Small business owners are a practical bunch. So when it comes to digital marketing – websites, search ads, digital banners, email, mobile ads, and others – they approach it with a decidedly practical bent. “Generating leads and sales is very important to us,” says Jack Groot, owner of JP’s Coffee & Espresso Bar in Holland, MI. “Without real traffic and ultimately profit, there is little or no value for us in digital marketing.”
Groot speaks for millions of small business owners who are leaning more and more into digital marketing, but only if they see real value in it. Larger organizations are accustomed to marketing digitally – they’ve been doing it for years. Many smaller firms, however, have stuck with traditional ways. But that’s changing, and picking up steam.
Digital marketing has blossomed as digital marketing tools for small business have become more accessible and affordable. A major trend driving increased use of digital marketing by smaller businesses is the increased availability of customer data – from website visits, social media, electronic purchases, and many other sources. This information helps even the smallest businesses understand customers better, identify leads earlier and respond to customer needs by knowing what they’re looking for.
According to a new study conducted by Inc. Magazine and Vocus, a cloud software provider, the top six reasons small biz owners use digital marketing are to:
1) Drive sales
2) Increase brand awareness
3) Reach new customer segments
4) Drive customer engagement
5) Identify usable customer insights
6) Save money/improve productivity
Another attraction of digital marketing for small business is that you can move the needle without having to allocate lots of resources – especially personnel. Meanwhile, more than half of the small and mid-sized businesses surveyed by Inc. say they now have at least one full-time employee working on their digital marketing efforts. Others use part-timers, outsourcing, or the business owners do it themselves.
Not surprisingly, the Inc. survey found that websites are the most commonly-used digital marketing tool among smaller businesses, with about 87 percent now using them. And while some still use “old” non-interactive websites, many others are incorporating digital marketing tools that incorporate social interaction to gain much greater traction.
Here’s a rundown of how many small businesses are using some of the different digital marketing tools:
- Email marketing (66%)
- Videos/photos (55%)
- Blogs/white papers (53%)
- Webinars (26%)
- Paid search (23%)
- Online store (23%)
- Mobile apps (18%)
- Mobile/SMS messages (4%)
Spending Levels on the Rise
Small business spending on digital marketing is also on the rise. According to the Inc. survey, some 23 percent of all small businesses now spend more than 75 percent of their marketing budgets on digital.
Among “larger” small businesses (those with $1 million or more in revenue), about 22 percent allocate less than 10 percent of their budget to digital. About 1-in-5 of these firms spends between 10 and 24 percent of their budget on digital. Another 13.5 percent of firms allocate 25-50 percent to digital, while about 14.5 percent devote 50-75 percent of their marketing spend to digital.
Groot’s businesses – including the Midwest Barista School in addition to the coffee and espresso bar – are now focused almost entirely on digital. And the reason is simple. According to Groot, digital methods – including his website, social media and blog – give him more bang for his buck for generating sales and leads, building awareness, keeping a high profile and driving profitability.
Defining Digital Success
Business owners are clear about what constitutes successful digital marketing in their eyes. Increased sales tops the list (named by 71%), with generating leads second (59%). Other success criteria include the following:
- Higher search ranking (33%)
- Publicity/social following (32%)
- Employee recruitment (9%)
- Event attendance (5%)
- Retention rates (4%)
Business owners seem largely satisfied with the progress they’re making on the digital front. About 71 percent rate their current digital marketing efforts as successful at achieving their goals. For those with revenues over $1 million, the success rates are even higher, with about 80 percent rating their efforts a success.
Overall, small business owners overwhelmingly expect to increase their spending on digital marketing, with about 90 percent saying they are likely to do so in the next three years.
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About the Author: Daniel Kehrer, Founder and Chief Content Officer of BizBest Media, is a senior-level leader in digital media, content development and online marketing with special expertise in startups, SMB, social media and generating traffic, engagement and leads. He holds an MBA from UCLA/Anderson and is a passionate entrepreneur (started 4 businesses), syndicated columnist, blogger, thought leader and author of 7 business and financial books.