Witness the Emergence of ‘Engaged’ SMBs

My Internet2Go program (via Opus Research) and MerchantCircle recently conducted an online survey of small business marketing practices, using the MerchantCircle member base. Because MerchantCircle wanted to maximize completes there was an incentive and they targeted more active members of their community. In this context “active MerchantCircle members” were those that have done one or more of the following: created an enhanced profile, uploaded pictures, created a blog, coupons and newsletters and/or connected with other merchants through the MerchantCircle website.

The survey received more than 2,500 responses, 2,403 of which qualified as “small businesses,” using the definition of 99 or fewer employees. Here was the headcount breakdown:

Picture 41

Here is the respondent distribution by years in business:

Picture 42

Here’s the respondent distribution by industry:

Picture 43

Here were the marketing budgets:

Picture 45

In terms of headcount distribution, annual marketing budgets and other characteristics this group of 2,403 US SMBs, respondents were fairly typical of the larger SMB population. However there were other ways in which they were not. For example, 90% claimed to have a website (beyond the presence on MerchantCircle). The average is about 52% for the broader market.

The “bombshell” findings in my view were the following:

  • 45.2% indicated they had a Facebook page for their business (a different question yielded a 53% response re “created a profile on a social network”)
  • 46% indicated they had a presence on Twitter, either business or personal account or both

Earlier this week a Citibank survey found that SMBs were generally not relying on social media as a marketing platform. That had 500 respondents and was based on a telephone survey. Just like online surveys, telephone surveys are imperfect, especially in the era of mobile phones. There is also no “representative” SMB sample in the way you can mirror the US census with consumer data. So what we have are two diametrically opposed set of findings. I’m showing you what the industry, headcount, and marketing budgets distribution was so you can judge for yourself how representative these findings are.

This group of respondents in my view represent a leading indicator of where a big chunk of the SMB market may be headed. These are scrappy SMBs, trying to find ways to promote themselves on a shoestring (44% spend less than $1K annually on marketing). Facebook and Twitter are easy and free and thus offer very low barriers to entry. But there’s also a gap between adoption and perceived effectiveness. We asked what types of media are you using and then, separately, which ones are the most effective. Again, this is based on perception but here are the media types that yielded the largest “gap” between usage and effectiveness rating:

  1. Social media profile
  2. Online yellow pages
  3. Blogging
  4. Print yellow pages
  5. Coupons/direct mail, email marketing (tied)

In other words, lots of respondents were using social media but a very large number did not rate it as effective. In the case of social network profiles 53% were using them but only 22% rated them “effective.” This may go to the inability to track or measure response as much as actual performance.

We also asked “What is your biggest complaint about online marketing?” Here were the top answers (aided response):

  1. Too costly
  2. Not enough time to do it well and still run a business
  3. Too many places to advertise
  4. Needs a dedicated person and don’t have the budget to hire one
  5. Not effective
  6. Too complex and confusing

In other surveys, too complex comes out as the top or one of the top two responses — another indicator that this population is somewhat different and “ahead of the curve.”

I want to reiterate that the survey population is more active and “engaged” but that this was also a very large sample (2,400) and in my belief shows:

  • There’s pent up demand for simple, cost-effective online marketing solutions/tools
  • There’s a large group of SMBs that will self-serve if the options are simple and the value proposition is clear
  • There’s considerable danger for traditional media as SMBs are starting to more aggressively investigate alternatives

There’s more here and I2Go clients got access to the broader data set and my analysis. But if there are questions, let me know.

22 Responses to “Witness the Emergence of ‘Engaged’ SMBs”

  1. Nearly Half of Small Businesses Have Profiles on Facebook and Twitter Says:

    […] see some pie charts and summaries of the finds here. It’s interesting to […]

  2. Tim Cohn Says:

    If social media were effective, it wouldn’t be free.

  3. Greg Sterling Says:

    Facebook ads aren’t free. The basic tools of social media are free and this is what the SMBs are moving toward. Measuring effectiveness is another matter.

  4. Tim Cohn Says:

    They will get what they pay for.

  5. Greg Sterling Says:

    Perhaps.

  6. steve haar Says:

    Social media is no more free than SEO, or going on a sales call, or talking to prospective customers. These are all activities designed to set the stage for a longer term relationship. Small businesses are far more sensitive to the notion that actions need immediate results… It tends to be cash flow centric (or time / effort to cash flow) and very much closer to direct marketing. It is also more central to SEM centric activity and marketers.

    This makes being patient for the fruits of the effort to ripen more difficult, but can be worthwhile.

  7. Witness the Emergence of ‘Engaged’ SMBs « Business News Says:

    […] My Internet2Go program (via Opus Research) and MerchantCircle recently conducted an online survey of small business marketing practices, using the MerchantCircle member base. Because MerchantCircle wanted to maximize completes there was an incentive and they targeted more active members of their community. In this context “active MerchantCircle members” were those that have done one or more of the following: created an enhanced profile, uploaded pictures, created a blog,Source: Screenwerk RSS Feed […]

  8. Witness the Emergence of 'Engaged' SMBs « Screenwerk (Latest Update) | Kantaas.Com Says:

    […] Witness the Emergence of 'Engaged' SMBs « Screenwerk […]

  9. Lynnea Bylund | ADMAX Says:

    Tim Cohn’s responses (above) underscore some of the ignorance and confusion common to newcomers (Tim however is not a newcomer) – yes the Facebook or MerchantCircle site is free – and it won’t do much without some serious time and careful attention – blogging, networking, etc. are part of the “muscular” or sweat equity that is necessary.

