Why Aren't SMBs Investing More In Online Marketing?

Chris CrumBusiness

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Local SEO firm BrightLocal recently released some findings from its annual SMB Internet Marketing Survey. These revealed that plenty of small and midsize businesses find online marketing effective, and plan to spend more on it in the future, yet a surprising number of them are dedicating pretty small amounts of money to it.

What do you think is holding back SMB online marketing budgets? Share your thoughts in the comments.

We sent some questions over to BrightLocal CEO Myles Anderson to gain a little bit more perspective into how SMBs are approaching online marketing.

According to the study, 34% allocate less than 10% of their marketing budget to online channels, while 50% allocate less than 30% and only 29% allocate over 70%.

Why is there so little going to online channels?

"I found this figure a little perplexing when you consider the other responses SMBs gave," Anderson tells WebProNews. "75% said online was effective at bringing in new customers & 3 of top 4 most effective marketing channels are ‘digital’. Yet SMBs allocate a disproportionately low % of their marketing budgets online. I believe the reason is a combination of a few factors."

"Many business owners handle it themselves so don’t assign a monetary budget to online marketing," he says. "The survey showed that 64% of business owners handle their internet marketing themselves. Online marketing isn’t applicable or doesn’t work for some businesses so they don’t invest. Some businesses rely solely on Word of Mouth to bring in new customers so don’t invest in online. Budgets are too low to play in the online arena."

Should SMBs be allocating more of their budgets to online channels?

"Considering that 75% of respondents said that online marketing was effective I would expect a larger slice of budgets to be allocated to online channels," Anderson says. "However many business owners seem prepared to handle their online marketing themselves. Many of the most effective marketing channels can be effectively used for free – it only takes time & knowledge to do it right and drive customers through to your business."

"These 2 aspects combined mean that big investment in online marketing isn’t always needed," he adds. "However local online marketing isn’t for the faint hearted. The vast array of options & constant change in best practices & guidelines make it hard to stay on top of unless you have the time & skills to invest in understanding it."

The rise of mobile opens up a lot of opportunity for online marketing for SMBs that wasn't so prevalent before smartphones.

Is a lack of understanding holding back budgets in mobile?

"The number of searches done using a mobile device now outstrips those done on a PC," says Anderson. "This is significant because the nature & intent of mobile-based searches is more ‘local’ than on PCs so local business websites & listings will be surfaced in the results for more search terms. Google uses searcher location as a big factor in determining which results it returns so optimization for mobile & also for your town/city/neighbourhood are more important then ever. Not all businesses will drive new customers from mobile searchers. Mobile searches are less ‘discovery’ orientated so services that require greater information & consideration prior to purchase (e.g. dentists, plastic surgeon, attorneys) won’t see much conversion from mobile. But that shouldn’t stop them optimizing for local and establishing brand presence with local customers."

"So, I think most businesses owners are aware that mobile usage is growing. But many may not perceive that it’s relevant to them or justified in allocating budget to it vs. other tried & tested channels that they know deliver new customers."

Based on the survey data, a significant amount of businesses are planning to spend more on online marketing.

Which channels (search, social, email, etc.) will benefit the most?

"I think they’ll see an uplift as businesses & marketeers look to pull in customers from many sources," says Anderson. "Having a diversified marketing strategy is wise as you don’t become reliant on 1-2 channels to deliver everything. Many businesses are too reliant on Google/Google Places to generate site traffic & calls. This leaves them vulnerable to algo updates or guideline changes which can literally switch off their pipeline of customers."

The research shows that businesses consider phone calls to be the most valued success metric compared to web traffic, search rankings, and significantly over customers actually walking through the door or inquiring via the website.

Why are phone calls so highly valued compared to other metrics?

"Firstly there are many local businesses that don’t cater to walk-in customers (e.g. gardeners, plumbers, accountants, therapists, mobile-masseuses) but they all have a phone," Anderson says. "Secondly, calls convert better than online enquiries. Customers are more engaged (they’ve taken the time to call) and a business has a greater opportunity to understand the customer’s need and propose the best solution for them. Thirdly, speaking to a customer on the phone is often cheaper than dealing with customers in-location. So if you can pre-qualify/pre-sell a customer on the phone then it’s a lower cost per sale."

Do you expect to increase your online marketing budget this year? Let us know.

Chris Crum
Chris Crum has been a part of the WebProNews team and the iEntry Network of B2B Publications since 2003. Follow Chris on Twitter, on StumbleUpon, on Pinterest and/or on Google: +Chris Crum.