new product update would seriously address the main concerns of small businesses. It was a large, yet necessary change that was generally met with positive reaction.
One positive is that there has been a decrease in SMBs thinking that Google+ Local / Google My Business is not important, or that Google simply doesn’t understand small businesses.
2. Marketing Consultants & Agencies
Q10. Do you handle internet marketing yourself or use a freelance marketing consultant/agency?
- 64% of those surveyed handle their internet marketing in-house (vs. 68% in 2013)
- Just 18% use a consultant / agency (vs. 15% in 2013)
There has been a slight shift towards SMBs utilizing the expertise of SEO agencies / consultants for their internet marketing, and a similarly small shift away from SMBs that don’t do any internet marketing.
However, it’s still obvious that most small and medium sized businesses do everything in-house. And we’ve already seen that 75% of SMBs believe internet marketing to be ‘effective’ or ‘very’ effective, so it’s more likely to be down to their smaller budgets, as opposed to a mistrust of agencies & consultants.
We do have to consider that 50% of SMBs are spending less than $300 a month on internet marketing. How far does that go with the average SEO consultant or agency?
It’s also worth considering that in the Local SEO Industry Survey 2014, 41% of local SEOs handle more than 10 clients personally, and a further 24% handle more than 21 clients. If SMBs are concerned that about how far their budgets will go, they may also be concerned with how many man hours their account will receive when SEOs have this many clients to look after.
Q11. How do you rate the performance of your marketing consultant/agency?
- SMBs that do not use an agency / consultant have been excluded from the above chart
- 39% love the work their agency / consultant does! (vs. 9% in 2013)
- 76% were positive towards the performance of their marketing consultant / agency (vs. 85% in 2013)
Whilst the uptake in SMBs outsourcing to an agency or consultant is fairly low – those that do so are generally more than satisfied with their results!
Clearly performance levels are not the problem. So instead, is it the case that SEO agencies & consultants need to do better at demonstrating their expertise to potential small business clients?
Q12. How many times per week are you emailed/called by an internet marketing or SEO company wanting to sell you their services?
- 35% are contacted every day by a consultant / SEO agency (vs. 32% in 2013)
- 90% are contacted at least once every month (vs. 86% in 2013)
Above we considered that whilst agencies are providing such pleasing results for SMBs, then they should make considerable effort to communicate this to potential clients. We can now see that they are doing just that – with 35% of SMBs being contacted on a daily basis.
Daily contact has actually gone up year on year, and on average, 90% of SMBs report that they received some contact at least once per month.
SMBs are not short of choice if they want to outsource their internet marketing, but clearly they are deterred by something.
Q13. If you use/were to use an internet marketing consultant which of these factors are most important to you?
- 18% say low cost is the most important factor when choosing an SEO consultant / agency (vs. 19% in 2013)
- 14% say performance guarantees are the most important factor (vs. 12% in 2013)
- 13% say having a good reputation in the most important factor (vs 13% in 2013)
Just above, we noted that despite positive results & frequent contact, few SMBs are outsourcing their internet marketing.
From the perspective of an SMB, low cost is the most important factor. 83% are spending less than $1,000 a month on marketing, and for 61% of SMBs, only half of that is spent online. This is the point at which any potential working relationship can break down.
From an SEOs perspective, agencies or consultants can provide really good results for SMBs but they also must also cover their own costs. A good SEO will be aware that there are many potential SMB clients out there but they must also be mindful of underselling their own services. SMBs may be attracted by low costs but that doesn’t always equal top results.
Similarly, 14% of SMBs (up from 12% in 2013), cite performance guarantees as the most important factor for choosing an agency or consultant. Yet how many quality SEOs would knowingly make promises of “top positions” & getting a client to number 1 for “keyword X” without adding some serious qualifiers to that?
On a plus note, quantifiable factors like having a good reputation (13%), relevant industry experience (12%) & being prepared to listen & learn about a client’s needs (9%) are still important factors from an SMBs perspective.
Of course, we can’t force SMBs to change the way they think about internet marketing and what makes a good SEO, but given time & understanding, perceptions can change. As more SMBs try outsourcing as an option, they will of course discover first hand what is important in terms of working with an agency.
Q14. Which of these statements best applies to your attitude towards internet marketing?
- 29% understand internet marketing & do it all themselves (vs. 40% in 2013)
- 28% are learning about internet marketing & would like to do it all themselves (vs. 22% in 2013)
- 84% would like to, or do their internet marketing themselves (vs. 84% in 2013)
- 16% have no interest in doing their own internet marketing (vs. 16% in 2013)
Year on year, more SMBs are learning about internet marketing. However, there is an 11% decrease in those that say they currently understand it and do it all for themselves. In a fast moving industry with plenty of changes, updates & potential pitfalls, internet marketing can be a tough skill to learn, particularly when that has to be balanced with the running of a business.
Costs are obviously an important factor, and the price of doing online marketing in-house puts off 17% of SMBs. It seems like a lot of SMBs are caught in the catch-22 scenario of not being able to afford to either outsource their online marketing, or to do it in-house – yet despite this they obviously understand its importance to their business.
Whilst it is unlikely that the cost of outsourcing will come down, or SEO will get easier, taking the step to learn about it themselves can seem to some like the last remaining option. Obviously it helps that Google is adapting its own products with the introduction of Google My Business too.
SEO agencies & consultants have a small battle on their hands to convince SMBs that internet marketing is worth their investment, and to promote positive factors based around solid reputation & relevant experience. The signs are that it is a worthwhile battle, as 2015 is set to be a positive year for all concerned; SMBs are looking to put more resources into online marketing & most agencies & consultants are providing high quality services. With those two factors combined – 2015 could be a real turning point for the small and medium sized business world.