    Take our “FREE” MerchantCircle site (link above) – although free, much time went into providing fairly regular blogs, and more than 20,000 invites garnered an MC network of approx 6000 connections.

    The result being a daily traffic count of 150-200 visitors, and a steady stream of calls and inquiries and free signups as well.

    We also have a separate MC FREE site for our small business accounting firm that attracts about 100 visitors per day and is “meshed” with our facebook and Twitter networks.

    Tim Cohn is correct but for the wrong reason – free social media and IYP listings are only as valuable as the TIME and energy expended on efforts to generate relevant content and meaningful connection followings – Tim could not purchase (Adwords/PPCs) our combined MC traffic (300/day) for much less than $300/day or $9000 per month — but we get that traffic, and the resultant inquiries, for … “FREE”.

  10. Steve Says:

    Given how biased your sample and survey was – online survey of SMB’s that are active online content contributors and part of Merchant Circle’s online networking system – I think the bombshell of your research is ONLY 45% were on Facebook and/or Twitter.

    Interestingly, I actually agree that the set of companies you surveyed are indicative of where the SMB sector is going.

    You should simply admit the Citibank survey is more representative of the broader SMB sector (it clearly is) and say your survey represents leading edge online SMBs.

    Then it would be believable. As is – and in particular the way the results are discussed in the press release – the survey is simply not credible.

  11. Greg Sterling Says:

    Steve:

    It doesn’t seem that you read the release or my post (above) about it too closely. No claim is made about this being representative of the market as a whole.

    Rather that making accusations of “bias” you should just pay closer attention next time.

  12. Steve Says:

    Greg:

    Sorry for my very poorly worded comment. I did not intend to suggest that you, your firm or your research was biased. I have a lot respect for your work. Please accept my apology.

    What I was trying to say was your survey population was biased towards very active online users who are also existing social networking users and not reflective of the broader smb market – something you do point out.

    But because of the way your findings are presented, readers can easily be confused and think your survey results apply to the broader small business market.

    You can see this in the blog posts on your survey and it comes through in the CNET article.

    I’ve also had several people ask me which is right – your survey or the Citibank survey.

    So again, sorry for the wording of my last comment. My goal was to point out the confusion and suggest that clarifying the differences between the Citi survey and your survey would help.

  13. Greg Sterling Says:

    Yes, the Citibank survey probably reflects the broader market. But that’s not necessarily an automatic or valid conclusion. We know nothing about the methodology there except headcount <100 and the fact that it was a telephone survey. Do we in fact know that these are small business owners answering?

    More broadly, my point in the post is that all SMB surveys are to some degree a snapshot and reflective only of what their respondents say, rather than an "objective" reflection of the broader market.

    Yes, our survey reflects the most active members of an online marketing site. I'm very clear about that (both above and on Internet2Go, as well as in the release). I say that people should not generalize. Re the CNET article . . . she wrote that without investigating, talking to me or trying to understand context first.

    She subsequently apologized in email for her characterization and for not digging deeper and did make a slight modification to her article (re the motive for using MerchantCircle).

    People are reading the press headline, and not carefully reading the rest of the release or my efforts at explaining the larger context, and then asserting bias or inserting motivations that don't exist. Using Merchant Circle was a cost effective way to get at a very large SMB population. We had more than 2,500 completes (2,403 are bona fide SMBs). If you look at the Kelsey surveys, they're polling 300 SMBs. And very rarely do you get a sample of more than 1,000. It's extremely difficult to get at SMB decision makers.

    The Citibank survey is 500. The relatively small size of that population and the fact that we know nothing more about it argues that those results cannot not be reliably generalized either.

  14. Social Media and SMBs: Conflicting Data « Screenwerk Says:

    […] release and the related post were clear that the survey population was ahead of the curve (”active” MerchantCircle […]

  15. Dueling Research: The Great Small Business Social Media Stand-Off Says:

    […] such a stake, because it’s a social network for small businesses. •    On the other hand, Greg Sterling makes a very good case for why MerchantCircle/Internet2Go’s research trumps […]

  16. Dan McCarthy Says:

    Great analysis, Greg. The underlying power of these tools is the ability to expand their digital footprint, enhancing their Google PageRank and building their social graph in relation to their business. Buzzwords, right? Not really. The big key is connecting all the content to a web repository — typically a blog — that is integrated into their web site. A lot of small businesses, particularly in the service categories, like real estate or design, are discovering that they are able to build a steady flow of qualified interactions that help drive their business.

  17. The analyst behind the MerchantCircle SMB research weighs in | Dan McCarthy's ViralHousingFix Says:

    […] by drm on October 29, 2009 The analyst behind the recent MerchantCircle survey of internet marketing practices by small businesses shared some of his personal highlights and conclusions from the research on his blog last week. […]

  18. Social Media & SMBs: What Did I Tell You? « Screenwerk Says:

    […] & SMBs: What Did I Tell You? By Greg Sterling Many fiery critiques came at me when I posted the results of a survey with Merchant Circle (despite clear disclaimers) that indicated SMBs were starting to adopt Facebook and Twitter in […]

  19. SMB ‘Social Media Presence’ Now at 24% « Screenwerk Says:

    […] the survey I conducted last year with MerchantCircle we found, among early adopter SMBs, a high degree of social media penetration (at levels above […]

  20. realtor rebate Says:

    all are good forms of advertising, but nothing beats good old word of mouth referrals…

  21. Tap the Growing Local-Social Opportunity - Yodle Company Blog Says:

    […] report that they plan to increase their use of email marketing and social media in 2010.” In a September 2009 survey I conducted among active MerchantCircle members (a more engaged group of small businesses) about […]

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