Which SMB Sectors Spend More Online & Get Best Returns

In January we published the results of the BrightLocal SMB Internet Marketing Survey 2014. With the results of the survey we can gain a better understanding of the attitudes & usage of internet & mobile marketing by small & medium sized businesses (SMBs).

In this follow-up analysis, we take a closer look at the data & compare responses from SMBs in different Industries.

For insights about the responses based on the size of the SMBs that took part, please see this post.

In total 736 SMBs took part in the survey, and by grouping them into Industry sectors we can gain a better understanding of the confidence, investment & ROI that SMBs in different sectors get from internet marketing.

We have only included analysis for 15 industries that had at least 20+ respondents in the survey. We felt that if an industry had below 20 respondents we couldn’t entirely trust the data; anomalies would have too great an impact on the averages and would skew the results.

We have looked at the following types of SMBs (use dropdown to show full list):

Industry vs Marketing budget

Key Findings:

• Real Estate, Insurance & Medical SMBs are spending the most on marketing
• Tradesmen, Web Design & Pet Services SMBs are spending the least on marketing

Analysis:

NB – ‘marketing budget’ in this chart refers to all channels (online & offline).

The aim of the survey was to find out how small & medium businesses view internet marketing. The majority of respondents had just 0-3 employees (58%), and we found that 70% of SMBs were spending less than $500 on marketing per month. As we can see from the chart, many different types of SMBs are spending above & beyond that $500 – but that figure represents the average spend for all of our respondents, no matter what industry they operate in.

The SMBs with the largest marketing budgets are those which typically fall in the most competitive markets. SMBs in the Real Estate & Insurance industries would certainly find themselves competing with national, or even international brands. And whilst having a local presence can certainly be an advantage to these companies, they are perhaps having to spend more on promoting their business to compete at that level.

There is also an argument to suggest that those industries which are typically more lucrative find it easier to justify a larger marketing spend.

Industry vs Marketing budget spent online

Key Findings:

• Web Design (70%), Marketing (57%) & Real Estate (52%) SMBs spend more of their marketing budget online
• Retail (25%), Interior Design (25%) & Pet Services (27%) SMBs spend the smallest amount online

Analysis:

We previously saw that SMBs in the Real Estate sector have the largest monthly marketing budgets, and now we can see that these same SMBs are spending the most within online channels. On the other hand, SMBs who are in the Insurance business may have deep marketing pockets, but they are only spending 32% of their budget online.

Retail SMBs only spend 25% of their marketing budget online. Looking at the type of retail businesses who took part in the survey, they’re mostly specialist or independent stores who may or may not sell online. Whilst it’s not a mandatory, internet marketing is more effective for SMBs that cater for online customers, and so many of these smaller retailers may not be included in that bracket.

Similarly with financial services SMBs, internet marketing may help to build local & brand awareness for a company but as a service which traditionally requires a face-to-face meeting, internet marketing may not be as successful for them. However we will come to ‘effectiveness’ in a little while.

Industry type vs Planned spend for 2015

Key Findings:

• Insurance, Marketing & Retail SMBs are most likely to increase their internet marketing spend
• 47% of tradesmen are not going to increase their online spend throughout 2015

Analysis:
From the original survey we learned that 37% of respondents plan to increase their internet marketing spend over the next 12 months (vs 21% in 2014).

We know that Insurance SMBs have big marketing budgets, but they don’t necessarily spend a lot of that budget online (37%). However, 77% of those same SMBs do plan to increase that spend over the next 12 months.

47% of Tradesmen do not plan to increase their internet marketing spend over the next 12 months. These same SMBs have one of the lowest overall marketing budgets, and on average spend 44% of it online. Perhaps the issue with SMBs with the smallest marketing budgets is that the amount they spend online is either not correctly allocated or the ROI cannot be fully tested. So in effect there is a cycle of not trusting online marketing despite not really putting enough budget into it to see what benefit it could really give them.

Of course, with marketing companies, it is little surprise that they have confidence in an industry that they work in.

Industry vs Internet marketing Effectiveness

Key Findings:

• 93% of Health & Medical & 83% of Real Estate SMBs find internet marketing to be ‘very effective’ or ‘effective’
• 45% of Marketing SMBs find internet marketing to be ‘very effective’

Analysis:

The correlation between internet marketing effectiveness, and the willingness to increase spend over the next 12 months generally tallies up reasonably well. Medical, Real Estate & Marketing SMBs find internet marketing to be the most successful at attracting new leads, and these same types of businesses are fairly positive, or certainly open to increasing their spend over the next 12 months.

There is a higher proportion of SMBs in the Financial sector that find internet marketing to be ‘not effective’ than any other. Although it’s also clear that there is a fairly even distribution of Financial SMBs that find it either ‘very effective’ or simply ‘effective’. It’s clearly an industry where there is a lot of mixed results, perhaps due to increased competition.

