Blog Post

Half of Small Businesses Spend Less than $300 Per Month on Online Marketing

Happy New Year! BrightLocal recently released results for its yearly Internet Marketing Survey of small to medium sized businesses (primarily U.S. businesses). Watch this Daily Brown Bag to learn what channels are most effective at bringing in new business and how much money small businesses are spending each month on marketing (as a whole). We also highlight the importance of word-of-mouth, the intense focus on mobile, and the top three things small businesses are looking for in an agency.

Also available on YouTube.


Hello, and welcome to The Daily Brown Bag. Today we’re going to be covering BrightLocal’s SMB survey just released. I’m Chad Hill, and I’m joined by Adam Stetzer.

Hey, good morning, Chad. Welcome to The Brown Bag. As you said, Chad, we’re covering a survey from BrightLocal. They’ve released a survey that they do every year. This is their annual internet marketing survey of small- to medium-sized businesses. This is an interesting piece of data, Chad. Their survey covered more than 736 small businesses. These are all employers that have less than 50 employees to be qualified as respondents. Most of the people responding actually had between one and three employees. This includes the owner, and these were primarily U.S. businesses. In terms of the SMB market, really more on the small business side, with most respondents having between one and three employees from the U.S. Again, over 700 responded. So pretty it’s a pretty good data source. Very interesting stuff here for our SEO reseller community.

Top Takeaways

We see that more small businesses plan to increase their online marketing budgets compared to last year. I know that’s always a question: Is online marketing still an exciting new thing? Is It still a growing space? This data says: yes, it is. Thirty-seven percent say they will be increasing their online marketing budgets this year, which is a 16% increase over the answer to that question at the same time last year. This year, we see more people saying that online marketing is effective at bringing in new business -- also very good, confirmatory news for our reseller community. Seventy-five percent say that those efforts are effective or very effective. When you look at that same question last year, Chad, that 75[%] is up from 68% responding effective or very effective last year. Not only are they planning to spend more, but the overall sentiment on “Is online marketing effective for small business?” continues to get more positive.

More SMB Sites are Optimized for Mobile

The last thing I’ll cover here, Chad, before I throw it to you, is that there has been an intense focus on mobile, which will not surprise us at all. We’ve been covering mobile for years now. We’ve been watching that train pull into the station, and, indeed, 66% said their sites are now mobile ready compared to 59% last year. That continues to be a big growth area for small businesses. Chad, what are some of the takeaways from all of this data?

I’ve got some more stats here and some specifics of some of the other details. There was a question about how much businesses are spending on marketing as a whole. It’s interesting; only 16% are spending more than $1,000 a month. Eighty-three percent are spending less than $1,000, and, actually, a whopping 70% are spending less than $500 a month. That’s a big chunk, and we’ve covered this many times: What can you really do with $500? Well, we see here that most small businesses -- those one to three employee shops across the country -- really are only spending $500… the majority of them are spending $500 or less. When you ask about what percentage of that marketing budget is allocated for internet and mobile… so, again, that’s marketing overall, right? Now we’re talking specifically about mobile. Half are spending less than $300 per month on online channels. Sixty percent dedicate less than half of their marketing budgets to online marketing, and 4% don’t do any online marketing at all.

Channels That Are Most Effective

In terms of channels, when people ask, “What is the most effective way of bringing in new business?” Again -- this is overall -- 28% said word-of-mouth, 20% said SEO, 15% local directories, and 10% email marketing. It’s really interesting to see that 28% word-of-mouth, and that’s what we see over and over again -- is that there’s still some really basic business components no matter how great your rankings are. You still need a good brand and you still need good customer service, which gets you that word-of-mouth referral.

Top Three Priorities

In terms of priorities -- in terms of how businesses are measuring the results of their marketing -- 31% said incoming phone calls is the number one priority, 20% said website traffic, and 20% said search rankings in terms of their top three priorities. Again, those phone calls -- a live customer on the line [is] still the most important thing, even if you have many page one rankings. People are measuring and looking for phone calls.

In-house versus Outsourcing

In terms of in-house vs. outsourcing, which, of course, is very interesting for a lot of people that follow us -- and, of course, for our business. Eighteen percent said they outsource. That’s compared to 15% last year. Sixty-four percent are doing online marketing in-house compared to 68% last year. So a little tick up in people outsourcing -- maybe some of the complexities that Google has continued to roll out and the number of different platforms out there -- have made people think, “Maybe I need some help doing this.” Only 29% said they understand internet marketing and are doing it themselves compared to 40% last year. In terms of satisfaction with their outsourcer, 75% rated their consultant or agency positively.

The Top Things that SMBs Look for In an Agency

The top three things they’re looking for in an agency are: low cost, of course; guarantees; and a solid reputation. So, Adam, some really interesting stats. I know that we’ve been doing some similar surveys, maybe more focused on the agency and asking them what they’re seeing and how they’re looking at their business, but a lot of overlap. What do you think?

Well, I think that this is very interesting data, and [it’s] encouraging. It’s showing us that the market is still growing. People are going to be spending more. The demand is still for SEO. Some people like to say search engine optimization is dead, but this data suggests, no, it’s actually one of the highest, in-demand products. Additionally, we’re seeing a continual uptick in the number of respondents who are outsourcing, which doesn’t surprise me, Chad, because SEO has gotten so much more complex as Google has introduced algorithmic changes. It has pushed us to new and cleaner approaches. People are finding it more complex and wanting to hire an expert. The more that SEO merges with PR activities and press releases and traditional marketing and branding -- that makes sense -- it’s just a harder thing to do in-house. All of this seems like very good news. Again, though, there’s a sprinkling of this message that we always include, which is: word-of-mouth still really matters. When you’re talking about these small businesses of one to three employees, they really can only spend $500 a month. Some can spend nothing, but word-of-mouth and having a good brand is still very important, even as you venture into the online space. I find this data very fascinating. I urge all of our viewers to study this.

The more that your business model can be built around data, rather than the flavor of the month, the better you will do. As you said, part two will be coming in the next survey that we cover, which will be our own, which specifically gets into some of the strategies that agencies are using and how they’re beginning to understand this small- to medium-sized business market and online marketing.

We hope you’ll stay tuned for that. Please subscribe. We’ll give you an alert when that data is ready.