Industry vs Effective marketing channels

In the original survey findings, 28% said that word of mouth was the most effective channel at attracting new customers, whilst 20% said that it was SEO. If we break the same data down by type of business, we can see which particular SMBs value online vs. offline marketing. Note that to show factors which can be measurably affected, we have removed word of mouth as a channel.

Online vs Offline:

NB – we have removed Word of Mouth from this data to give a clearer Online vs. Offline comparison

Key Findings:

• SMBs of all types rate online marketing as a more effective marketing channel
• Web designers (90%) & Marketeers (87%) unsurprisingly rank online channels the highest

Analysis:

We can see that online marketing channels are seen as more effective overall. The confidence from Web Design / Marketing SMBs is unsurprising, whilst Insurance, Medical & Legal SMBs are all those which have the larger marketing budgets – which in turn allows them to allocate more spend towards testing various online & offline channels.

In the next chart we can look at which online channels are favoured by different sizes of SMBs.

Breakdown of online marketing channels:

Key Findings:

• 59% of Educational SMBs rate SEO as the mot effective online channel
• Email marketing is most successful for Insurance SMBs (33%)
• PPC is most effective for Real Estate SMBs (17%)
• Mobile marketing is most effective for Tradesmen (18%)
• Online local directories are most effective for Interior Design SMBs (50%)

Analysis:

We can see that SEO is considered the most successful online channel for most SMBs, although Interior Design, Pet Services, Tradesmen, Mechanics & Construction SMBs rate other channels higher.

SEO is an effective tool for Education SMBs, despite the fact that only 57% of the same respondents said that online marketing was more effective overall. They were also fairly uncertain about their spend for 2015, with 44% saying they may spend more, and 25% saying no.

For insurance agents, repeat customers are an especially important asset. Annual insurance policies are profitable, and have potential to generate repeat customers year after year. It’s also a business that relies a lot on seasonality, and so email marketing naturally helps these SMBs to retain an existing customer base.

Industry vs Success metrics

Respondents were asked to select 2 options from the 5 choices provided.

Key Findings:

• SMBs offering Pet Services are most concerned  with Search Rankings (41%)
• Web traffic is most important to Real Estate SMBs (41%)
• Mechanics are most concerned with customers walking through the door (42%)

Analysis:

In the original survey, phone calls to a business were the most valued success metric (31%),

Considering that SEO is deemed so effective for Education SMBs, it is surprising that Search Rankings (9%) & Web traffic (19%), appear so low on their list of concerning success metrics. Of course, we also noted that 43% of Education SMBs rate offline marketing as the more effective – which is backed up by a lot of value associated with phone calls & walk-in customers as success metrics.

In the original survey, and in the follow-up, we speculated that the nature of a business would go some way to defining the success metrics that a company is most concerned with.

Retail SMBs & Mechanics are obviously interested in customers walking through the door due to the immediate nature of the service they offer. There are other types of business such as Financial, Marketing, & Legal whereby an initial appointment, meeting or discussion may be required before a transaction can take place. These type of SMBs are typically more concerned with phone calls as a success metric – something which may lead to a sale further down the line.

Similarly, Serve Area Businesses (SAB’s) which may include Tradesmen, Cleaning & Construction SMBs, are also more concerned with generating phone calls to their business – generally because they may not even have a traditional place of business.

Industry vs Mobile readiness

Key Findings:

• Insurance (92%), Web Design (87%) & Marketing (85%) SMBs are the most mobile ready
• Cleaning (29%), Education (31%) & Construction (17%)SMBs are the most unsure about their mobile readiness
• Construction (39%), Retail (31%) & Real Estate (29%) SMBs are the least mobile ready

Analysis:

Insurance SMBs are very much ahead of the game – even more so than Web Design & Marketing SMBs – who again offer little surprise about their advanced state of mobile readiness.

A certain percentage of Cleaning (14%), Tradesmen (7%) & Mechanics (8%) SMBs do not think that having a Mobile ready / optimized site is relevant to their business.

For any local business, having a mobile ready / optimized site is of utmost importance if they want to be found online. So surely it’s a welcome opportunity for any local SEO agencies or consultants to help SMBs in these sectors.

Industry vs Feelings about Google+ Local / GMB

Key Findings:

• Cleaning (64%), Medical (61%), Marketing (60%) & Web Design (60%) SMBs are most positive about Google +Local / GMB
• Insurance (31%) & Real Estate (29%) SMBs are most negative about Google +Local / GMB
• Education (50%) & Interior Design (50%) SMBs are most confused / frustrated about Google +Local / GMB

Analysis:

In the original survey we asked SMBs which of a series of statements best applied to their feelings about Google+ Local / Google My Business. There were 7 statements which could roughly be broken down into 3 distinct sentiments; positive, confused / frustrated & negative.

It’s no surprise that Marketing & Web Design SMBs are amongst the most positive about Google +Local & Google My Business. However, what is concerning is that within the Marketing sector, there is still a fairly high percentage (31%) of SMBs that are confused or frustrated by the same service. Clearly they are require to know about the service & are even paid to offer it as a service, so it’s definitely a cause for concern.

Real Estate & Insurance businesses are the most negative. Real Estate agents have been the big losers since the Pigeon update with a huge drop in local pack results being served for real estate/realtor terms. So it isn’t surprising that they’re negative.

Industry vs Outsource / in-house marketing

NB – The following chart excludes Marketing & Web Design SMBs as they almost universally answered “in-house”.

Key Findings:

• Mechanics (31%), Medical (29%) & Retail (25%) SMBs are the most likely to outsource
• 33% of Tradesmen & 30% of Construction SMBs don’t do any internet marketing
• Real Estate (79%), Cleaning (79%) & Legal (77%) SMBs are most likely to handle it in-house

Analysis:

In the original survey, 64% said that they handle their internet marketing in-house (vs. 68% in 2013). In the follow-up piece we also learned that 70% of sole proprietors do their own internet marketing – the highest proportion of all respondents.

Looking at the chart above we can see that there is a high proportion of Tradesmen (33%) & Construction (30%) SMBs that don’t do any internet marketing – whilst Mechanics (31%), Medical (29%) & Retail (25%) are the most likely to use a marketing consultant or agency.

We saw before that Tradesmen have one of the lowest marketing budgets overall – and so it’s unsurprising that a high percentage of them don’t do any internet marketing. Budget restraints ultimately don’t allow for it.

Industry vs SEO agency satisfaction

Key Findings:

• Financial, Insurance & Real Estate SMBs (all 100%) are the most satisfied overall
• Cleaning businesses (67%) have the highest proportion of SMBs that ‘Love’ their agency
• Interior Design SMBs (50%) are the most unsatisfied with their agency
• 60% of Pet Services SMBs had an agency but sacked them

Analysis:

In the original survey we learned that 39% of SMBs love the work that their agency provided! (vs. 9% in 2013). The above chart is ordered by overall satisfaction.

Finance – Interestingly, a large 40% of Financial SMBs rated internet marketing as not effective, yet 100% of them are happy to some degree with their agency’s performance.

Real Estate – 73% of Real Estate SMBs rate internet marketing as effective or very effective, and these SMBs are equally as satisfied with their agency’s performance.

Cleaning – 86% of Cleaning SMBs rate internet marketing as ‘effective’ or ‘very effective’, and 83%  of these ‘love’ or are ‘happy’ with their agency.

Industry vs Important SEO agency factors

In the original survey, there were 6 clear factors which stood out as the most important factors for an SEO agency / marketing consultant:

• 18% – low cost
• 14% – performance guarantees
• 13% – having a good reputation
• 12% – relevant industry experience
• 9% – being prepared to listen & learn about a clients business
• 8% – they offer a free audit

Please note that Marketing SMBs have been removed from the below chart.

Key Findings:

• Lost cost is most important to Cleaning (33%) & Pet Service (33%) SMBs
• A good reputation is most important to Tradesmen (33%) & Pet Services (25%) & Construction (25%) SMBs
• Relevant industry experience is most important to Web Design SMBs (25%)
• Being prepared to listen & learn is most important to Educational SMBs (22%)
• A free audit is most important to Web Designers (21%)

Analysis:

Web Designers, who much like Marketeers, are likely more accustomed to the online marketing world. To them, low costs are not as important, probably because they are more aware of the practices & processes involved. Instead, these SMBs are more interested in relevant industry experience & a free audit.

It’s interesting that many types of SMBs will judge a potential marketing agency / consultant on the same merits that are important to their own customers:

Good reputation – Tradesmen & Construction SMBs, who rely very much so on their reputation, equally expect any potential agency to also excel in this trait. To them it’s part & parcel of being a succesful business & they’ll judge other services in the same way.

Performance guarantees – It is Insurance, Financial & Legal SMBs that are most concerned with Performance guarantees. These types of businesses work daily with the law, financial practices & strict industry regulations. There is very little guess work in law or finance & so they come to value these traits in any potential agency. Performance guarantees rather than estimations or ‘grey areas’ are therefore welcomed.

Being prepared to listen & learn about a business – Similarly, If you plan on selling internet marketing services to SMBs in the Education sector then it is best to take a leaf out of their book and be prepared to listen & learn about the industry!

It may be very much a coincidence that these traits are valued by these types of SMBs. However, if your customers hold you to certain values, these become very much part of your company culture – so why wouldn’t you take these same traits to every area of your business?- not only in dealing with customers but also in dealing with third party businesses such as marketing agencies or consultants.

Ultimately, a business wants value for money if they are going to outsource, and if an agency can win their confidence by speaking directly to the values that they have come to hold dear, then o their values directly, then they have a better chance of winning their business.

About the author

Ross Marchant

Ross is the former Marketing Manager for BrightLocal. With 9+ years SEO and content experience, Ross spearheaded the marketing and CRM initiatives which focus heavily on creating useful and informative content. Ross coordinated the research program at BrightLocal which delivers unique insights into both the SEO industry and local consumer behaviours.

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